Nestlé plan to pump 65 million gallons of Upper Arkansas River Valley water for bottling in Denver stirs contentious fight

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NATHROP — Dozens of Chaffee County residents lined up Thursday to virtually blast a plan by Nestlé Waters North America to pump up to 65 million gallons of groundwater a year out of the Upper Arkansas River Valley for bottling in Denver. 

“We don’t need Nestlé to bottle our water and sell it back to us in plastic bottles,” Jennifer Swacina, co-founder of Unbottle and Protect Chaffee County Water, a group formed in opposition to the Nestlé plan, said during the meeting held on Zoom.  

The same scene played out in person in 2009, when the world’s largest food and beverage company applied for a permit to drill wells along the banks of the Arkansas River and build a pipeline to a station where 25 trucks a day would haul the spring water to a Denver plant for bottling under the Arrowhead brand. 

The plan this time around isn’t much different as Nestlé Waters asks Chaffee County for a new 10-year permit. But as the commissioners heard in a three marathon meetings last week, 2020 is a lot different than 2009. 

The county’s population is booming. Drought is ravaging the state. Plastic is polluting the planet. Nestlé Waters has been targeted by conservation groups across the country as it expands its water bottling operations. And Nestlé is about to sell its North American water brands.

“A lot has changed over the last 11 years,” Chaffee County Commissioner Rusty Granzella said as he questioned Nestlé officials during a nearly seven-hour meeting Tuesday night. The commissioners are expected to issue a final decision on the Nestlé permit application in the coming weeks.

Nestlé Waters reported $8.6 billion in sales in 2019, down slightly from 2018. The company’s North American water brands generated $3.6 billion in sales in 2019. 

Earlier this year, as Nestlé worked to increase sustainability and profitability, the company said it would, by 2025, replenish all the water it sucks from watersheds and offset the carbon footprint of bottling and transporting water. The company also announced in June it was exploring a sale of its water-bottling operations in Canada and the U.S.

Local implications of international deal

A Chaffee County staff report this month on the Nestlé Waters permit renewal application said the company “has indicated it will be selling Nestlé Waters North America in 2021.” 

When commissioners asked about the possibility of a sale, Larry Lawrence, Nestlé Waters North America’s natural resources manager, said the sale would not impact the permitting process or agreements the company was making to continue operations in Chaffee County. 

John McGowan, a Chaffee County homeowner, on Thursday asked the commissioners to examine why Nestlé was selling and warned against a private equity owner. 

“Nestlé is saying it has promised to operate in more sustainable ways,” McGowan said, “but Nestlé found it has a dilemma with its North American waters business, which cannot fulfill these new environmental promises and achieve its profitability goals.”

Other speakers on Thursday wondered what would happen if Nestlé left and sold the land, potentially to a developer who could add homes that might have a larger impact on the aquifer and community. A majority of the speakers at Thursday’s meeting urged the commissioners to deny the permit request.

The looming sale comes as Nestlé Waters faces increasing scrutiny over its water-mining operations in the U.S., where it has 25 bottling plants. 

Nestlé is seeking a permit renewal in North Florida that would allow a fourfold increase in water it draws from Ginnie Springs. The company wants to extract 1.2 million gallons of water a day from the springs for its Seven Springs brand. The proposal has galvanized environmental opposition centered on the impact to the region’s Santa Fe River. In August, North Florida’s Suwannee River Water Management District delayed a decision on Nestlé’s permit renewal application. 

Nestlé’s water operations in Michigan have been targeted with protests and lawsuits for years. Conservation groups have spent two years battling Michigan’s 2018 approval of Nestlé’s plan to increase the amount of groundwater it takes from several regions. 

A Michigan appellate court in December ruled that the town of Osceola had the authority to deny Nestlé’s request for a pumping station that would increase its ability to draw and move water. Michigan lawmakers in 2019 proposed three bills that would give local authorities more control over water extraction plans and prevent companies from selling locally mined water outside the Great Lakes Region, but the legislation never made it out of committee. 

A bill to ban companies from mining water for bottling in Washington State was crafted earlier this year after a plan for a water bottling facility in a small town near Mount Rainier sparked local opposition. The legislation, like Michigan’s, also stalled in committee. Montana, Oregon and Maine also have proposed legislation to limit the bottling of groundwater. 

Nestlé Waters North America pumps water from wells above the Ruby Mountain Springs on the banks of the Arkansas River. (Jason Blevins, The Colorado Sun)

And in March, two U.S. House Democrats launched an investigation into Nestlé, noting that the company extracted 3.4 billion gallons of groundwater in Michigan between 2005 and 2015 and made $343 million selling Michigan water in 2016 alone. But the lawmakers said Nestlé pays Michigan as little as $200 in fees and taxes for each water bottling plant it has in the state. 

U.S. Rep. Harley Rouda of California and Michigan’s Rep. Rashida Tlaib said their subcommittee of the House’s Committee on Oversight and Reform “is concerned that Nestlé is taking a critical public resource from communities in need without equitably reinvesting in those communities and ensuring long-term sustainability.”

In September 2019, Nestlé Waters North America asked Chaffee County to extend its permit for another 10 years. The hearings have been delayed by the pandemic and the commissioners granted the company an additional year of operation while they collected public input.

