Nestlé Fixed For Fierce & Prolonged Confrontation Over Mountain Water

By Mark Gutglueck and Amanda Frye
The Swiss-owned Nestlé Corporation appears to be poised for a battle royale with the State of California, environmentalists and potentially the U.S. Forest Service as well as Arrowhead Springs Hotel property owners over its continuing extraction of more than 54 million gallons of water from the San Bernardino National Forest the California Department of Resources maintains it has no rights to.
Nestlé, which bottles water it takes from Strawberry Canyon at the 5,200-foot elevation level in the San Bernardino Mountains under the Arrowhead Mountain Spring Water brand, today went public with a response disputing the findings of the California Water Resources Control Board issued on December 21, 2017 pertaining to an investigation the state had conducted with regard to Nestlé’s San Bernardino Mountain water use. The state board’s conclusion was Nestlé had asserted it had water rights and was able to marshal evidence that it had the right to divert up to 26 acre-feet of water (8.47 million gallons) per year, while it was actually drafting 192 acre-feet (62.56 million gallons). Thus, the California Water Resources Control Board determined, Nestlé is extracting on a yearly basis 166 acre-feet (54.09 million gallons) of water it does not have a right to take.
Nestlé Waters of North America, Inc., a corporate subsidiary of the Swiss-owned Nestlé Corporation, acquired an expired permit for a pipeline right-of-way to transport water through the San Bernardino National Forest in the San Bernardino Mountains when it bought out Perrier in 1992. Perrier had acquired the permit when it purchased the BCI-Arrowhead Drinking Water Company, formerly called Arrowhead Puritas, in 1987, at which time the permit was yet active. That permit, which expired in 1988, allowed a pipeline across the forest which transported water extracted from a significant below-ground source located in Strawberry Canyon in the San Bernardino Mountains. In 1978, Arrowhead Puritas, had renewed that permit for transporting the harvested water from Strawberry Canyon extracted by means of boreholes and horizontal wells, for ten years. Under that permit, Arrowhead Puritas was allowed to continue that activity, for which it paid the U.S. Government $524 per year, a standard fee for such uses in all National Forests. The Arrowhead Drinking Water Company had assumed water drafting operations from a series of predecessors. That assumption was based on a tangle of asserted water extraction rights, some of which are documented, others of which were presumed upon a dubitable basis, including some of which have no basis in the public record. In 1987, Arrowhead Puritas was purchased by Perrier. In 1988, the water extraction permit expired and was not renewed. Pending a U.S. Forest Service review of the water drafting arrangement, Perrier was allowed to continue to operate in Strawberry Canyon, and continued to pay the $524 per year fee. In 1992, when Nestlé acquired the Arrowhead brand from Perrier, it inherited the Strawberry Canyon operation and continued to pay the $524 annual fee without renewing the permit. In 2015, United States Department of Agriculture Secretary Thomas Vilsack ordered the expired permit review through the National Environmental Policy Act process. The U.S. Forest Service review of the operation has yet to be completed, and Nestlé continues the water extraction in Strawberry Canyon under the expired permit.
A major portion of the water rights Nestlé inherited appear to be based upon prescription, an assertion of rights founded upon custom or long continued use. Such a claim, while recognized under state law, is inapplicable to water or water rights on federal property.
Nestlé’s activity, which was never favored by environmentalists, came under increasing fire as the statewide drought, which first manifested in 2011, advanced. In 2015, environmental groups were gearing up to file a lawsuit claiming the U.S. Forest Service had violated protocols and harmed the ecology of the mountain by allowing Nestlé Waters North America to continue its operations in Strawberry Canyon for 27 years after its permit expired. In the meantime, with the Forest Service initiating its environmental review, Nestlé continued its water extraction, pumping in excess of 62 million gallons of water annually from the San Bernardino Mountains. Environmentalists then lodged protests with the water rights division of the California Water Resources Control Board, alleging Nestlé was diverting water without rights, making unreasonable use of the water it was taking, failing to monitor the amount drawn, making inaccurate reports of the water it was taking, and wreaking environmental damage by its action.
State officials undertook an investigation, which after two years resulted in the conclusions released in the December 21 report. According to the California Department of Water Resources, while Nestlé could lay claim to the right to divert up to 26 acre-feet of water (8.47 million gallons) per year, it was actually drafting and diverting to its corporate use more than seven times the amount of water it is entitled to, quantified at 192 acre-feet (62.56 million gallons). “While Nestlé may be able to claim a valid basis of right to some water in Strawberry Canyon, a significant portion of the water currently diverted by Nestlé appears to be diverted without a valid basis of right,” the California Water Resources Control Board stated, while further asserting that Nestlé’s use of water for Arrowhead bottling “could be unreasonable if it injures public trust resources, such as instream habitat for certain species, in such a way that it outweighs the beneficial use.” The California Water Resources Control Board’s water rights division recommended that Nestlé immediately end its 166 acre-feet (54.09 million gallons) of unauthorized diversions.
Nestlé officials said they would prepare a response, which upon completion was released today.
In that response, Nestlé referenced “citizen complaints concerning Nestlé Waters North America Inc.’s collection of water in Strawberry Canyon in the San Bernardino National Forest,” which sparked the study and its report. “The complaints alleged diversion of water without a valid basis of right, unreasonable use of water, injury to public trust resources, and incorrect or missing reporting,” according to Nestlé’s response. “The report of investigation did not find any basis for the complaints concerning unreasonable use of water and incorrect or missing reporting and deferred any review of injury to public trust resources until the San Bernardino National Forest completes the renewal process for Nestlé Waters North America Inc.’s special use permit. Nestlé Waters North America Inc. disagrees with one or more of the analyses and preliminary conclusions contained in the report.”
Nestlé makes the assertion that its water rights claims have a lineage back to pre-1914 water rights as well as to water rights asserted by one of its corporate predecessors in a 1931 court action, Del Rosa Mutual Water Company v. D.J. Carpenter, et al., referred to as the Del Rosa Judgment, which through an adverse appropriation process, gave water rights reserved for the National Forest to the California Consolidated Waters Company, a now defunct entity, which took water out of the National Forest in the 1920s and 1930s.
Nestlé asserts in its response to the California Water Resources Control Board’s report that it “will demonstrate the quantification of Nestlé Waters Of North America Inc.’s pre-1914 surface water rights was undercounted, that the Del Rosa Judgment is persuasive historical evidence of water use and relative water rights, that the Del Rosa Judgment gave Nestlé Waters Of North America Inc.’s predecessor-in-interest pre-1914 prescriptive rights to the flows in Strawberry Canyon, and that the hydrogeology of Strawberry Canyon supports the conclusion that a significant amount of the water collected by Nestlé Waters Of North America Inc. is percolating groundwater.”
Nestlé makes reference to the “East Twin Creek Watershed,” which refers to the network of tributaries rising in the San Bernardino Mountains essentially north of San Bernardino and proximate to and below what is now Lake Arrowhead.
Noting that the California Water Resources Control Board report of its investigation concludes that Nestlé Waters Of North America Inc. has valid pre-1914 surface water rights by appropriation to 26 acre-feet per year from Strawberry Canyon, Nestlé asserts that its corporate predecessors established rights to draw water further down the mountain at the approximate 2,200-foot elevation level. Those rights related to bottling operations affiliated with various companies, including ones based in Los Angeles as well as one associated with the Arrowhead Springs Resort.
Nestlé propounds that “based upon additional historical information we have located, Nestlé Waters Of North America Inc. believes that both the LA Plant and the Old Arrowhead Factory adjacent to the Arrowhead Springs Hotel were appropriating additional flows prior to 1914 from the tributaries of East Twin Creek, which were not accounted for in the California Water Resources Control Board report and should be added to the total acre-feet per year calculated by the California Water Resources Control Board. In addition, the Arrowhead Hot Springs Company had entered into a 10-year contract in 1909 with a third party for the bulk delivery of spring water from Indian Springs. The additional volumes from each of these activities necessarily increases the total pre-1914 water rights held by Nestlé Waters Of North America Inc. today.”
Nestlé further asserts that the drawing of water at the lower level, where the Arrowhead Hot Springs Hotel was located, entitled Nestlé’s predecessor’s in interest to water further up the mountain, at the 5,100 foot elevation level in Strawberry Canyon because, at one point prior to the formation of the National Forest, water from Strawberry Canyon was being used by the hotel. “Notices of Appropriation were filed by B.F. Coulter, President of Arrowhead Hot Springs Hotel Company, on May 9, 1887, ‘to the water flowing or to flow in this Strawberry Canyon’ which will be ‘conveyed from its point of diversion through a flume twelve by twelve inches for the first 30-40 feet and thence by iron pipe diameter 10 inches to seven inches diameter at the point of use,” Nestlé asserts.
Nestlé maintains that in 1912, the Arrowhead Hot Springs Company undertook to construct a spring water bottling plant, on a parcel of land adjacent to the Arrowhead Springs Hotel. Nestlé further notes that the spring sources for that bottling plant were located on land not owned by the Arrowhead Hot Springs Company, known as Indian Springs, which is located in the San Bernardino National Forest at the approximate 2,200 foot elevation, and Strawberry Springs.
This is problematic for Nestlé in that a finding of fact in a 1913 lawsuit, Arrowhead Hot Springs Company v. Arrowhead Cold Springs Company, demonstrates through legal description that all water for bottling was from within property boundaries.
Nestlé also marshals evidence in the form of a letter written by Byron Waters, a member of the California Assembly representing San Bernardino County in the 1870s, the founder and organizer, in 1881, of the Farmers Exchange Bank of San Bernardino, and one of the most active attorneys in the San Bernardino District throughout a law career that lasted nearly 60 years, from his admission to the bar in 1871 until 1930. Waters was at one time the legal counsel for the Arrowhead Springs Corporation. In a letter dated February 14, 1929, Waters asserted that a tunnel used by his client to convey water was constructed by his client’s predecessor around 1899.
It is unclear whether Waters was referencing a tunnel and/or boreholes and horizontal wells dug into the mountain or a flume conveying water from Coldwater Creek.
