For decades, Nestlé has been collecting tens of millions of gallons of water each year out of the mountains of Southern California, then bottling it as “Arrowhead Mountain Spring Water,” despite lacking the proper rights to it. This illegal water collection has generated millions of dollars in bottled water sales each year for the company.
Regulators at the State Water Resources Control Board, one of six branches of the California Environmental Protection Agency, conducted a 20-month investigation after receiving several water rights complaints and an online petition against Nestlé starting in April 2015. They subsequently determined the Swiss food giant has been taking far more water from the San Bernardino National Forest than it had the rights to, publishing their detailed findings in a 37-page investigation report on their website.
Nestlé was notified of the allegations by the State Water Board, which said the company “must limit its appropriative diversion and use of water to 26 (acre-feet per year) unless it has evidence of valid water rights to water within the permitting authority of the State Water Board and/or evidence documenting the extent of additional water claimed to be percolating groundwater.”
That 26 acre-feet annum would represent about one-fourth of the water piped from the company’s Arrowhead Springs source in 2016, and less than 15 percent of the average amount of water that has been extracted yearly for decades.
The company reported drawing about 32 million gallons of water — or about 100 acre-feet — from the national forest in 2016. According to the Board’s report, this puts Nestlé way over its licensed quota. The Board states that “current operations do not appear to be supported by rights to the diversion or use of water exceeding 26 acre-feet per annum.”
That 26 acre-feet per annum equates to an 8.5 million gallon annual cap, meaning the company has been collecting an excess of 23.5 million gallons over the authorized limit each year.
Nestlé Waters North America has insisted it has valid rights to continue its bottled water operation in the national forest.
The company collects water from the national forest north of San Bernardino using a system of 10 gravity-fed boreholes and two water tunnels drilled deep into the mountainside. The water flows downhill through a stainless steel pipeline to a roadside tank, where it is pumped into tanker trucks and hauled to a bottling plant about 30 miles away.
In 2015, as the drought continued tightening its chokehold on the state, activists filed a lawsuit against the U.S. Forest Service, arguing the agency had allowed Nestlé to illegally extract water out of the mountains. A March 2015 Desert Sun investigation revealed that the U.S. Forest Service had been allowing the company to continue drawing water from the national forest using a permit that had expired in 1988 — nearly three decades ago.
The Forest Service subsequently announced a review of the permit and in 2016 released a proposal to grant the company a new five-year permit.
Nestlé’s claim to the water in the mountains of Southern California originates all the way back to 1865, when a man built a health spa in the area. Those rights were transferred to different organizations for decades until they ultimately fell into the hands of the bottled water company.
Amanda Frye, an activist from Redlands, California, was among the first to raise concerns about Nestlé’s bottling operation. Frye said she unearthed 150-year-old documents first laying out the water rights and said that her research indicated Nestlé only had rights to water at the base of the mountain, even though the company was drawing from higher elevations.
The case involves documents going back more than 150 years and legal distinctions between surface water and groundwater, which fall under separate water-rights systems, as well as complex distinctions between different categories of groundwater.
The company told authorities its ownership of spring water in Strawberry Canyon can be traced back to a possessory claim filed in 1865 by David Noble Smith — who first built a simple “infirmary” hotel where people eased their ailments at the hot springs. Nestlé also pointed to a subsequent U.S. patent obtained by Smith and recorded in 1882. It said the water rights were upheld in court in 1931 and have not been legally challenged since.
Frye, however, studied the historical documents cited by Nestlé and told state regulators she thought the company didn’t have valid rights. She said the 1865 claim cited by the company staked out 160 acres near the base of the mountains around the future hotel site, yet Nestlé has been drawing water from locations about 2.5 miles away and much higher in the mountains, at an elevation of around 5,000 feet.
In a letter to Nestlé Waters North America, Victor Vasquez, a senior water resource control engineer in the board’s water rights division, said the Division of Water Rights staff concluded, based on their review of available information, that Nestlé’s claim to a water right originating from the 1865 claim “is limited to riparian uses and is not valid for Nestlé’s current appropriative diversion and use of water from the San Bernardino National Forest.”
