GLENDALE, Ariz. — A Nestlé plant in the Valley has an issue: it wants to make a lot of "high-quality" creamer. But it might not have enough water to do so.
The company's solution could allow factories to drain Arizona's groundwater and could threaten the quality of city tap water, according to water experts.
The massive food and drink producer announced last year it would be building a nearly $700 million plant in Glendale, but has since run into issues with its water provider EPCOR. The amount of wastewater Nestlé projected to need turned out to be too much for the Canada-based utility.
Nestlé is now trying to change Arizona water law to meet their demands. A newly introduced bill in the state Legislature would allow factories to treat their own water on-site, effectively cutting out state-licensed public and private water providers.
Nearly every Valley city, numerous water officials and multiple business associations are against the proposed change.
This isn't the first time Nestlé has been in the news for water in Arizona. Another company plant built in west Phoenix spent almost its entire less-than-years open from 2016 to 2019 as the object of questions about why a water bottling plant should be built in the desert.
Here's how a dispute between a customer and a water utility turned into one of the most controversial bills this year.
How is Nestlé trying to change Arizona's water laws?
The bill Nestlé is backing this year, SB 1660, would create a whole new category of water, along with allowing industrial plants to bypass licensed water providers and treat water on-site for underground storage.
"Effluent," or used, water was already classified by Arizona as treated sewer water. However, this bill would create another type of effluent water specifically for manufacturers.
The proposed industrial on-site water treatment is described in the bill as:
- The industrial facility may construct and operate an on-site wastewater treatment facility
- The industrial facility will be allowed to discharge its treated water to an underground storage facility
- The water service provider for the industrial facility can continue to provide water to the facility
"This legislation would help create a sustainable framework for businesses that are investing in onsite water management, which will support Arizona’s water infrastructure now and into the future," Nestlé told 12News multiple times in an email.
Numerous water experts and officials disagree, saying the change is anything but "sustainable."
Valley cities, water experts overwhelmingly oppose Nestlé's bill
The bill has little support outside of Nestlé. Three of the nine people who registered with the legislature as being in favor of the bill were representatives of the company.
Nestlé told 12News its current water provider, the Canada-based company EPCOR, agrees that the bill is an "effective and efficient supply solution."
EPCOR apparently disagrees. The company is one of the 26 entities publicly listed as being against the bill, including numerous Valley cities, water users and businesses. The opposition list also includes:
- Phoenix
- Scottsdale
- Tempe
- Mesa
- Chandler
- Peoria
- Gilbert
- Goodyear
- Avondale
- Surprise
- Arizona Municipal Water Users Association
- Water Utilities Association of Arizona
- Home Builders Association of Central Arizona
- Arizona Mining Association
How does Nestlé's bill threaten the state's groundwater?
There are two points in the bill that are red flags for Arizona's water experts: "long-term storage credits" and a lack of groundwater quality oversight.
Long-term storage credits allow entities that treat water and store it underground to freely pull that water out at a later date.
For example, if a water user has a right to pump 3,000 acre-feet of water in a year, but the user generates 1,000 acre-feet of wastewater and stores that in their aquifer, then the user can pump 3,000 acre-feet plus an additional 1,000 acre-feet the following year.
This becomes an issue in Nestlé's bill because industrial water users are not required to have a 100-year water supply to operate under Arizona law. Tenney believes the lack of an assured water supply coupled with being able to generate long-term storage credits would allow industrial users to freely drain the state's aquifers.
"We think this is one way [Nestlé] is getting around having to purchase more grandfathered water rights ... it's not helping the aquifer," said Warren Tenney, the executive director of the Arizona Municipal Water Users Association.
"If [Nestlé] is saying they want to do sustainable aquifer management, then the most responsible thing would be injecting wastewater into the aquifer to offset the groundwater pumping they're already doing. They shouldn't be generating long-term storage credits that allows them to increase the amount of [groundwater] pumping they do."
The bill would also make it a lot more difficult to make sure the water Nestlé, and every other industrial water user, is recycling meets water quality regulation standards.
Under current law, industrial users must pay for their water from either a public or private water provider. If the industrial user wants to recycle the water, it must deliver it back to the water provider and pay again to draw it out.
All licensed water providers are currently subject to state water quality testing.
However, this bill would essentially give each industrial user in Arizona the option to cut out their water provider in how they handle recycled water. Nestlé confirmed to 12News that the bill would apply to any manufacturers in the state, opening up the possibility for groundwater contamination to fly under the state's radar.
The plant would be required to meet all groundwater and aquifer protection quality standards, but experts believe the state isn't prepared to adequately oversee hundreds of individual factories.
"You can't just let industrial users manage their own recharge facilities without having any kind of monitoring of the water quality," said Kathy Jacobs, the director of the Center for Climate Adaptation Science and Solutions at the University of Arizona.
"I don't think the Department of Environmental Quality or the Department of Water Resources are prepared to start on-site investigations of water quality implications of these kinds of facilities. I also think it's important for the whole water management system not to have individual water treatment plants scattered across the landscape."
The goals of the Nestlé bill may sound familiar to some familiar with a recent push to change Arizona water law made by another drink manufacturer. The outcome of that battle may prove that threatening to change state water policy may be a winning strategy.
Red Bull shows possible solution to Nestlé without changing state water policy
Another reason AMWUA opposes the bill is the perceived cause behind the bill's creation.
The association views the Nestlé bill as the product of a dispute between the company and EPCOR, a point which Nestlé alluded to in its email to 12News.
"Unfortunately, [EPCOR's] industrial discharge capacity allocation offered does not sufficiently meet our needs to support the business," the email read.
Nestlé wasn't the only drink manufacturer having this same issue with EPCOR, but a recent deal made them the last one gunning for this law change.
Rauch Fruit Juices, the parent company of Red Bull, opened its own plant in Surprise in 2021. An expansion announced last year caused the plant to significantly increase the amount of water it would need, according to previous reporting from Audrey Jensen at the Phoenix Business Journal.
It was for this reason that Rauch originally joined Nestlé in backing SB 1660. Rauch, however, recently dropped its support of the bill after its issues were seemingly solved by an agreement between EPCOR and the City of Surprise.
The agreement would allow EPCOR to expand its wastewater treatment operations by pushing some of its wastewater to Surprise, which would alleviate the Red Bull plant's wastewater issue, Jensen reported.
Tenney thinks the agreement should act as an example to Nestlé. If Rauch figured out how to fix its issue outside of adjusting Arizona's water policy, Tenney sees no way Nestlé couldn't do the same.
"Their issue can be managed without changing very important water law," AMWUA Executive Director Warren Tenney said. "When you're trying to change the statutes to solve a dispute like this, it's special interest legislation."
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