In 1929, the California Consolidated Waters Company was formed to merge Los Angeles’ three largest water bottlers and distributors of “Arrowhead Water,” “Puritas Water” and “Liquid Steam.” The property, bottling operations, water distribution and administration of Arrowhead Springs Company, Puritas, and the water bottling division of Merchants Ice and Storage were all administered by California Consolidated Waters Company. Soon after, California Consolidated Waters, without having obtained any authorization from the U.S. Forest Service, put in place tunnels, boreholes and horizontal wells at the higher elevation of 5,200 feet at the headwaters to Strawberry Creek in Strawberry Canyon. Nevertheless, the Arrowhead Springs Company at one point gave notice in one agreement that it had no water rights above Section 12, meaning, essentially, that any water rights in Strawberry Canyon did not descend from it.
In its response to the California Water Resources Control Board’s December 21 report, Nestlé asserts that Nestlé’s corporate predecessors utilized a substantial amount of water from “Coldwater Canyon (sometimes referred to as “Cold Water” Canyon) for bottling and distribution purposes. Although Coldwater Canyon was referenced, the spring water actually came from Indian Springs, which is located immediately west of Coldwater Canyon.”
The Sentinel’s examination of available document from this era shows the 1909 pipeline head was described via legal description as being on Arrowhead Springs Property in Coldwater Canyon, which was repeatedly confirmed in testimony during a 1910 lawsuit.
Central to Nestlé’s assertion of water rights is the Del Rosa Judgment. “The case of Del Rosa Mutual Water Company v. D.J. Carpenter, et al., (1931) is persuasive evidence of historical water use and the relative water rights in the East Twin Creek watershed,” Nestlé asserts. “Del Rosa was an adjudication of all the water rights in the East Twin Creek watershed, including all of the tributaries, above Del Rosa Mutual Water Company’s point of diversion. The California Water Resources Control Board investigation report states that because the California Water Resources Control Board has ‘concurrent jurisdiction over water,’ the outcome of this judicial proceeding is not binding on the California Water Resources Control Board and it may draw its own, different conclusions. However, the California Court of Appeal in Pleasant Valley Canal Co. v. Borror (61 Cal.App.4th 742, 778 (1998)), in holding that a trial court judgment can be ‘the best available evidence of . . . relative water rights,’ suggests that the California Water Resources Control Board should defer to these prior judicial findings of fact in cases such as Del Rosa. The Del Rosa Judgment expressly found all of the required elements of a prescriptive right with a pre-1914 priority date. Under California law, prescriptive water rights (i.e., water rights acquired by adverse possession of someone else’s water right) permit a private party to acquire the water rights of another private party.”
Neither U.S. Forest Service land nor reserved rights were ever mentioned in the Del Rosa Lawsuit. Adverse possession is not applicable to federal lands. Of note is that in the Del Rosa lawsuit, Arrowhead Springs Corp and California Consolidated Water stated they had no previous water rights.
In contrast to the California Water Resources Control Board’s finding that Nestlé/Arrowhead is entitled to withdraw 26 acre-feet of water (8.47 million gallons) of water annually from the San Bernardino Mountains, Nestlé asserts it has rights to ten times that much, at 271 acre-feet (88,306,266 gallons) of water per year, consisting of 58.2 acre-feet of pre-1914 appropriative rights from normal pre-development flows from Strawberry Creek and Indian Springs, another 86.8 in prescriptive rights from normal pre-development flows from Strawberry Creek and Indian Springs, along with 126 acre-feet of groundwater rights to percolating groundwater from Strawberry Canyon.
In conclusion, Nestlé asserts, “Based on the volume of pre-1914 water rights affirmed by the California Water Resources Control Board’s investigation report and the additional pre-1914 volumes identified by Nestlé Waters North America, Inc. the additional water acquired by the California Consolidated Waters Company pursuant to the Del Rosa Judgment, and the right to withdraw groundwater from Nestlé Waters North America, Inc.’s spring sites in an unadjudicated basin, Nestlé Waters North America, Inc. is not making any unauthorized diversions from Strawberry Canyon.”
Where things will proceed from this point – with the California Water Resources Control Board saying Nestlé is entitled to no more than 26 acre-feet of water from the San Bernardino Mountains, Nestlé drafting 192 acre-feet and claiming it is actually entitled to 271 acre-feet – depends on how spiritedly the California Water Resources Control Board and Nestlé will adhere to their conflicting contentions. Perhaps the most powerful player in the matter is the U.S. Government, in the form of the U.S. Forest Service, which for almost nine decades has indulged Nestlé and its corporate predecessors-in-interest in removing substantial amounts of water out of the National Forest for commercial purposes. Since 1988 it has held off on carrying out the examination for the environmental certification for the renewal of the Strawberry Canyon water extraction permit. Drought and other degradations of the San Bernardino National Forest have created a situation in which the continuing largesse toward Nestlé – a foreign-owned corporation exploiting a precious national resource for profit – has created a burgeoning controversy.
Several elements of Nestlé’s claims are open to challenge. The Coulter water right appropriation Nestlé referenced is applicable to the Arrowhead Springs Property and not the water bottler.
Contract water agreements do not equate to water rights by a third party. Federal reserve rights are fully applicable to all federally-owned property, and appropriation through adverse possession by the assertion of prescriptive rights is not applicable to U.S. Forest lands.
A legalistic rallying point for environmentalists opposing Nestlé’s continuing diversion of water from Strawberry Canyon is the consideration that Nestlé has conceded that much of the historic water use it is citing as the basis for its water rights consisted of extraction not in Strawberry Canyon but at a much lower elevation level, at Indian Springs and in Coldwater Canyon. Neither Nestlé nor any of its corporate predecessors in interest over the last 30 years has utilized those sources, and thus, the environmentalists are contending, those prescriptive rights to that water, if indeed they ever existed, have been abandoned, and Nestlé cannot assert those rights further up the Mountain at the 5,200-foot elevation level.
Today, Friday February 9, on the same day that Nestlé released its response to the California Water Resource Control Board’s December 21 report, San Bernardino National Forest Spokesman Zachary Behrens responded to the Sentinel’s inquires made in January with regard to the San Bernardino National Forest management’s stance with regard to the California Water Resources Control Board’s December 21, 2017 report.
The Sentinel had asked if the Forest Service was monitoring Nestlé’s Arrowhead Water bottling-related operation in Strawberry Canyon on a continuous basis. “Nestlé monitors the water extraction on a continuous basis and submits daily summaries, by well, in monthly reports to the Forest Service,” Behrens said.
Asked if the Forest Service installed, or already had in place, meters to allow that water drafting to be quantified, Behrens said, “The Forest Service required Nestlé to provide daily well data on a monthly basis on August 5, 2016. Nestlé requested approval to upgrade their monitoring equipment, and the Forest Service approved their request on January 31. 2017. The new equipment was installed during 2017 and operational by the October 2017 report.”
To the Sentinel’s inquiry as to the current figures on the amount of water being conveyed out of Strawberry Canyon, Behrens said, “The Forest Service has the monthly reports submitted by Nestlé, but detailed flow data on wells is exempt from disclosure under the Freedom of Information Act.” Thus, Behrens said, he was not prepared to disclose how much water Nestlé took in 2017 and how much water Nestlé has taken so far this year.
With regard to how the Forest Service will enforce the cessation of water drafting once Nestlé has reached the 26 acre-foot annual threshold, Behrens said, “The California Water Resources Control Board has full authority to enforce their own orders and would have to make any determinations of violation. If Nestlé were to ignore the state orders, the Forest Service could take action through the special use permit non-compliance process. Until the state actually issues an order, rather than staff recommendations, Nestlé is considered to be in compliance with their permit.”
The response of environmentalists and their efforts in pressing both California state water authorities and the U.S. Forest Service to restrict Nestlé from engaging in any further conveyances out of the San Bernardino Mountains could impact the circumstance.
On February 9, Rachel S. Doughty of the Berkeley-based Greenfire Law Firm wrote to Victor Vasquez of the State Water Resources Control Board’s water rights division, propounding that Nestlé is not entitled to any water out of the National Forest, including the 26 acre-foot pumping right the December 21 report says the company is allotted.
“To meaningfully consider whether valid water rights support any of Nestlé’s diversions for Arrowhead, the board must first analyze how they affect communities and natural resources served by the watershed, both under current conditions and in a wide range of Twenty-First Century hydrologic conditions that includes a potential multi-year drought,” Doughty wrote. “If left uncorrected in the report of its investigation, this omitted analysis would fatally compromise the board’s ability to fulfill its cornerstone duties to protect against injury to other legal users of water, protect public trust resources, and enforce the prohibition of waste and unreasonable use of water in Article X, Section 2 of the California Constitution. These duties belong to the State Board, and cannot be finessed by waiting for the outcome of federal environmental review or permitting decisions.”
Doughty continued, “Nestlé has failed to demonstrate, and is highly unlikely to establish, any enforceable pre-1914 appropriative right to divert water out of the affected watersheds, even for the estimated 26 annual acre-feet portion noted as a likely prospect for such rights from Indian Springs. Nestlé has also failed to establish enforceable rights to groundwater to support its appropriations for Arrowhead bottling. Nestlé’s points of diversion are located on federal land. Any water rights analysis must account for federal government rights, including federally reserved rights and any state-protected rights associated with overlying ownership, as well as the rights of [Native American] tribes and other water users.”
Doughty took aim at Nestlé’s reliance on the Del Rosa Judgment in asserting its water rights in the San Bernardino Mountains.
She noted that the California Water Resources Control Board has already determined “Nestlé cannot extrapolate rights to divert water for offsite bottling from the 1931 judgment confirming a settlement between private parties in Del Rosa Mutual Water Company v. Carpenter, et al. The perfunctory analysis of water rights in Del Rosa was “not binding” on the board’s own exercise of concurrent jurisdiction. The settling parties may have achieved ‘different outcomes’ through that judgment than those of a ‘full judicial proceeding,’ and the judgment occurred at a time when courts were ‘still absorbing’ then-recent significant change in water law, including the California Constitution’s restrictions on waste and unreasonable use of water. That judgment, which may not even have fully applied the water law of 1931, can neither supersede legislative requirements for post-1914 appropriative rights nor hamstring the board’s fulfillment of its own duties in 2018.” Further, according to Doughty, “Nestlé’s claim to “all the water in Strawberry Canyon” is baseless, resting on unproven and implausible assumptions about its predecessors’ physical possession of the water, and ignoring the actions of other appropriators in the watershed. Nestlé has no credible basis to anchor its pre-1914 water rights claim on other documents furnished to the State Board, such as a 1930 title report, a 1929 deed, and private agreements from 1930 and 1931.”

