Judge scraps Calif. town's deal to sell Nestle half-billion gallons of spring water

Nestle Waters North America Inc. today announced it will appeal a local court ruling that has delayed plans in hiring for the construction and operation of a bottled water factory in McCloud. As part of the announcement the company is taking out two full-page ads in local papers to reassure residents that Nestle Waters is not abandoning its plan for the factory...

MCCLOUD, CA, March 30, 2005 (BUSINESS WIRE) -- Nestle Waters North America Inc. today announced it will appeal a local court ruling that has delayed plans in hiring for the construction and operation of a bottled water factory in McCloud. As part of the announcement the company is taking out two full-page ads in local papers to reassure residents that Nestle Waters is not abandoning its plan for the factory.

"The deal between Nestle Waters and the McCloud Community Services District is emphatically not 'down the drain' as a recent newspaper headline claimed," according to one of the full page ads running today in the daily Redding Record Searchlight.

The company's actions followed a ruling on March 21 by the Siskiyou County Superior Court. The court indicated that the McCloud Community Services District should have completed the project's environmental review before entering into an agreement with Nestle Waters North America for the sale of spring water.

The deal involved Nestle building a $120 million water bottling plant to revitalize the former lumber town at the base of Mount Shasta in northern California. It would have given Nestle, the world's biggest food and beverage company, up to 521 million gallons of the town's drinking water for as little as $300,000 a year. The 50-year deal could be extended for a century with little control by the unincorporated town.

Nestle pointed out the court's ruling spoke only to the timing of the environmental review and did not suggest the current environmental review process is invalid or defective. As a result of the ruling, the company can no longer estimate a timeline for opening the factory or state when hiring may be expected.

"We are disappointed by the decision and the potential delays this legal activity is expected to cause the project. Since the beginning, we understood that the development and permitting of a factory to bottle spring water required a multi-staged and thorough environmental review. Siskiyou County's environmental evaluation of the proposed Nestle Waters bottling factory in McCloud has been underway for over a year, and we have always expected to comply fully with the requirements of the California Environmental Quality Act," David Palais, of Nestle Waters, wrote in an open letter to area residents running today in the weekly newspaper the Mount Shasta Herald.

The McCloud area economy has been on a steady decline since the closing of the lumber mill in 2003, causing many area residents to travel outside of the area for work. The school board last year had to decide if it was economically feasible to keep the high school open due to declining enrollment.

The company has asked Siskiyou County to continue to move forward with the environmental review it is conducting to ensure that the proposed factory in McCloud would have no adverse impact on the environment. The company also announced that it believes the contract with McCloud Community Services District is valid and that they will continue to meet all contractual obligations to the McCloud Services District.

"We are committed to the process that was started more than a year ago that would create new jobs and other economic benefits for the residents of the area and protect the environment," stated Palais.

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