By Jerry Harkavy,Associated Press Writer

FRYEBURG – In an environmentally conscious state with a lackluster economy, Poland Spring has been a decades-long delight: a nonpolluting industry that relies on a renewable resource to provide hundreds of good-paying jobs in small towns where they are often hard to come by.

The clear plastic bottle of spring water with the dark green label has become as much a part of Maine’s image as a pair of L.L. Bean boots. The company’s longtime slogan says it all: “Poland Spring. What it means to be from Maine.”

But the love affair is showing signs of strain.

Poland Spring is a target of a statewide citizen initiative campaign to impose what is thought to be a first-in-the-nation tax on the water it draws from Maine’s underground aquifers. At the same time, the company’s expansion plans are running into local opposition from residents who are annoyed by tanker truck traffic and worry about their groundwater drying up.

The initiative campaign has prompted Poland Spring to suspend plans to add a third Maine bottling plant to its existing facilities in Poland and Hollis.

Its parent company has even warned that approval of the 20-cent-per-gallon tax could force Poland Spring to abandon the state.

“If this tax ever were to be approved, we would have to seriously re-evaluate our ability to continue to do business in Maine,” said Kim Jeffery, president of Nestle Waters North America, a unit of Swiss giant Nestle SA, the world’s biggest food and beverage company.

It’s a surprising turn of events for one of the state’s best-known economic successes, a business that was mired in bankruptcy when it was acquired by Perrier 25 years ago and grew in line with America’s thirst for bottled water. In the past five years alone, annual sales soared from $406 million to $624 million.

More than 50,000 Mainers have signed petitions in hopes of forcing a referendum on the proposed extraction fee on water that businesses draw from the state’s aquifers for resale in containers. Campaign organizers say a handful of smaller bottlers would be hit by the tax, but Poland Spring would bear the biggest impact.

The campaign, dubbed H2O for ME, was the brainchild of Jim Wilfong, a former legislator who served in the Small Business Administration during the Clinton administration, specializing in international trade.

Wilfong views access to clean, fresh water, as an emerging issue for the 21st century, and he foresees the day in which it becomes a life-giving commodity that’s delivered by supertankers and railroad cars to water-starved areas.

“Who’s going to own it, who’s going to control it, is it going to be sustainable? Those are the real issues,” Wilfong said.

Revenues from the tax would flow into a Maine Water Dividend Trust, modeled after an Alaska fund that banks payments from oil producers. A small portion of the proceeds would be used to safeguard aquifers and promote the sustainability of water resources; much of the rest would be earmarked for small business development. The trust’s earnings would, like the Alaska fund, be disbursed to state taxpayers as annual dividends.

With Poland Spring drawing nearly 500 million gallons of water per year from its wells in Maine, the tax would amount to close to $100 million, a cost the company said would exceed its annual profits.

Citing fierce competition in the beverage business – Poland Spring ranks third behind PepsiCo’s Aquafina and Coca Cola’s Dasani – Nestle Waters said the tax would put the brand at a competitive disadvantage compared to bottlers in other states.

Whether the petition campaign has collected enough valid signatures will be determined by state election officials by early next year. H2O for ME collected only a few hundred more than the required 50,519, and some signatures may be ruled invalid.

If the petition campaign succeeds, the question would go to referendum in November 2006.

In Maine, Poland Spring has 550 employees, whose pay scales range from $14 to $25 an hour, according to Tom Brennan, a natural resource manager at the company.

“The manufacturing sector in Maine is disappearing,” Brennan said. “This is a clean industry, based on a renewable natural resource. It provides good jobs with good pay and good benefits. I don’t know why people would take issue with it.”

The H2O for ME campaign comes as Poland Spring has been expanding its operations in Maine. The company has been drawing from new sources of water and opened its Hollis plant in 2001.

Fryeburg and Kingfield had been named as prospective sites for a third bottling facility, with Kingfield now seen as the leading candidate for the $100 million project.

In addition to Poland Spring and Hollis, the company draws from wells in Fryeburg, Pierce Pond Township and St. Albans, hauling water by tanker truck to plants up to 100 miles away. It is seeking to develop new pumping stations in Dallas Plantation and Fryeburg.

But a group of Fryeburg residents has been battling the project, citing the impact of up to 50 tanker trucks a day loading up on busy Route 302 from a 4-mile pipeline that would run underground from neighboring Denmark. Critics also expressed uncertainty about the effect on the local aquifer and suggested that the New Hampshire border town should be striking a harder bargain with the bottler.

The Fryeburg Planning Board last month approved the $2.1 million project, but critics have vowed to appeal the decision.

Asserting that the campaign against the Fryeburg pumping station and the statewide referendum effort “were feeding off one another,” Brennan said he was “surprised at the vehemence of some of the opposition.”

But Wilfong, who admires Poland Spring as “a brilliant marketer,” denied that the bottler is a specific target of the referendum campaign. “We don’t have it in for anybody. We just think this is something that’s fair and ought to be done,” he said.

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