Minnesota water bottle plant receiving millions in subsidies

Photo by Justin Sullivan/Getty Images.

A new Niagara Bottling plant in the Twin Cities metro is receiving millions of dollars in state and local subsidies to bottle and sell Minnesota water.

A deal reached between the company, the state Department of Employment and Economic Development and the city of Elko New Market will give Niagara Bottling more than $4.3 million in waived fees, forgivable loans and tax rebates.

The plant will require an estimated 13 million gallons of water per month — more than the entire city of Elko New Market uses — leading some opponents to question why state and local government are giving incentives to extract a valuable resource, given the uncertainties of climate change and the future of water quality and quantity.

The plant is under construction at an industrial park in Elko New Market, about 35 miles south of Minneapolis.

The first phase of the plant’s operation is expected to create 59 jobs, with pay ranging from $17.24 per hour to salaried positions earning upwards of $200,000 per year, according to data from the city of Elko New Market.

Niagara Bottling is a private California-based company that packages water for brands like Walmart and Sam’s Club. Over the last decade, the company has received more than $12 million in subsidies from various states, according to data from Good Jobs First, which tracks corporate tax breaks. The company didn’t respond to written questions.

Elko New Market City Administrator Thomas Terry said the Niagara Bottling plant checks many of the boxes the city looks for when handing out economic development deals: It will create jobs; attract more development to the previously vacant industrial park; and diversify the city’s tax base, which he said is overly reliant on residential property taxes.

The state offered Niagara Bottling a $405,000 Minnesota Investment Fund loan that can be forgiven if the project meets capital investment and job creation targets. The plant also qualifies for a combined $800,000 in grants and tax rebates through the Job Creation Fund.

Niagara Bottling will also save more than $3 million in local water and sewer connection fees.

A water user of Niagara’s size would typically pay around $3.3 million in water connection fees, but the city instead decided to charge the company fees similar to what a non-water intensive plant, like a warehouse, would pay: around $315,000.

The company is also paying a discounted water usage rate, though it isn’t receiving a discount on the base rate, which is calculated based on the plant’s size and expected usage. Niagara Bottling will pay an estimated monthly base rate of $54,000 per month — equivalent to that of 1,551 single-family homes — plus a usage fee of $1.52 per thousand gallons of water

An Elko New Market household typically pays the base rate of $35.02 plus a usage fee of $2.95 per thousand gallons, Terry said.

Some residents aren’t sure why a company that sells water should be able to purchase it from the city at a discounted rate — especially because the increased water extraction could disturb the wells of nearby residents, forcing the city to pay for treatment.

As part of the permitting process, the Department of Natural Resources and local officials stress-tested the city’s water system, pumping water from the wells at maximum capacity to study the potential effects of increased usage on the system. During the tests, some residents reported cloudy water and increased manganese levels. (At high levels, manganese can cause problems with memory, attention and motor skills among children and adults; infants can develop behavioral and learning problems, according to the Minnesota Department of Health .)

Carrie Jennings, director of Minnesota water conservation nonprofit Freshwater, said she knew of 22 households impacted by the well tests.

Niagara Bottling will bottle and sell water from the Prairie du Chien-Jordan Aquifer, which supplies drinking water to parts of the Twin Cities metro.

“The minute I heard that they were taking water out of our aquifer, it was just sort of a cringe moment for me,” said Janelle Kunzia, an Elko New Market resident who has organized opponents of the new plant.

To accommodate the plant’s water demands, the city of Elko New Market requested a new water allocation permit from the DNR, more than doubling the city’s water pumping capacity, from 135 million gallons to 365 million gallons per year.

The Twin Cities metro area has become increasingly reliant on groundwater since it surpassed surface water — namely the Mississippi River — as the primary source of water in the region in the 1970s. Today, some areas are facing dropping aquifer levels and pollution from chemicals like PFAS , manufactured by 3M in the east metro.

The conflict over the Niagara Bottling plant reminds some observers of a 2019 proposal to ship Minnesota groundwater from the Mt. Simon-Hinckley aquifer to the southwestern United States, which is facing a water shortage. DNR officials quickly shot down the proposal, citing state restrictions on the use of water from the Mt. Simon-Hinckley aquifer.

“If you bottle (water) and take it out of the region, then it’s gone. It’s extracted and gone,” Jennings said.

Rep. Rick Hansen, DFL-South Saint Paul, said climate change and growing political power in water-needy states means Minnesota will need to continue protecting its groundwater.

“These issues of water transfer, whether it’s by a train or by millions of plastic bottles, are going to continue to grow in concern,” Hansen said.

The added water usage means the city of Elko New Market needs to pay for a new water tower and well. A growing population means the city would need to add the water infrastructure regardless, Terry said, but the plant’s construction has sped up the timeline.

High water bills have long been a complaint of Elko New Market residents, and Terry said the revenue from the Niagara Bottling plant could help moderate residents’ water bills.

“That kind of revenue on the system helps reduce the financial risk to the fund, and thereby the risk to our ratepayers,” Terry said.

The water bottling industry, long criticized by environmentalists for fueling the growth of plastics pollution, grew by 73% over the past decade, according to a 2023 report from the United Nations University. The U.S. is the largest buyer of bottled water, followed by China.

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