Busted Bottles

Portland Bottling faces allegations it ripped off ratepayers while championing a measure to lower water bills.

BOTTLE BILL: City officials say Portland Bottling Co. illegally drained 21 million gallons of water over three years at its plant. "We work very hard to comply with all city rules and regulations," says company president Tom Keenan.

No corporation had more at stake in the May ballot measure over control of the city's water than Portland Bottling Co. 

The soft-drink bottler contributed $100,000—more than any other donor—to the failed measure, which would have wrested control of Portland's water and sewer utilities away from City Hall.  

The company claimed it wanted to rein in rising water bills and stop the misspending of ratepayer funds. "The mayor has called us political terrorists," Portland Bottling president Tom Keenan said last July. "I say we are political liberators."


Bureau of Environmental Services investigators last November discovered evidence that Portland Bottling had, over a three-year period, illegally diverted 21 million gallons of water—enough to fill 32 Olympic-sized swimming pools. The diversion meant wastewater wasn't run through a meter that calculates Portland Bottling's sewer bills.

Records show the city alleges the practice may have been going on for five years, despite the company's claims it had fixed the problem.

On June 19, the bureau sent the company a $307,616 bill for "illicit sewer use" and levied a $142,300 penalty for violating city code. 

City Commissioner Nick Fish, who oversees BES, says the violations and fine are the biggest in the 25 years the bureau has overseen a pre-treatment program for corporate wastewater. "We caught them effectively stealing from other ratepayers," Fish says. "This is the most egregious violation we've ever documented."

City sewer officials have sent the case to the U.S. Environmental Protection Agency, which could pursue criminal charges. 

Portland Bottling says it will challenge the city's penalties. "We 100 percent dispute it," Keenan says. "We think it's politically motivated."

Portland Bottling has long been one of the city's largest industrial water customers, using about 47 million gallons a year to mix and bottle soda pop and energy drinks. A giant 7-Up bottle, since repainted, has stood for more than 70 years as an icon among the blue-collar businesses along Northeast Sandy Boulevard. 

Portland Bottling, like most industrial sites, pays for water piped into its plant and is billed for sewer services based on how much it discharges down the drain.

Documents obtained by WW under Oregon public records law show sewer inspectors in 2007 discovered Portland Bottling was bypassing its wastewater meter by diverting water used to clean bottles down a floor drain. 

The city levied a penalty and told Portland Bottling to fix the problem. The company claimed in 2008 it had done so but couldn't prove it "without requiring a production stop for a significant period of time," according to city records.

Portland Bottling has been among the leading critics of the city's water and sewer rates and spending. In July 2013, that frustration turned into a political revolt after Mayor Charlie Hales called Keenan and other company executives "political terrorists" for even suggesting a ballot measure to create an independent water and sewer utility board.

In August, Portland Bottling gave $25,000 to signature gathering for the ballot measure. The company had the means to finance a campaign: Its largest shareholder is Harry Merlo, former CEO of timber giant Louisiana-Pacific ("Mystery Man Revealed,” WW, Oct. 2, 2013). 

In November, the city opened a new investigation into Portland Bottling. Records say city officials became suspicious when they saw a disparity between how much water was going in to Portland Bottling and how much wastewater they expected the company to send out.

The bureau sent a robotic camera into the city pipes beneath Portland Bottling and discovered evidence that wastewater was still being diverted around the meter.

A bureau inspector told Portland Bottling on Dec. 11 it was violating city code with "illicit connections that bypass the permitted treatment system." Two days later, the company reported a $10,000 donation to the water district ballot measure.

Keenan says Portland Bottling had plugged the drain in 2008, and didn't know the plug had dislodged until city inspectors said so last December. "They have been in our plant inspecting us every year, and all of a sudden, something's not right," Keenan says. "I find that hard to believe."

The bill and penalty sent to Portland Bottling cover only violations that occurred in the past three years. Fish insists the investigation was not politically motivated.

"That's a red herring," says Fish. "While they were funding this campaign, they were in egregious violation of their permits. So there is a deep irony.” 

WWeek 2015

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