SB Council Approves Long Deferred Law Letting Reefer Loose In City

Marijuana-related commercial businesses in San Bernardino will function on one-year duration permits that will be renewed or discontinued annually dependent upon whether their owners and operators comply with state and local law, according to a proposed ordinance previewed and tentatively approved by the city council this week.
The ordinance will allow up to 17 cannabis-based businesses within the 61.95-square mile city, and is intended to supersede Measure O, an initiative allowing the sale of marijuana that was approved by city voters in 2016 but which was tentatively struck down by a San Bernardino County Judge last year.
In December, Judge David Cohn, ruled that Measure O imposed on the city so-called “spot zoning,” which unfairly delineates certain properties as eligible for commercially intensive activity and advantages the owners of those properties to the detriment of surrounding or nearby property owners, while simultaneously and not coincidentally creating a virtual marijuana sales monopoly for the sponsor of Measure O, vice kingpin Randy Welty.
Unless Cohn’s ruling is overturned, the city’s ordinance will go into effect on April 7, one month following the necessary second reading of and vote to approve the ordinance on March 7.
The issue of marijuana availability in San Bernardino has proven somewhat contentious over the last several years. While the Compassionate Use Act of 1996 contained in Proposition 215 approved by voters that year legalized marijuana use and its dispensation for medical purposes, it allowed local jurisdictions to regulate or outright ban its distribution within their borders. San Bernardino, like virtually every other city in San Bernardino County, prohibited the sale of the drug. This did not prevent, however, the eventual emergence of entrepreneurs willing to run bootleg operations within city limits. Over the last eight or nine years, such enterprises began to proliferate, not only in San Bernardino, but elsewhere in the county, as the younger generation of marijuana consumers began to cast off the social and legal restrictions relating to the drug that had been in place in California and nationally from the time of their great-great grandfathers and which their fathers’ generation, large elements of which were heavily steeped in the cannabis culture, simply accepted. To a significant degree, the illicit medical marijuana dispensaries in San Bernardino County were fronts for the distribution of marijuana ultimately used for recreational purposes. With the initial wave of those illicit marijuana operations that in the 2008 to 2010 timeframe tested the resolve of the old guard and the then-status quo, local law enforcement agencies made a game effort to respond. Simultaneously, the San Bernardino County District Attorney’s Office and in some cases the offices of various city attorneys sought to keep up. By 2012, however, the sheer numbers of those willing to run the marijuana distribution restriction gauntlet had come to overwhelm local civil authorities. In 2012, Needles was the first of the county’s 24 cities to bow to the new social reality, clearing the way for five licensed marijuana dispensaries to operate in what at 4,900 residents is the county’s least populous city, lying at the extreme end of San Bernardino County on California’s East Coast, the banks of the Colorado River, and the gateway into the Golden State.
With cannabis use mushrooming, the district attorney’s office de-prioritized simple marijuana cases and delayed filing on or ultimately failed altogether to file on criminal cases relating to the operation of medical marijuana clinics, leaving such matters to be handled civilly. In some case, well-heeled clinic operators put those cities through their paces, requiring vast expenditures in terms of resources, money and effort in shuttering dispensaries. In Upland, for example, the city spent upwards of $310,000 in its effort to close down a dispensary – G3 Holistics – operated by Aaron Sandusky. In July 2014, San Bernardino City Attorney Gary Saenz, taking stock of the number of pot shops sprouting up in the county’s largest city, offered his view that the cost and difficulty of closing down dispensaries made the city’s ban on the enterprises that had existed since 2010 “futile.” The council formed a legislative review committee composed of three council members to study the issue and promised to reconsider the ban. Saenz said the city was contemplating allowing some dispensaries to function under a strict set of guidelines that would include significant licensing fees. Nevertheless, a majority of the council, consisting of John Valdivia, Henry Nickel, Jim Mulvihill, Fred Shorett and Mayor Carey Davis, were unwilling to embrace cannabis liberalization. Ultimately, the political establishment, which had assumed that “potheads” lacked the discipline and cohesiveness to mount any kind of political effort, were stunned to learn that the cannabis availability advocates had managed the daunting task of gathering sufficient signatures to put an initiative on the ballot calling for allowing dispensaries to operate in the city. Randy Welty, who owned, operated or had an interest in 54 marijuana dispensaries and eleven adult entertainment venues throughout California, took the opportunity to apply money of his own to get a more self-serving initiative on the ballot, one that would virtually assure he would be one the city’s marijuana entrepreneurs. Outmaneuvered by the potheads for whom they had such disdain, the council sought to catch up, putting its own commercial marijuana initiative on the ballot, one that had far greater restrictions and regulations built into it than either of the measures that had evolved organically from the city’s residents and cannabis promoters. When the three competing measures came before the city’s voters in November 2016, the city’s commercial cannabis-activity-permitting-and-regulating proposal, Measure P, went down to defeat, with 23,106 votes or 48.45 percent in favor and 24,583 votes or 51.55 percent in opposition. Besting Measure P was the proposal put forth by the city’s homegrown marijuana aficionados, Measure N, which garnered 24,048 votes or 51.1 percent, with 23,015 or 48.9 percent in opposition. That should have been good enough for passage, except that the outsider Welty’s proposal, Measure O, topped it, with 26,037 votes or 55.12 percent and 21,196 or 44.88 percent in opposition.
Having been outsmarted and outhustled by the city’s potheads at the ballot box, the establishmentarian members of the city council, not unlike the remaining members of the Roman Senate perched among the ruins of the Eternal City in the Fifth Century aftermath of the Vandals, Goths and Visigoths having sacked the place, are now utilizing Judge Cohn’s ruling disqualifying Welty’s Measure O to take a second bite at the apple. While paying lip service to the concept of getting inclusive feedback from the community about how marijuana use is to be tolerated in the county seat, the cannabis regulation ordinance given first reading this week is essentially a rehash, with some refinements and a liberalization or two, of Measure P, which was sponsored and favored by the city council in November 2016 and rejected by the city’s voters.
The ordinance as drafted set a ratio of one cannabis-oriented business per 10,000 residents, meaning that 21 businesses could have been licensed in the city of 215,000. The council on Wednesday night, however, changed that ratio to one for every 12,500 residents, which translates into a maximum of 17 marijuana concerns. What is not specified is the ratio to be maintained among the exact types of businesses – that is, dispensaries, cultivation facilities, research facilities and testing labs, and wholesale distribution warehouses. What was laid out was that the city council will have ultimate discretion in determining what kind and how many such businesses will be permitted.
The specter of potential graft hung over the proceedings. In one of the San Bernardino County cities where marijuana liberalization has taken root, Adelanto, a now-former council member there, Jermaine Wright, remains in federal custody, having been stripped of his elected status and awaiting trial on charges that include taking bribes in exchange for offering to ensure an undercover FBI agent who was posing as an applicant for a marijuana distribution license would obtain operational licensing and clearance from Adelanto City Hall. As in Adelanto, marijuana-based businesses in San Bernardino are potentially very lucrative, and the competition for licensing and permits is expected to be fierce, with the possibility and the temptation that one would-be marijuana entrepreneur or even more than one will offer some order of an inducement to a member or members of the city council or city staff so that his or her business proposal in competition with so many others will be given permission to operate.
The council reserved unto itself the authority to determine how many of each type of business will be given go-ahead, and it will also be the ultimate arbiter of whether each business will be eligible for relicensing or re-permitting, and whether the ratio of the types of businesses to be allowed to operate in the city will remain constant or will fluctuate.
The ordinance specifies a merit-based ranking system of operators to encourage them to comply with regulations, such that adherence to the city’s rules and regulations will enhance an operator’s chance of gaining relicensing at the end of the 12 month permitting cycle. Violation of state law is grounds for immediate revocation of a permit.
Staff will evaluate competing applications, presenting findings to the city council, which will then do a public evaluation of the competition and award approval of the permit application at a public hearing. This public hearing is one hedge against the potential of graft insinuating itself into the permit approval process.
The opportunity of exacting revenge on those elements of the community who had played a part in log rolling the social march toward marijuana tolerance in San Bernardino was not lost on the council. Those who took up a position along the cutting edge of cannabis tolerance – the dozens of messianic marijuana entrepreneurs who risked citation and arrest by opening cannabis clinics and dispensaries while the city yet deemed them illegal and off-limits – are to be stigmatized as previous lawbreakers and will be outcasts from the future marijuana feast. Anyone affiliated with the operation of an illegal cannabis business in town and documented by the city as such will not be able to obtain a permit and license in the future. Like Moses, they will have the satisfaction of having led their people to the Promised Land, but will not be permitted entrance thereto.
The ordinance also mandates that those involved in the marijuana trade keep their distance from decent folk. Businesses must be at least 600 feet – two football fields – away from schools and commercial daycare and youth centers; at least 300 feet – a football field – away from residentially zoned property or any existing residential units, even if those units are not on property that is residentially zoned. Yet to be determined will be the distance requirement from other public and private facilities, including government offices, churches, bars, fraternal meeting places and libraries.
Cannabis-based businesses are off-limits to those under the age of 21. There can be no conspicuous advertisement of the businesses. “Business identification signage shall be limited to that needed for identification only and shall not contain any logos or information that identifies, advertises or lists the services or the products offered,” the ordinance states. Security measures must be in place at the businesses, including video cameras trained on the exits, entrances and the internal areas where customers are present. Doors to the facility must be subject to electronic control and locking. Each business must employ a uniformed and licensed security guard during operating hours. Businesses must be able to maintain security in the face of a power outage.
The ordinance also heads into the province of personal cultivation of marijuana. Those 21 years of age or older are permitted to grow up to six of the plants, as is consistent with state law, at his or her domicile. The plants cannot be in common public view.
Consumption, i.e., smoking, is prohibited in public places, public buildings and places generally open to attendance by the public or within 50 feet of the entrances to public places or buildings.
Noteworthy is what the ordinance does not prohibit. It does not prohibit cultivation as long as the operation is carried on indoors and “meets or exceeds minimum legal standards for water usage, conservation and use; drainage, runoff and erosion control; watershed and habitat protection; and proper storage of fertilizers, pesticides and other regulated products to be used on the parcel.” The ordinance prohibits the smoking of marijuana in city vehicles but does not prohibit its smoking in private vehicles. Nor does it prohibit smoking outdoors if it is not done publicly and is at least 1,000 feet away from any school, day care center, youth center, library, park, bicycle path, or any alcohol or substance abuse rehabilitation center.
                -Mark Gutglueck

Trial For SEC’s Bond Fraud Suit Against Victorville Set To Begin February 27

The trial in the Securities and Exchange Commission’s suit against the City of Victorville alleging city officials and its bond underwriter defrauded bond investors has been delayed at the city’s behest. Proceedings were to have begun more than two weeks ago but the city succeeded in convincing the court to postpone them at least until February 27.