Vasquez said in the letter that over the period from 1947 to 2015, Nestlé’s reported water extractions from the San Bernardino National Forest have averaged 192 acre-feet, or 62.6 million gallons, per year.
He wrote that Nestlé could claim up to 26 acre-feet of water per year for diversions from Indian Springs. The staff identified that water right “based on 1912 plans to bottle water in Los Angeles.”
There are also other complexities in the regulators’ findings. Vasquez said Nestlé “likely has an appropriative groundwater claim to an unknown amount of developed percolating groundwater that would not have contributed to surface flow in a natural channel elsewhere in the watershed.”
He was referring to a distinction in state law between “percolating groundwater” — or groundwater that is filtering down to an aquifer and is not subject to the water board’s legal authority — and groundwater that is flowing “in a known and definite channel” and does fall under the board’s authority.
The battle over Nestlé’s operation in the San Bernardino Mountains is one of several fights that opponents have waged across the country — in states including Oregon, Michigan, and Pennsylvania — to try to block the company from siphoning water from springs and aquifers.
Nestlé Waters North America issued the following response to the Board’s report:
“We are pleased that the report released by the State Water Resources Control Board (SWRCB) validates Nestlé Waters’ chain of title and reaffirms that we hold valid, pre-1914 surface water rights and groundwater rights to a significant amount of the water in Strawberry Canyon.
“We are pleased that they have confirmed we have a right to these “authorized diversions,” and we will continue to operate lawfully according to these existing rights and will comply fully with California law. We look forward to cooperating with the SWRCB during the review process and to providing the necessary documents to supplement the SWRCB’s report, including producing information requested from over a century ago, to the extent that it is available.
“Arrowhead Brand Mountain Spring Water has been sustainably sourced from the springs in what is now the San Bernardino National Forest for more than 120 years.
“We take our responsibility as a California water steward seriously, and our successful operations for more than a century point to our commitment to long-term sustainability.”
Nestlé’s attorneys have made their case in detailed exchanges with investigators at the State Water Board. Emails and letters released by the board earlier this year show the discussions have focused on subjects including the Food and Drug Administration (FDA)’s requirements for bottled water labeled as “spring water,” and distinctions between surface water and groundwater.
With surface water, California and other western states use a “first-in-time, first-in-right” system in which the first party to use water from a stream or river obtains a priority right. With groundwater, in contrast, California law says landowners have a right to pump water from beneath their property, and generally no one holds priority rights.
Nestlé said in a document submitted to federal and state officials that the historical basis of its rights “includes both surface water and subterranean water.”
Larry Lawrence, the company’s natural resources manager in California, said in a statement back in August of 2017 that the company had responded to every request from state regulators and that the “chain of title” of the company’s water rights is well documented.
“These rights have remained unchallenged for nearly a century,” Lawrence said at the time.
Responding to the regulators’ findings, activists with the groups involved in the lawsuit called for the Forest Service to shut down Nestlé’s water pipeline.
The controversy over Nestlé’s operation in the San Bernardino Mountains is unique in that it’s located on national forest land. But it’s one of many disputes that have sprung up across the country in places where the company is bottling water or has sought to bottle more water.
Last year, voters in Oregon blocked Nestlé’s plans to tap water from a spring in the Columbia River Gorge, approving a ballot measure that bans commercial water bottling in Hood River County. Nestlé also dropped plans last year to extract spring water in Eldred Township, Pennsylvania, withdrawing a zoning permit application after local residents protested and filed a lawsuit. In Michigan, where lead-poisoned Flint residents still don’t have clean water in their faucets, Nestlé opponents have also been fighting the company’s plans to increase pumping.
As the company has run into opposition in those locations, it has continued searching for other spring sites and expanding elsewhere. Last year the company announced plans to open a bottling plant in Phoenix, Arizona.
Demand for bottled water continues to grow in the United States. Last year, the Beverage Marketing Corporation reported that the U.S. bottled water market reached a milestone, with Americans consuming more bottled water than carbonated soft drinks — and bringing in nearly $16 billion in wholesale revenues.