Controversial Arizona bill would allow factories to treat their own water

PHOENIX — A bill to let Nestlé treat wastewater at its proposed Glendale plant and pump that water into the aquifer, earning water storage credits to draw on in the future, is raising fears that it will pit businesses against other water users.

Under SB 1660, industrial plants would not only be allowed to treat their wastewater on-site but also earn long-term storage credits for treated water they put back in the aquifer. Companies could use those credits later to draw out 75% of the treated water they put in the ground.

One of the bill’s sponsors, Sen. Sine Kerr, R-Buckeye, points out that it will be a net gain of 25% in the groundwater for other users and called the plan “the best aquifer management program the state will have.”

But its many critics — which include water utilities, home builders and the city of Phoenix, among others — said the bill would create a fragmented system, overburden the Arizona Department of Environmental Quality and possibly degrade the quality of Arizona’s water.

They fear Nestlé will be just the first of many industrial users to flood in to take advantage of the new law if the bill passes.

“This creates a means by which companies can accelerate their groundwater pumping,” said Thomas Loquvam, general counsel for EPCOR, the water company that would serve the Nestlé site. “And they have used pretty clever, high-paid communication consultants to characterize this.

“But the bottom line is that they would be able to create long-term storage credits and use those year over year over year, increasing the amount that they deplete from the aquifer,” Loquvam said.

The bill, sponsored by Kerr, Sen. Steve Kaiser, R-Phoenix, and Rep. Tim Dunn, R-Yuma, was created at the behest of Nestlé, which plans to build a $675 million plant for creamer production on 144 acres at 150th and Northern avenues in Glendale.

The world’s largest food and beverage company is seeking the change because the amount of wastewater that would be generated by the plant is too much for EPCOR to handle.

A Nestlé official said in an email that the legislation would help create a sustainable framework for businesses investing in on-site water management, which will support Arizona’s water infrastructure now and into the future.

“We’ve been working with the local utility for several months and continue to engage with EPCOR in parallel to the SB 1660 process,” a Nestlé spokesperson said in the emailed statement. “Unfortunately, their industrial discharge capacity allocation offered does not sufficiently meet our needs to support the business. All parties involved agreed that this was an effective and efficient supply solution.”

Loquvam said he is “not aware of any statement from EPCOR” indicating the company agrees with the Nestlé plan.

SB 1660 was originally supported by Rauch Fruit Juices, which ran into a similar problem with EPCOR last year. Rauch recently dropped its support of the bill after an agreement was made between EPCOR and the city of Surprise. Rauch is building a plant in the Glendale area that would produce Red Bull energy drinks.

“We figured it out,” Loquvam said of the agreement with Rauch. “And I have no doubt that we can do something similar with Nestlé, or anyone else that needs it.”

Organizations, including the Water Utilities Association of Arizona, say Nestlé should follow Rauch’s lead.

“Nestlé should work with EPCOR to resolve these contractual issues,” said Dean Miller, the contract lobbyist for the Water Utilities Association of Arizona. “This should be happening at the negotiating table, not at opening statutes.”

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The bill’s opponents argue that once the doors open for one facility, more manufacturers will want to treat their own effluent instead of letting water providers do the job.

The industrial sector’s demand for water more than doubled from 1985 to 2017, according to the Arizona Department of Water Resources.

“There’s a lot of people that want to do this,” said Spencer Kamps, vice president of legislative affairs for the Home Builders Association of Central Arizona. “So if everybody starts piecemealing off their own wastewater, the whole system starts getting very discombobulated quickly, and there’s an issue of fairness as well.”

Forty-one percent of Arizona’s water supply comes from groundwater, according to the Kyl Center for Water Policy at Arizona State University.

Opponents have also raised concerns about water quality. The latest version of the bill states that facilities must “meet or exceed aquifer water quality standards before discharge” as determined by the state Department of Environmental Quality (DEQ). But Phoenix officials worry the facilities will not be properly regulated.

“We’re not confident that DEQ is going to manage those permits in a way that the water gets put back into the aquifer, which by the way, under state law is designated as a drinking water aquifer. We’re uncomfortable with that,” said Cynthia Campbell, water resources management adviser for Phoenix.

Campbell said that if the bill passed, it would, in essence, allow private industry to compete with the public for drinking water.

“We’re very concerned about the potential proliferation of additional holes in the aquifer at a time when it is very likely that municipal groundwater pumping is going to increase in the face of Colorado River shortage because that is simply the only place we have left to go for water,” she said. “And so now you’ve got private industry with a profit motive. That’s why they’re doing this. Competing with the public for drinking water.”

She called the approach “do-it-yourself wastewater treatment” instead of using the utility in their service area.

The planned 630,000-square-foot Nestlé factory is expected to be operational in 2024. When the company announced its plans for the creamer facility in March 2022, it said in a press release that Arizona provides an “ideal environment” for Nestlé’s operations by reducing transportation times and emissions.

The legislation would create a new category in the law of “special effluent” for wastewater treated at an industrial site. Effluent is liquid waste or sewage in water from housing, commercial or industrial developments, utilities and cities. After treatment, the water is recharged into the ground and can be used for future development.

Wastewater treatment facilities like the one proposed by Nestlé cost between $20 million and $30 million to build. The company has said it will not use state funding to pay for construction.

The bill passed the Senate on March 21 and is currently being considered in the House. According to the recent bill status, fifty-five individuals and organizations favor the bill, and 295 are against it. Among the organizations against the bill is EPCOR.

“If you have Nestlé doing it (treating its own wastewater), and a couple of other companies who are doing it, all of a sudden they’re … dramatically increasing how much groundwater they pump,” Loquvam said. “All of the people who lived in this area, all of the small businesses that relied on this aquifer and continue to rely on it for the long-term viability of their existence, they’re all left with the consequences. And so I just don’t see the cost benefit of this bill benefiting us as a whole.”

Kerr expressed confidence the legislation will pass.

“This is the best aquifer management program the state will have,” Kerr said. “I’m very excited about that because not only are the businesses going to recharge the aquifer that’s beneath them, and then they will be able to recover that water, but leaving 25% in that aquifer.”