Keith Metzler

Keith Metzler

City officials have long maintained that they are anxious for proceedings to get under way so it can be demonstrated that the Southern California Logistics Airport Authority did not, as the federal government contends, engage in a Ponzi-like scheme. According to the original Securities and Exchange Commission (SEC) filing made on April 29, 2013 in U.S. District Court in Los Angeles, the Southern California Logistics Airport Authority used its capacity as a governmental entity to make a cascade of bond offerings and borrowings, with each succeeding issuance or loan being used to debt service previous ones, the final one of which was collateralized by hangars that were knowingly substantially overvalued.
Despite the city’s claim that it wants to see the matter put behind it, the lion’s share of delays in the case have come about as a result of requests by the city, which is the parent agency of the Southern California Logistics Agency and the employer of Keith Meltzler, who is the one individual affiliated with the city who is actually named in the complaint.
Just before the trial was to commence on January 23, the start was moved to January 30. Terree Bowers, the former US Attorney for the Central District of California and member of the international team of prosecutors who presented the cases against Radovan Karadzic and Ratko Mladic before the Yugoslavia War Crimes Tribunal, is currently in private practice and representing the city and the airport authority. Bowers has asked for and was granted an extension so he might receive treatment for an undisclosed medical condition, so that now the trial will, again tentatively, begin on February 27. The defense, collectively, had asked for a longer extension, until June. But the SEC’s lawyers objected, and the judge hearing the case, U.S, District Judge John A. Kronstadt consented to a delay only until February 27, at which time Bowers is expected to be available along with the lawyer representing the bond underwriting firm, Shaun Murphy, whose involvement with a trial now ongoing in Riverside County Superior Court should be concluded by then.
The SEC’s 2013 complaint names the City of Victorville; the Southern California Logistics Airport Authority; Carlsbad-based Kinsell, Newcomb & DeDios; KND Affiliates; J. Jeffrey Kinsell, president of Kinsell, Newcomb & DeDios; Janees L. Williams, vice president of Kinsell, Newcomb & DeDios; and Keith C. Metzler, who at that time was the assistant city manager of Victorville. KND Holdings Inc., parent company of KND Affiliates, also was named as a relief defendant.
According to the complaint, “The Southern California Logistics Airport Authority used tax increment bond offerings to finance a number of ill-conceived redevelopment projects, including the construction of a power plant and four new airplane hangars on the former George Air Force base. By late 2007, it needed $50 million to pay a deposit on a turbine for the power plant, and planned to finance that payment with a new $68 million tax increment bond offering. However, given the tightening credit market and the subordinate nature of the bonds, prospective bond purchasers demanded that the debt service ratio for this offering be increased to 1.25 (from the 1.10 ratio governing prior bond offerings). As a result, the authority was forced to downsize its December 2007 bond offering from $68 million to $42 million. This left the authority with few resources to continue its redevelopment activities. Indeed, by this time, nearly all of the tax increment available to the authority had been used to secure its prior bond issuances.”
Tax increment refers to property tax on property that is committed by a government agency with jurisdiction over that property to pay for public improvements related to that property or to provide debt service to cover bond financing or loans taken out with that property as the security for the bonds or loans. In most cases the proceeds from the bonds are used to make improvements to the property or to provide infrastructure to spur development.
The SEC complaint continues, “In February 2008, in an effort to escape from this financial constraint, the authority borrowed $35 million in short-term financing. It then publicly offered $13.3 million of subordinate tax increment bonds in April 2008 to repay part of that short-term debt. This April 2008 financing was premised, in part, on an assessed value of $65 million for the four hangars. This $65 million valuation was used to determine the all-important tax increment for the April 2008 bond offering, and allowed the authority to satisfy the minimum 1.25 annual debt service ratio for the offering. However, the hangars’ $65 million assessed value was vastly inflated, resulting in the disclosure of false tax increment and debt service ratios in the official statement provided to investors in the April 2008 bond offering. Defendant Keith Metzler, the director of economic development for the city and an agent for the authority, and the two Kinsell, Newcomb & DeDios investment bankers – defendant Jeffrey Kinsell, the owner of Kinsell, Newcomb & DeDios, and defendant Janees Williams – all knew that the assessed value of the hangars was inflated, and, as a result, that the tax increment and debt service ratios disclosed to investors were false. Yet they each withheld this information, resulting in materially misleading disclosures and a substantially oversized bond offering.”
The lawsuit further states, “Kinsell and Kinsell, Newcomb & DeDios also engaged in an additional fraudulent scheme to take undisclosed construction and management fees collected on the airport hangar project. In 2006, the authority retained defendant Kinsell, Newcomb & DeDios Affiliates, LLC (Affiliates), an entity partially-owned by Kinsell, to manage this project. The authority agreed to compensate Affiliates and its contractor under a ‘cost plus 10% construction management fee’ contract. However, Affiliates exploited this fee arrangement by paying itself at least $450,000 more in fees than it was owed. Affiliates further misappropriated $2.3 million of bond proceeds through a fictitious 15% monthly ‘property management fee.’ Affiliates transferred over $1 million of unauthorized property management fees to relief defendant Kinsell, Newcomb & DeDios Holdings, the parent of Kinsell, Newcomb & DeDios. Kinsell, Newcomb & DeDios then used the majority of these fees to finance Kinsell, Newcomb & DeDios’s operating expenses, including payroll. The authority never authorized Affiliates to collect these excessive fees, which Affiliates took from bond proceeds intended to complete construction of the hangars. As a result of the unauthorized construction management fees and property management fees, affiliates misappropriated a total of approximately $2.7 million in bond proceeds.
By engaging in this conduct, the authority, Kinsell, Newcomb & DeDios, Affiliates and Kinsell violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, and the city, Metzler, Kinsell, Newcomb & DeDios, Kinsell and Williams aided and abetted violations of these antifraud provisions of the federal securities laws.”
In the more than four-and-a-half years since the action was filed, Victorville and the airport authority have been represented by Terree A. Bowers, Adam Bentley, Collin Seals and Karen Van Essen of Arent Fox LLP. Metzler has been represented by Michael D. Torpey, James N. Kramer, James A. Meyers, Kevin M. Askew, Judy Kwan and Blake L. Osborn of Herrington & Sutcliffe LLP. Kinsell, Newcomb & DeDios have been represented by attorneys Shaun Murphy, Mark A. Maasch and Randall S. Polycn.
Early in the case, attorneys for the defense asserted in motions that the hangars were indeed worth what the city said they were worth. If that tactic had worked, it would have greatly compromised the central tenet of the government’s case. Kronstadt in November 2013 ruled that the combined defenses’ overall rationale for dismissing the case against the three defendants was “unpersuasive,” and that the bulk of the matter should go forward.
Kronstadt has ruled that the SEC has not yet presented any convincing evidence to show the city or Metzler improperly gained from their alleged misconduct, which is the basis of the SEC’s prayer for disgorgement, a form of relief seeking restitution of ill-gotten profits from security law violators.
By 2015, Herrington & Sutcliffe were proving to be more aggressive than Arent Fox in propounding that much of what was at the basis of the SEC’s case was action by Kinsell, Newcomb & DeDios.
In a July 2015 filing, however, the SEC asserted Metzler could not logically or credibly lay responsibility for what had occurred at the feet of Kinsell, Newcomb & DeDios or other agents of the city, including city staff assigned to the airport.
The SEC’s lawyers, consisting of Robert Conrad, Theresa Melson, Todd Brilliant, Sam S. Puathasanon, John W. Berry, Kristin S. Escalante, Amy Jane Longo and David J. Vanhavermaat, asserted Metzler was the “point person” most fully focused on the situation at the airport, including the value of its various assets. Metzler played “a significant role” in the bond offerings, according to the SEC, communicating with the bond rating agencies and giving presentations to potential investors. Evidence shows he knew the county assessor valued the hangars at roughly half the amount he represented, the SEC contends.
“Metzler, in his motion, attempts to characterize this case as one about simple ‘mistakes’ that he made while surrounded by a team of professionals who should have fixed the errors instead of him,” according to the SEC. “What he ignores, however, is the compelling evidence of his intentional conduct to hide serious problems regarding the millions of dollars of tax increment that was needed to repay back the authority’s ever-increasing debt load.”
After incurring more than $269 million in debt, the city and the authority in 2008 had exhausted all options involving leveraging available tax revenues. It sought a bridge loan from Deutsche Bank. Deutsche Bank, however, insisted that any possible repayment schedule with it would require the backing of additional bond issuances. When Deutsche Bank requested from the city that it perform a calculation of the property value escalation that would come from new development, the record clearly demonstrates Metzler leapt into the breach, according to the SEC. “Metzler was heavily involved,” the SEC asserted. Though Metzler had documentation clearly indicating substantially lower property values, he hid that reality and conveyed to Deutsche Bank a $65 million estimate on the value which referenced construction costs he knew to be inflated, the SEC said. There were no sales of comparable hangar properties to support that price and there were no pending offers for the purchases of the hangars in question. Thus, the SEC maintains that Metzler knew, or was reckless in not knowing, that there were material misrepresentations in connection to the April 2008 airport bond offering.
There has been a less-than-subtle sundering of the once solid monolithic defense initially put up by the defendants in which the city, the authority, Metzler and Kinsell, Newcomb & DeDios uniformly maintained nothing wrong had occurred such that the city, the authority and Metzler are now suggesting that if the misappropriation of $2.7 million in bond proceeds as alleged by the SEC actually occurred, it was a matter of Kinsell, Newcomb & DeDios pulling the wool over Metzler’s eyes and those of the bond investors. Still, if Metzler proves able to establish that he was not involved, knowledgeable or culpable in Kinsell, Newcombe & DeDios’s diversion of the bond proceeds, this would yet raise questions about his level of competence and the degree to which he failed to live up to his responsibility of providing proper oversight of Kinsell, Necombe & DeDios’s activities.
Despite the SEC’s allegations with regard to Metzler in particular, the Victorville City Council has not lost faith in him. While he had occupied the position of economic development director with the city and had been the agent for the airport authority at the time of the 2008 bond issuance that is at the heart of the lawsuit, Metzler had been elevated to the position of assistant city manager in 2011. The suit did not trigger his firing or even a demotion. Rather, at the end of November 2017, when Victorville City Manager Doug Robertson accepted an offer from the Town of Apple Valley to become town manager there and announced his departure as Victorville city manager effective January 1, the City of Victorville moved in December to appoint Metzler acting city manager.
To date, the City of Victorville has paid Arent Fox and Herrington & Sutcliffe $11 million in preparing the defense of itself, the airport authority and Metzler.
-Mark Gutglueck

