McCLOUD, Calif. (Legal Newsline)-The largest distributor of bottled water has cancelled its contract with the McCloud Community Services District to build a manufacturing plant on the banks of the pristine McCloud River.

In a letter sent via overnight courier to the city on Friday, Nestle's Executive Vice President and General Counsel Mark Evans wrote that recent changes in the scope and size of the project has led to the decision in the hopes that both sides can "start with a clean slate and build an agreement that reflects the current circumstances.

"We believe that is best that we step out of the existing contract and start a new," Evans wrote.

The news follows a threat by Attorney General Jerry Brown to sue the bottled water company because of its potential environmental impact on the McCloud River, the amount of fossil fuels required to produce and ship plastic bottles, and the amount of water the existing contract allowed the company to remove from the river each year.

In August, Brown told the Siskiyou County Planning Department that its environmental review had "serious deficiencies" that require a revision of the contract.

Evans touted Nestle's response to these concerns in its letter announcing the cancellation of the existing contract, including a proposal to scale back the size of the facility and amount of water usage. The company, according to the letter, also said it has offered "significant reductions on the use of groundwater wells" and commission a two-year study with independent scientists to study the effect of the facility.

Environmental organizations that have opposed the project praised Brown for his efforts in forcing the cancellation of the project.

"Thanks to the California attorney general's office," Wenonah Hauter, executive director of Food & Water Watch, said, "the people of McCloud have been given another chance to protect their water from exploitation by Nestle's water barons."

Nestle officials said the cancellation does not end its interest in the project, which at one point included plans to draw nearly a half a billion gallons of water from the McCloud River.

"We remain very excited about our project proposal in McCloud and would like to commence discussions with the District on a new contract," the letter states. "We see the formal cancellation not as an end to the relationship but as the beginning of a new phase of that relationship."

The McCloud River, at the base of Mount Shasta, is unique in that it derives most of its water from springs rather than snowmelt or rainfall. Residents of Siskiyou County, which is about 100 miles north of Sacramento, Calif., often tout the water as the purest in the state.

Brown defended his interest in the negotiations in an August interview with Legal Newsline.

"We take our pristine waters and cart them off to Maine or someplace," Brown said. "It's like carrying coal to New Castle, or ice to Alaska. It represents a level of waste that, at least, ought to be acknowledged. Hopefully, consumers will find more efficient ways to hydrate."