By Mark Gutglueck
A coalition of groups has filed suit against the United States Forest Service, essentially accusing it of according a multi-national corporation favorable treatment by allowing that company to continue to use expired permits to draw millions of gallons of water from wells, boreholes and tunnels on public land and sell it at a profit.
The suit comes with California now caught in what scientists say is the most severe drought the state has suffered in 1,200 years, following the governor’s executive order severely curtailing the amount of water people can use in virtually every part of the state and after the U.S. Forest Service for the last nine years has restricted or revoked many other permittees’ longstanding use of water from springs and streams in the San Bernardino Mountains.
The suit holds the promise of being an explosive one, the Sentinel has learned, which will lead to the exposure of how a company based in Switzerland has compromised federal policy with regard to foreign profiteering involving U.S. natural resources by means of providing lucrative employment to retired high ranking U.S. Forest Service senior managers.
The Center for Biological Diversity, The Courage Campaign and the Story of Stuff Project on Tuesday, October 13, filed a civil complaint in U.S. District Court in Riverside alleging the U.S. Forest Service has allowed the Nestlé Corporation, functioning as the Arrowhead Mountain Spring Water Company, to continue to take water from the San Bernardino National Forest, despite the expiration of its permits to do so in 1988.
Nestlé of North America, a corporate subsidiary of the Swiss-owned Nestlé Corporation, once had United States Forest Service permits, which it assumed from Perrier, when it bought out that entity in 1992. Perrier had acquired the permits when it purchased the Arrowhead Puritas Water Company in 1987. Those permits allowed the holder to extract water from a significant below-ground source in the San Bernardino Mountains. The Arrowhead Springs Company formed in 1909, drawing surface water from Strawberry and Coldwater Canyon near the old Arrowhead Resort at approximately 2,000 feet. In the 1930’s, a special use permit was obtained from the Forest Service and tunnels, boreholes and horizontal wells were placed at the higher elevation of 5,200 feet at the headwaters to Strawberry Creek.
The Arrowhead Springs Company merged with the Los Angeles-based Puritas Water Company in 1929. In 1978, Arrowhead Puritas renewed its permit for the removing of water by means of groundwater harvesting boreholes and horizontal wells from Strawberry Canyon, for which it paid the U.S. Government $524 per year, a standard fee for such uses in all National Forests. That permit expired 27 years ago, but the company continues to pay the miniscule fees associated with that permit and utilizes for commercial purposes water thousands of times in excess of that used by local domestic users who even before California Governor Jerry Brown’s executive order limiting water use statewide had their access to mountain water cut off.
During the early and middle part of the 20th Century, the Arrowhead Water Company and then the Arrowhead Puritas Water Company enlarged the pipes used to tap into the aquifer below and around Strawberry Creek and over the years built the company into the largest purveyor of bottled water on the West Coast based upon the quality of that water.
According to industry analysts, Perrier, which was then a privately-held company, paid over $400 million to acquire the Arrowhead Puritas operation 28 years ago. Among some in the know, it was believed Arrowhead Puritas had hornswoggled the French company, given that the permit on the Strawberry Canyon spring water was due to expire the following year.
The U.S. Forest Service, however, did not bring the curtain down on Perrier’s continued drafting from the source nor on Nestlé when it inherited the operation in Strawberry Canyon from Perrier in 1992. Furthermore, the Forest Service did not undertake a review of the permit. Rather, the company simply stayed current on its permit fee and neither the Forest Service nor any other arm of the federal government interfered with the operation, which entailed Nestle/Arrowhead continuing to have free rein over the Strawberry Canyon water. Following the elapsing of the permit in 1988, Perrier and then Nestlé continued to pay the $524 annual fee attached to the permit, and continued to extract water unabated from Strawberry Springs, conveying the water away in a stainless steel pipeline.