All 8 Desert Community Bank Branches Go To Michigan Bank

Troy, Michigan-based Flagstar Bank, which credits itself with being “the sixth largest bank mortgage originator in the nation,” has entered into a definitive agreement to acquire the eight-branch network of Desert Community Bank from East West Bank.
Flagstar Bank, which was founded in 1987 and went public in 1997 and has been listed on the New York Stock Exchange since 2001 trading under the ticker FBC, is a community bank with $16.9 billion in assets and 99 banking branches in Michigan. It operates a significant wholesale mortgage business nationally, with 95 retail mortgage offices across the country, 41 of which are in California. Most of Flagstar’s California offices currently operate under the Opes Advisors brand, a division of Flagstar.
The acquisition agreement is pending regulatory approval, and the deal is not expected to close until the first half of 2018.
According to a corporate statement from Flagstar, “Flagstar is eager to be part of the Desert Community Bank community and intends to expand the support and commitments to the High Desert areas that Desert Community Bank serves. Flagstar’s interest in Desert Community Bank is in part based on the community ties that have been built. Flagstar already has a meaningful presence in California. It originates more than 30 percent of its mortgage business in the state and has 41 retail mortgage offices in California. Desert Community Bank provides a great opportunity for Flagstar to continue to grow in California, providing a high quality deposit base to complement Flagstar’s lending activities. With strong brand recognition, a loyal customer base, and dedication to the community, Desert Community Bank is aligned with Flagstar’s corporate culture. In addition to maintaining the existing quality services, Flagstar expects to invest in upgrades of Desert Community Bank’s branches, ATMs and website to better deliver products and services to our customers.”
Desert Community Bank was founded in March 1980. In 2007, it was acquired by East West Bank for $143 million, with 45 percent in cash and the rest in stock. Desert Community Bank branches maintained their original branding and did not change their names to East West Bank. Flagstar indicated all eight branches “will continue to operate as Desert Community Bank, or DCB, retaining the DCB name and brand. However, Desert Community Bank will become a division of Flagstar Bank.
Flagstar offered an assurance that “Until the acquisition closes, customers will not experience any changes. During the conversion process of moving Desert Community accounts onto Flagstar’s operating systems, Flagstar is committed to making as few changes and creating as little disruption as possible for customers. Customers will be notified well in advance of any changes.”

Applications Being Accepted For The 2018-19 San Bernardino County Civil Grand Jury

Applications are now being accepted for those willing serve as grand jurors for the fiscal year period beginning July 1, 2018 and ending June 30, 2019.
The Civil Grand Jury is empowered by the California Penal Code to investigate all aspects of county and city governance, and to potentially hear information on certain criminal investigations. All communications to the grand jury are confidential and every signed citizen complaint is responded to after being investigated. Service as a grand juror involves an average of three to five full working days per week, compensated at $25 per day, plus meals and appropriate mileage. The grand jury regularly meets in San Bernardino.
Those who are at least 18 years of age, a United States citizen, and a resident of California and the County of San Bernardino for at least one year prior to appointment, speak English, possess sound judgment and good character are eligible to serve. By law, elected public officials are not eligible.
Interested citizens can download the application on-line at www.sbcounty.gov/grandjury Applications can also be obtained by calling (909) 387-9120 or in-person located at 172 West Third Street, Second Floor, San Bernardino, CA. The application deadline is April 6, 2018.

Department Of The Interior Reopens 1.337 Million Desert Acres To Mining

The federal government has rescinded a restriction on new mining or mineral exploration on 1.3 million acres in California’s deserts.
The restrictions, which were formulated under the Barack Obama Administration in 2016 by the Bureau of Land Management, were rescinded this week
According to a notice laid out in the Federal Register on February 7, “The Bureau of Land Management (BLM) has canceled its withdrawal application and the withdrawal proposal relating to 1,337,904 acres of public lands within designated California Desert National Conservation Lands. The BLM, a division of the Department of the Interior, has determined that the lands are no longer needed in connection with the proposed withdrawal. This notice terminates the temporary segregation from location and entry under the United States mining laws, subject to valid existing rights, the provision of existing withdrawals, other segregations of record, and the requirements of applicable law. The BLM has also terminated the preparation of an environmental impact statement evaluating this application and proposal.”
Further down in the notice, under supplemental information, it is stated that on December 28, 2016, notice had been given of an action with the nomenclature 81 FR 95738, which called for the withdrawal of 1,337,904 acres of public lands within designated California Desert National Conservation Lands from location and entry under the United States mining laws for 20 years, but not from mineral or geothermal leasing or mineral materials laws, subject to valid existing rights.
81 FR 95738 contained an involved description of the land enclosed within the action. That property included portions of the desert lying northwesterly and northeasterly of California State Highway 164; portions of the desert lying easterly, southerly and southwesterly of Ivanpah; portions of the desert lying easterly and northeasterly of BLM Stateline Wilderness Area and southeasterly of Mesquite Valley; portions of the desert lying easterly and northeasterly of BLM Stateline Wilderness Area; portions of the desert lying westerly and southeasterly of BLM Mesquite Wilderness Area; portions of the desert lying northwesterly of Mojave National Preserve; portions of the desert lying northeasterly, southeasterly, southwesterly, northerly, southerly, and easterly of BLM Kingston Range Wilderness Area; that area of the desert lying southerly, southeasterly and northeasterly of BLM Pahrump Valley Wilderness Area; those portions of the desert lying northeasterly of BLM Hollow Hills Wilderness Area; that portion of the desert lying northwesterly of U.S. Interstate Highway 15; those portions of the desert lying easterly of BLM Hollow Hills Wilderness Area; some portions of the desert lying easterly of the Soda Mountains; some portions of the desert lying easterly, westerly and northwesterly of U.S. Interstate Highway 15; portions of the desert lying easterly of California State Highway 127; portions of the desert lying northwesterly, southerly and westerly of BLM South Nopah Range Wilderness Area; some portions of the desert lying northerly, southerly, easterly, and westerly of Dumont Dunes; some portions of the desert lying easterly and westerly of Sheep Creek Springs Road right-of-way; portions of the desert lying easterly of Death Valley, portions of the desert lying southeasterly of BLM Saddle Peak Hills Wilderness Area, and northeasterly of Death Valley National Park; portions of the desert lying southeasterly, southerly and easterly of BLM Ibex Wilderness Area; portions of the desert lying southwesterly, northerly and northeasterly of the boundaries of the BLM Bighorn Mountain Wilderness Area; portions of the desert lying northeasterly, southeasterly and southwesterly of Joshua Tree National Park; portions of the desert lying westerly of Kaiser Road; portions of the desert southerly of U.S. Interstate Highway 10, portions of the desert lying southerly, westerly and northerly of BLM Chuckwalla Mountains Wilderness Area; portions of the desert lying northerly and easterly of Chocolate Mountains Aerial Gunnery Range; portions of the desert lying southerly and westerly of Mule McCoy Linkage; portions of the desert lying northerly, northwesterly, southeasterly, southwesterly and westerly of the BLM Picacho Peak Wilderness Area; portions of the desert lying northeasterly and easterly of BLM Malpais Mesa Wilderness Area; and portions of the desert lying northeasterly of BLM Owens Peak Wilderness Area, among other areas.
The geologically diverse California Desert Conservation Area, covering more than 25 million acres, includes sand dunes, canyons, dry lakes, 90 mountain ranges, and 65 wilderness areas.
Because of the rescission, prospectors will be able to stake claims later this winter, but not at once. According to Jerome E. Perez, the California state director of the Bureau of Land Management, “At 10 a.m. on March 9, 2018, the public lands described will be opened to location and entry under the United States mining laws, subject to valid existing rights, the provision of existing withdrawals, other segregations of record, and the requirements of applicable law. Appropriation of lands under the mining laws prior to the date and time of restoration is unauthorized. Any such attempted appropriation, including attempted adverse possession under 30 U.S.C. 38, shall vest no rights against the United States. Acts required to establish a location and to initiate a right of possession are governed by state law where not in conflict with federal law. The BLM will not intervene in disputes between rival locators over possessory rights given that Congress has provided for such determinations in local courts.”
Environmentalists were displeased by the Donald Trump Administration’s action.
Ileene Anderson, the lead scientist with the Center For Biological Diversity, on Thursday told the Sentinel, “This cancellation of the mining withdrawal, while not completely unexpected, clearly imperils the conservation values of these lands now and into the future, and undermines the carefully crafted Desert Renewable Energy Conservation Plan, which was developed and adopted through a rigorous public process. These National Conservation Lands have been identified as being a key part in keeping our irreplaceable California Desert Conservation Area connected and healthy in a world dealing with a quickly changing climate.”
         -Mark Gutglueck