The county permit limits pumping from two Ruby Mountain wells to 16.6 acre-feet a month, which is roughly 200 gallons per minute. In 2019, Nestlé Waters reported it drew 89 acre-feet of groundwater, or about 29 million gallons, from its wells below Ruby Mountain. 

Many miles between spring and bottle

About 25 tanker trucks fill up every day at Nestlé Water’s 300,000-gallon tank in Johnson Village. The trucks travel more than 130 miles to the Denver bottling plant, where the spring water is treated and bottled under the Arrowhead label.

The company’s original permit required that half the tanker drivers should be Chaffee County locals. After posting dozens of ads for $28-a-hour driving jobs, the company in 2018 and 2019 was unable to meet the 50% requirement, one of 44 conditions and criteria in Nestlé’s original permit.

County housing officials at Tuesday’s meeting recognized the challenge of hiring local workers, which is tied to the lack of affordable housing in the county. County officials suggested that a new contract with Nestlé Waters could replace the local hiring requirement with a $500,000 local housing fund. (Nestlé officials were not keen on that plan during Tuesday’s meeting.)

Other county officials suggested the company fund a recycling program that would distribute recycling bins for water bottles around the county.

Nestlé Waters funded science education endowments in 2009, giving $250,000 to the Buena Vista Education Assistance Fund and $250,000 to Save Our Schools Salida, both of which award scholarships to local students entering college to study science.

The property where Nestlés Waters collects spring water from a series of wells was a former fish hatchery developed by Colorado State University professor Harold Hagen, who bought the property in 1970. Hagen and his wife, Mary, sold the 11-acre parcel Nestlé Waters in 2009 for $2.85 million. (The company also bought acreage for truck-filling tanks in Johnson Village in 2009 for $1.12 million.)

State law requires non-residential well users to augment any water they pull from an aquifer. Since Nestlé Waters does not own enough water rights connected to the land it owns, it buys water and releases it into the Arkansas River to augment its withdrawal from the valley’s Pinedale Aquifer. 

From 2009 to 2014, Nestlé Waters augmented the water it drew from the aquifer with water purchased from the City of Aurora — which stores water in the Upper Arkansas River Valley.

Since 2014, Nestlé Waters has augmented the river through a deal with the Upper Arkansas River Water Conservancy District. That deal included an amendment to the 2009 permit that capped diversion at 16.6 acre-feet per month or 196 acre-feet a year. The company last year paid the district more than $152,000 for 96 acre-feet of water that the district released into the Arkansas River from Twin Lakes Reservoir over the course of the year. (That’s about 7 acre-feet more than the company extracted.)

Nestlé Waters North America bought 11 acres on the banks of the Arkansas River in 2009. The company is seeking another 10-year permit to pump as much as 65 million gallons of groundwater from wells on the property, which it trucks to Denver for bottling under the Arrowhead brand. (Jason Blevins, The Colorado Sun)

So the augmentation plan has enhanced flows in the Upper Arkansas River, district manager Terry Scanga told commissioners at Tuesday’s meeting. 

Scanga cited federal studies of the valley’s wells that measured underground water supplies. One study showed an estimated 3.8 million acre-feet of water in underground aquifers below 200 square miles in the valley. Another federal study from 2000 to 2003 estimated that the existing 3,443 wells in the valley, plus an additional 4,000 to 5,000 new wells by 2030 would withdraw less than 1% of the estimated volume of water in the valley’s aquifers.

“I don’t believe we have a water problem in Chaffee County. We have enough water,” Scanga said on Tuesday, describing how the district stores roughly two to three years of water supply for the valley. “That doesn’t mean we should be asleep at the wheel, so to say. I think we should be working on storage. Conservation in and of itself is not enough … we have to have that storage.”

Commissioner Greg Felt expressed concern over the possible transfer of the permit should the company sell its North American operations. Calling a potential sale “a much more impactful issue now” than it was a decade ago, Felt worries that a deep-pocketed private equity company could take ownership and elevate profits over agreements with the community. 

“The relationship we do have now is based on the fact that this agreement was developed … in partnership,” Felt said. “So it’s a different type of investment and relationship, potentially, with someone else.”

Earlier this month Reuters reported Nestlé had started the sale of its North American water brands, citing unnamed sources who reported the company could sell for $5 billion with first-round bids coming by the end of October. Those sources said private equity funds that focus on cutting costs to improve profits for quick turnaround deals — like the investment giant Apollo Global Management — are expected to show interest in the Nestlé water brands.

Opposition has focused on the 2009 agreement that landed Nestlé Waters on the banks of the Arkansas River. The Unbottle and Protect Chaffee County Water argues the company should have already donated a 130-acre conservation easement to the county. The agreement for the easement was supposed to happen during construction of the project’s pumps and pipeline but has not. The company says it is working with Colorado Parks and Wildlife on an easement. 

Tom Bomer, a co-founder of the Unbottle group, said the 2009 permit with Chaffee County was “poorly crafted” and “tilted toward Nestlé’s interests.”

Bomer also pointed to the fact that almost all of Colorado is locked in a drought for the first time since 2013 and the Upper Arkansas River Conservancy District secures water for its deal with Nestlé from parched Western Slope. Swacina proposed that since the original contract had been amended so many times during the last decade, the company should submit an entirely new application for a permit extension beyond the company’s one-page request.

“This contract has failed the citizens of Chaffee County,” Bomer said. 

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