There is no limitation imposed on Nestlé’s water withdrawal from Strawberry Canyon. Efforts to quantify how much water, precisely, Nestlé is using have yielded inexact results and Nestle has asserted that it need not give figures because it is proprietary information. Neither the U.S. Forest Service, nor the state of California, nor the county of San Bernardino nor any local water agency has required that the water being taken from Strawberry Canyon, which is drawn not from a naturally occurring spring but wells and tunnel borings into the side of the mountain, be measured.
Headquartered in Vevey, Switzerland, Nestlé is the largest food company in the world measured by revenues. According to its 2014 report to its stockholders, bottled water accounts for seven percent of the company’s revenue. Much of that is from the Arrowhead brand, although the company does market filter purified water under the Nestlé brand and it owns the Perrier, Aquarel, Aqua Panna, Contrex and Vera brands. Based upon Forest Service records, up until the current drought the company has withdrawn upwards of 100 million gallons from Strawberry Canyon annually. An extrapolation based upon internal Nestlé documents puts the company’s Strawberry Canyon water consumption significantly beyond the 100 million gallon mark.
Gene Zimmerman was appointed forest supervisor in the San Bernardino National Forest by the United States Forest Service in 1991. To Zimmerman fell the responsibility of carrying out a review of the permit acquired first by Perrier and then Nestlé as a consequence of the 1987 sale of Arrowhead Puritas. Upon acceding to the forest supervisor position, Zimmerman failed to initiate the permit review. However, Nestle’s expired permit was only one of several hundred in the forest, the processing of which Zimmerman had severely inadequate funding and staff to deal with. After he had been in the post for a decade, in 2001, he initiated that review at Nestlé’s request. While work on that permit review progressed in fits and starts, ultimately it was never completed and Zimmerman allowed it to elapse, most likely because of inadequate staffing and the potential high cost to Nestlé for environmental analyses. In 2003 Zimmerman at the request of Nestlé wrote a letter to Nestlé saying the company was in compliance and could continue operations until the Forest Service issued a new permit in the future. In 2005, Zimmerman retired. Shortly thereafter he went to work for Nestlé as a consultant, assisting them with federal permitting.
The laissez faire regulation of Nestlé over the years has not gone unnoted. While Nestlé, as the largest water user in the San Bernardino National Forest, is allowed to operate unchecked, much smaller users, including ones with water rights that are senior to those held by Nestlé, are being cut off by the United States Forest Service from the access they traditionally had to mountain springs and creeks.
Beginning in 2006, the Forest Service began to limit the water usage of hundreds of residents in the San Bernardino Mountains, reevaluating the permits those residents had for the use of creek, spring and well water. Many, if not all, of those residents had long established permits to use the water from the Forest Service. A minority of them had state water rights. Nevertheless, the cabin owners were told by the Forest Service that they would no longer be allowed to draw water from mountain creeks in a way that would harm the environment. In some cases they were allowed to take water only in the winter when the supply was abundant. In some cases, they were prevented from taking any water from the streams. Most were instructed that they would need to exclusively use wells or, in the case where they had no wells, build tanks and truck in water. In many cases the cabin owners had documentation showing water rights extending back for more than eight, nine, ten and eleven decades. That softened no soap with the U.S. Forest Service, which threatened to revoke their cabin permits if they did not cease the taking of water from the creeks, and the impacted cabin owners were required to make immediate investments of upwards of $5,000 apiece and continue with the ongoing expense of purchasing outside water to maintain the liveability of their domiciles.
Conservation groups and local resource experts asked the Forest Service and Nestlé over a year ago to meet and work on the expired permit and extreme drought affecting the health of Strawberry Creek. The Forest Service and Nestlé refused to meet with the concerned citizens. At that point, conservation groups started writing letters asking for drought relief and permit re-evaluation before allowing more removal. When no action was taken, Ian James from the Desert Sun began investigating and exposing the problem in a groundbreaking series of articles that brought the issue into wider scrutiny.
In April, after Governor Jerry Brown’s water use reduction mandate was issued, an online community group calling itself the Courage Campaign collected more than 135,000 signatures endorsing a demand that Nestlé discontinue its Southern California bottling operations which utilize water drafted from public lands for which it does not have a current permit. The Courage Campaign petitioned the state Water Resources Control Board to utilize its authority in shuttering those operations.