Dolly Trent’s Advice For Bewildered Hearts

Dear Ms. Trent,
My husband went out to get some cigarettes on the Fourth of July and he never came back. I’ve looked for him in all the usual places, checked with my in-laws and all of his fishing, drinking and poker buddies. I can’t find him. What should I do?
Flustered in Fontana

Dear Flustered,
Brace yourself for this: Have you tried calling the morgue?
Ms. Trent
Dear Ms. Trent,
The other night, Carl, my boyfriend, said he would take me out dancing. On the way there, we got into an argument. I could tell Carl was real mad, because he didn’t come around to open the door for me like he usually does. He went straightaway into Horseshoe Harry’s and started to drink.
I really wanted to dance, so I tried to make up with him, but all he wanted to do is sit there and get blotto. He refused to dance and he even spilled a drink on my dress. So, you know what I did? I walked out on him. I just left him sitting there in Horseshoe Harry’s all alone. I figured I would walk home, but after about ten blocks I realized how far from home I was, and turned around. When I got back to Horseshoe Harry’s, Carl was gone. I kept calling his house but there was no answer all night long. I ended up taking a cab home.
I wasn’t able to find Carl until the next night. He told me that after I left Horseshoe Harry’s, a redhead sat down next to him and he bought her a drink and they started talking. He says he doesn’t remember anything after that until he woke up the next day in a rooming house across town. He says he thinks maybe the redhead slipped him a mickey.
I’m not sure what to think about Carl’s story, except I don’t like it. I suspect he took off with the redhead, but if he did, why would he have even mentioned her? And what were they doing at that rooming house? Every time I ask Carl about what happened, he keeps saying he can’t remember anything until he came to in the rooming house at three o’clock the next afternoon.
Ms. Trent, what should I do?
Perplexed in Pomona

Dear Perplexed,
Call the rooming house and see what size beds it has. If it features cots, I’d say you don’t have anything to worry about. Ditto, single or twin beds. I’d say things are iffy if they have double or full size. If they have queen size or king size, I wouldn’t chance it, and I’d give Carl the short goodbye. It sounds to me like he drinks too much, anyway.
Ms. Trent

Richard Gird

Richard Gird

Richard Gird

By Mark Gutglueck
Richard Gird once owned a significant amount of acreage in western San Bernardino County, and his activities in his capacity as a land baron had a significant impact on the development of the Inland Empire in the late 1800s.
Born on March 29, 1836 in Litchfield, New York, Gird was the son of John Gird and Laura King. His paternal grandfather, Henry Gird, had migrated to New York from Wexford, at the southeastern coastline of Ireland. In New York, Henry Gird had operated a newspaper and also served as a colonel in the British army. Richard’s father, John, was born in Trenton, New Jersey. With his mother, Mary Smith, John left New York City and move to Herkimer County in 1812, where they inherited Cedar Lake Farm from Mary Smith’s family. Thereafter, John married Laura King, the daughter of Sylvanus King of Massachusetts, who claimed lineage from the Mayflower and whose line also included the first governor of the state of Maine.
John and Laura Gird had nine children who were raised on an estate that in 1850 was valued at $11,000. Their eldest son and Richard’s brother, Henry S. Gird, was among those who went to California during the Gold Rush, though he was likely not an actual 49er in that he did not depart until 1850. By early 1851, Henry Gird was living at Greenwood Valley in El Dorado County, not far from where James Marshall had discovered gold at Sutter’s Mill in Coloma.
In 1853, Richard, then seventeen-years old, took a steamer from New York to the Isthmus of Panama, crossed to the Pacific side, contracting malaria en route, and caught another steamer to California, where he met up with his older brother in El Dorado County. Less than successful in the gold fields, the brothers moved to Sonoma County where they took up farming along the Russian River. Subsequently, Richard’s younger brother, Levi, sojourned to California. After Henry obtained property in the Alexander Valley northwest of Healdsburg and established the Gird Ranch there, Richard and Levi set up a farm in Geyserville, a little south of Henry’s spread, where they were joined by two of their sisters, Mary and Ellen.
When he was 21, Richard went to Chile, where in 1858 he engaged in the supervision of mining and railroad projects for Henry “Harry” Meiggs, a shipbuilder from New York, who had come to California where he captured a corner on the lumber market in San Francisco during the Gold Rush. Meiggs invested his fortune in North Beach real estate. He was elected city alderman and, presuming on his brother’s status as San Francisco’s controller, utilized his official position to endorse some unissued city warrants, which he proffered as collateral on some loans to keep his real estate ventures from collapsing when the debt he had accrued outran the value of his holdings. After the forgery was discovered, Meiggs in 1854 departed, abandoning in the process his not insubstantial lumber interests in Mendocino, next turning up in Chile. Meiggs spent more than two decades there in the personage of a Chilean and Peruvian railroad baron, constructing rail lines financed with government bonds and loans, a portion of the proceeds from which Meiggs managed to siphon off to repay nearly all of the debt he had left behind him in San Francisco. Meiggs made intense efforts to rehabilitate himself in California, including prevailing upon the legislature to take up and pass Senate Bill 183, an act stating that “any court having jurisdiction… is hereby authorized and directed to order to be dismissed… any indictment that may have been heretofore or which may hereafter be found against Henry Meiggs.” The bill, passed in 1874, was vetoed by Governor Newton Booth. Still vulnerable to being prosecuted for embezzlement, Meiggs died in Peru in 1877.
Despite his affiliation and work with Meiggs, the young Richard Gird was under no such prohibition and he left Chile for New York in 1859. A short time later, he returned to Geyserville.
By 1863, Gird, having avoided conscription into the Union Army, was in the Arizona Territory, where there was intense speculation in mining. The first territorial census, taken in 1864, listed the 28-year-old Gird living in Olive City, one of among 19 residents in the La Paz Mining District, which is now a ghost town along the Colorado River across from Blythe, California. Gird worked as a surveyor, and was hired by the territorial government in that capacity. He is credited with drawing the first professional map of Arizona, which he completed in 1864. Gird then moved to San Francisco and established himself, in conjunction with his sister Ellen’s husband, Horace Martin, as a manufacturer of mining equipment, such as machinery and engines. Gird remained in San Francisco until 1872, returning thereafter to Arizona.
It was during his second residency in Arizona that Gird prospered spectacularly. He first worked in assaying, weighing gold ore and evaluating its purity, and engaged in superintending mining mills and furnaces, along with surveying, principally at the Signal Mining and Milling Company. In 1878, while prospecting in an unproven mining area in conjunction with two brothers, Al and Ed Schieffelin, the trio came across a fabulous lode of silver ore and ushered in the creation of the famed Tombstone mining district. Running the Tombstone Mining and Milling Company with East Coast funds obtained by former Arizona governor Anson Safford, Gird became fabulously wealthy. At the forefront of the mining operations there, he designed and built the first mill in the district and extruded the first bullion. Gird was the first postmaster and was elected the first mayor of the boomtown Tombstone. He was a man of peace, having nothing to do with the infamous violence associated with Earps and the Clantons. In 1880, Gird ran as a Republican for the Arizona Territorial Assembly, unsuccessfully. That year, he married Maine native Nellie McCarthy.
