Is Maine's proposed extraction tax the latest attempt to squeeze bottled water?
- The Maine legislature is considering whether to enact a 12-cents-per-gallon fee on any company extracting more than 1.5 million gallons of water from underground sources for commercial bottling. Of the estimated $100 million or more in potential revenue, 65% would go to a municipal broadband fund, college grants and possibly early childhood education, according to the Lewiston Sun Journal.
- The sponsor, Democrat Lori Gramlich, said the bill is not targeted at Nestlé-owned Poland Spring. However, the newspaper noted it would apply to the nearly billion gallons of Maine groundwater the Swiss company extracts each year from 10 different sites.
- Nestlé and business groups oppose the legislation, saying it could cut sales, limit jobs and harm Maine's economy. Jonathan Block, an attorney for the company, said any new tax should be fair and equitable, and this one doesn't meet that test. "By way of example, if we consider another renewable natural resource, such as wood and applied a similar concept, we would be proposing to tax wood if it is used for, let’s say toothpicks, but not tax it if it is used for any other use, such as paper, furniture and lumber," he told legislators.
If Maine lawmakers adopt a water extraction tax, it would be the only state to have one — which is another reason some oppose it. Alaska has a 35% oil and gas production tax based on annual net value. In fiscal 2018, oil production generated $2.4 billion for that state, comprising about 80% of unrestricted general fund revenue.
Gramlich, the bill's sponsor, said Maine needs the money, and Nestlé pays nothing for the water now. But Robert Marvinney, the Maine state geologist, told legislators groundwater is renewable and annually recharged, and the 960 million gallons Poland Spring extracted in 2018 was "a drop in the bucket." One Maine blueberry producer uses more than a billion gallons to irrigate each summer, he said.
It's unclear whether the bill has any real chance of passage, but as of April 8, it hadn't seen any further action following a public hearing in March. Since then, the legislation was referred to state House and Senate Committees on Taxation.
Nestlé's water business — the largest bottled water company in the U.S. — is being squeezed from other directions as well. The company's permit to tap millions of gallons for its Arrowhead brand from the San Bernardino National Forest in Southern California was extended for three years this past summer, but only if sufficient amounts of water are available to meet natural resource needs due to intermittent drought.
Nestlé also faces renewed legal action over its spring water labeling claims. A 2017 class-action lawsuit called its Poland Spring brand "a colossal fraud" because reportedly comes from groundwater and not an actual spring, but it was dismissed last year. However, the same judge allowed an amended complaint to go forward last month, according to The New York Times. A similar 2003 complaint ended with Nestlé forking over $10 million to charity, The Washington Post reported.
The company, which staunchly defends its products, said Poland Spring meets the U.S. Food and Drug Administration's identity standard for spring water. The agency states in its requirements for bottled water that "the name of water derived from an underground formation from which water flows naturally to the surface of the earth may be 'spring water.' " The water can be collected either at the spring or through a bore hole tapping the underground formation feeding the spring, FDA rules say.
Controversies such as the proposed extraction tax and labeling lawsuits are likely to heat up even more since bottled water has previously eclipsed carbonated soft drinks as the most popular beverage in the country. A 2017 survey found almost two-third of adults put still or sparkling water on their list of most preferred beverages.
Consumers are paying a lot of money for these products. The International Bottled Water Association said $18 billion is spent on bottled water annually in the U.S. — with those dollars flowing to Nestlé's 10 bottled water brands, Pepsi's Aquafina, Coca-Cola's Dasani, and Danone's Evian. With so much money at stake — and with state budget crunches, limited natural resources and shifting plastic waste policies — the future could be an increasingly uncertain one for Poland Spring and other big bottled water brands.
- Lewiston Sun Journal Poland Spring might get soaked with new $100 million state tax