Nestlé SA said Monday it is scaling back plans in Northern California to build what would have been the country's largest water-bottling...

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SACRAMENTO, Calif. — Nestlé SA said Monday it is scaling back plans in Northern California to build what would have been the country’s largest water-bottling plant.

The announcement by Nestlé Waters North America comes after years of opposition by environmentalists and a group of residents in the rural town of McCloud.

With soaring fuel and transportation costs, building a 1 million-square-foot facility at the base of Mount Shasta no longer makes economic sense, said David Palais, Nestlé’s Northern California natural-resource manager.

The company also has built a plant in Denver and expanded other facilities in the West and those expansions make a large plant in California less necessary, the company said.

Nestlé signed a contract in 2003 with the McCloud Community Services District to pump up to 521 million gallons of water a year. In exchange, the Swiss food-and-drink company agreed to pay $250,000 to $350,000 a year to McCloud, a town about 200 miles north of Sacramento.

Palais said the company now will seek permission to pump a fraction of that water and build a smaller plant of about 350,000 square feet.

Critics of the plant welcomed Nestlé’s announcement.