In 1881, Gird sold out his Tombstone mining interests for $800,000. He then went to Southern California in an effort to emulate the success of his landholding cousin, Henry H. Gird, a New York native transplanted and raised first in Louisiana and then Illinois, who went further west to California during the Gold Rush. Henry Gird acquired Rancho La Cienega, near Los Angeles, prospering there from about 1860 until the mid-1870s. In 1876, Henry H. Gird bought a ranch near Fallbrook and Bonsall in northern San Diego County and did quite well there.
In 1881, Richard Gird purchased the 37,000-acre Rancho Santa Ana del Chino and the “Addition to Santa Ana del Chino” from Francisca Williams Carlisle McDougal. Gird purchased an additional 9,000 acres, until his holdings included 47,000 acres, or 73.35 square miles. He and his wife moved into the Joseph Bridger residence, an adobe that later formed part of the clubhouse of Los Serranos Country Club, founded in 1925 in present Chino Hills and which was later briefly known as the Pomona Valley Country Club. For a number of years he utilized the rancho for the raising of livestock. He fenced a large portion of the rancho, and raised eight hundred horses and eight thousand head of cattle. He served on the California Board of Agriculture, experimented with many crops previously untried in Southern California and held fourth on farming in published articles and essays. He founded the Chino Champion newspaper.
Gird had energetic plans for the Chino area, including a sugar beet farm and sugar factory and a railroad, as well as a refinery for oil pumped from the ground near La Puente by the Puente Oil Company.
The sugar beet plantation, a cooperative which involved the Oxnard Brothers, Henry, Robert and Benjamin, at one point ranged to 2,500 acres. He put in the narrow gauge Chino Valley Railroad, which connected to the Southern Pacific’s transcontinental line at Ontario. He also set aside a forty-acre site for a University of California agricultural station branch.
The completion of a direct transcontinental railroad line to Los Angeles in 1885 led to heavy speculation in real estate during the following few years. In the midst of this regional financial upturn, Gird subdivided 23,000 acres of his ranch land, 35.9 square miles, into small ranches, and 640 acres, one square mile, into the townsite of Chino, assisted by his brother-in-law Horace Martin, his one-time San Francisco mining equipment company partner who subsequently had gone to Chicago where he was involved in civil engineering. Gird opened a bank and built a school. He indulged a passion for acquiring prize horses.
The Boom of the Eighties fizzled out in 1890. The Panic of 1893 created a national depression, which severely impacted Gird financially. This was exacerbated by a drought that hit the region.
Overextended financially, Gird was obliged to take out a $525,000 loan from the San Francisco Savings Union, which received a trust deed to the Chino Rancho. Gird, hoping for a quick national recovery from the depression, was looking forward to generating money from his vast holdings relatively quickly. When the recovery stalled, Gird was forced into the unthinkable to service the debt. In October 1894, Gird began to sell off the ranch land, but was able to raise just $75,000 in the sluggish and faltering economy.
In November 1894, Gird closed a deal with an entity known as the Chino Rancho Company to sell off 41,000 acres of the ranch for $1.5 million, payable in installments. The Chino Rancho Company was unable to generate sales to raise the capital it was committed to paying Gird, and that enterprise failed by the end of 1895. Ownership of the property reverted to Gird, who was still indebted to the San Francisco Savings Union.
In April 1896, a British syndicate functioning under the corporate guise of the Chino Beet Sugar Estate and Land Company, tendered a $1.6 million offer for the land. While this venture held much promise, like the one before it there was difficulty marketing the property and it collapsed. Once again, the Chino Rancho reverted back to Gird.
Because of his financial travails, Grid’s reputation was taking a hit. In a show of resentment toward him, Chino residents effaced his name from the cornerstone of the school he founded.
In time, prominent and well-fixed personages from the San Francisco Bay Area – Richard A. Clark; Henry A. Whitley; Samuel M. Samter; George A. Rankin; Arthur F. Allen; J. B. Reinstein; Jesse W. Lilienthal; I. J. Wiel; C. S. Benedict; and Phoebe Apperson Hearst – formed the Chino Land and Water Company. Hearst, the widow of Nevada silver mining magnate and U. S. Senator George Hearst as well as the mother of publisher William Randolph Hearst, was the major stockholder. She took it upon herself to pay off the San Francisco Savings Union. In a parallel action, the Chino Estate Company sold off Gird’s ranch assets. Having made his creditors whole and out from under the onus that the Chino Valley represented to him, Gird moved into semi-retirement to a home on West Eighteenth Street in Los Angeles, where he lived with his wife and younger brother, William. He dabbled, for a time, in mining speculation in Mexico.
In 1890, the Lewis Publishing Company of Chicago Illinois published An Illustrated History of Southern California, “embracing the counties of San Diego San Bernardino Los Angeles and Orange and the peninsula of lower California.” Richard Gird was among those profiled.
“The subject of this sketch was of studious habits and disposition, and made the best of his advantages,” the book states. “He devoted considerable attention to the study of mechanics and other scientific studies. Of an ambitious disposition and desirous of a more extended field of operations, he sought the far West, and when less than seventeen years of age, in 1852, he came by steamer to California.” After reciting Gird’s travels and accomplishments as a young man and his rise to riches in Arizona thereafter, the book states, “Upon his taking possession of his ranch, Mr. Gird began the extensive operations of developing and building up the Chino Valley. That has made the Chino ranch and Richard Gird household words in Southern California.”
The narrative continues, “Mr. Gird is a man of broad views, marked ability and sound business principles. His name is synonymous with honesty and straightforward dealing with all who know him, and his friends are legion. Aside from his enterprises at Chino, he has been connected with other industries and interests in the county. He is one of the original incorporators of the Farmers’ Exchange Bank of San Bernardino, and is vice-president of the same. He is also director in the San Bernardino National Bank. He is a strong supporter of churches and schools, and his purse is ever open to any call that advances the interests of either. In political matters he is a staunch Republican, taking a prominent part in the councils of his party. He has for years been a member of the county central committee, and was chairman of the same in 1884. In 1888 he was a member of the State Central Committee, and in the same year was elected alternate delegate to the Republican National Convention.”
Among Gird’s writings were articles authored on Tombstone for Out West magazine in 1907 and on sugar beet raising in the Land of Sunshine magazine in 1894 and the pamphlet Resources of California, produced for the Chicago World’s Fair in 1893.
In 1910, at the age of 74, Richard Gird died in Los Angeles and was buried at Rosedale Cemetery.

Biologists On ‘Chick-Watch’ Prior To Tomorrow’s Bald Eagle Count

BB Eagle Nest All eyes are on the nest of a pair of bald eagles near Big Bear Lake as the anticipated hatching of two eggs nears. The eggs, which were laid in early January, are expected to hatch sometime between February 7 and February 11.
The nonprofit Friends of Big Bear Valley installed a “nest cam” with the support of the San Bernardino National Forest. The livestream can be viewed at http://www.iws.org/livecams.html (Select “Big Bear Eagle Cam, Big Bear Lake). The nest is located on U.S. Forest Service managed land. To protect the eagles from disturbance, the area surrounding the nest is completely closed to all public entry.
The public is invited to join local biologists on Saturday, Feb. 10, 2018, to help count bald eagles wintering around six Inland Empire lakes. Observers meet at one of the count locations for a short orientation and then they proceed to their observation sites where they record their observations between 9 and 10 a.m. Then they return to the meeting location to turn in the data sheet. The biologists use those data to determine the minimum number of eagles in the area.
No experience is needed. Signing up ahead of time is unnecessary — just show up at the designated time and location, dress warmly, bring binoculars and a watch. Information on the different eagle count sites follow:
Big Bear Lake area volunteers will meet at 8 a.m. at the Forest Service’s Big Bear Discovery Center on North Shore Drive for orientation. Contact Robin Eliason (reliason@fs.fed.us or 909-382-2832) for more information. Please call 909-382-2832 for cancellation due to winter weather conditions — an outgoing message will be left by 6:30 a.m. on the morning of the count, if it has to be cancelled. Contact the Discovery Center (909-382-2790) for information about Eagle Celebrations. There will also be a free slideshow about bald eagles at 11 a.m. after the counts.
Lake Arrowhead/Lake Gregory volunteers will meet at 8 a.m. at the Skyforest Ranger Station for orientation. Contact Robin Eliason (reliason@fs.fed.us or 909-382-2832) for more information. Please call 909-382-2832 for cancellation due to winter weather conditions – an outgoing message will be left by 6:30 a.m. on the morning of the count if it has to be cancelled.
Silverwood Lake State Recreation Area volunteers should plan to meet at the Visitor Center at 8 a.m. for orientation. Contact Mark Wright for more information about volunteering or taking an eagle tour (760-389-2303 between 8 a.m. and 4 p.m. or email: mark.wright@parks.ca.gov).
Lake Hemet volunteers should plan on meeting at the Lake Hemet Grocery Store at 8:30 a.m. for orientation. Contact Ann Bowers (annbowers@fs.fed.us or 909-382-2935) for more information.
Lake Perris State Recreation Area volunteers should plan to meet at the Lake Perris Regional Indian Museum at 8 a.m. for orientation. For more information call Lake Perris SRA at 951-940-5600 or the Lake Perris Regional Indian Museum at 951-940-5657.
The annual bald eagle counts take place every winter for four months. The next and last one of the season will be Saturday, March 10, 2018.
Photo courtesy of Friends of Big Bear Valley