In the face of that request, Nestlé’s water drafting in Strawberry Canyon continued unabated.
In the lawsuit filed Tuesday, attorneys Lisa T. Belenky, Justin Augustine, Rachel S. Doughty and Douglas P. Carstens are representing the Center for Biological Diversity, the Story of Stuff Project and the Courage Campaign Institute in a complaint for declaratory and injunctive relief filed against the United States Forest Service, Randy Moore, in his official capacity as the Pacific Southwest Regional Forester and Jody Noiron, in her official capacity as forest supervisor for the San Bernardino National Forest. One of the lawyers involved in the suit is a Durango, Colorado-based environmental attorney, Matt Kenna, who is not a member of the California Bar but is participating in the litigation under a provision in California law practice regulations, Pro Hac Vice, which allows attorneys from outside the state to represent clients in California’s courts under certain circumstances. Nestlé and Arrowhead Water are not named in the suit.
According to the suit, “The West Strawberry diversion structure consists of eleven access points that are tunnels, boreholes, and horizontal wells drilled as deep as 490 feet into the mountain, operated by Nestlé. Water from these diversions is collected and then conveyed in a metal pipe that travels several miles down the mountain, including within the bed of Strawberry Creek and its tributaries and their adjacent riparian habitat as well as outside of these areas. The majority of the diverted water is then piped into trucks, eventually to be bottled and sold throughout the United States under Nestlé’s signature premium brand name: Arrowhead Springs. Removal of large amounts of water at the highest elevations of the watershed is having an environmental impact at the well, borehole, and tunnel sites as well as throughout the entire downstream watershed.”
The suit continues, “Strawberry Creek and its tributaries and their associated vegetation support a large diversity of riparian species [which are] likely to be reduced in numbers because of historic and current diversions coupled with drought. Riparian habitat in the drainage is limited to the area that still receives surface or near surface flows in the Strawberry Creek watershed. As in most of Southern California, summer flows in the watershed are generally low. Summer storms add temporarily increased flow, but the higher flows quickly revert to a lower level generally supported by groundwater. The extent of stream flow in the summer time in Strawberry Creek has been far lower than normal in recent years, in part due to the ongoing drought.
The year-round diversion of substantial amounts of water using the West Strawberry diversion structure seriously affects summer flows in Strawberry Creek and amount of life that the watershed can support. There would be much more and improved riparian and woodland habitat if natural flows were returned to Strawberry Creek and its tributaries.”
According to the suit, “The United States Forest Service (USFS) is authorized under the Federal Land Policy Management Act, to grant or renew rights of way upon USFS lands for various special uses, including ‘pipes, pipelines … and other facilities and systems for the impoundment, storage, transportation, or distribution of water.’ Special use permits for such rights of way must be subject to terms and conditions that ensure compliance with federal and state laws regarding air and water quality and environmental protection, and that ‘minimize damage to scenic and esthetic values and fish and wildlife habitat and otherwise protect the environment.’ The National Forest Management Act requires the USFS to develop, maintain, and, as appropriate, revise a land and resource management plan for each unit of the National Forest System. The land and resource management plan must ‘provide for… watershed, wildlife, and fish’ and ‘provide for diversity of plant and animal communities.’”
The suit continues, “On August 8, 1976, the United States Forest Service issued the permit to Arrowhead Puritas Waters, Inc. allowing occupancy of ‘2.7 acres and/or 4.36 miles’ for the purpose of ‘maintaining thereon water transmission lines, necessary service trails to maintain pipelines and water collection tunnels, horizontal wells, and spring boxes.’ These diversion structures were and are located in the west fork of Strawberry Creek, just east of Highway 18 in the forest. The permit was amended on August 2, 1978 to name a new owner: ‘Arrowhead Mt. Spring Water Company.’ This is the name that remained on the permit until its expiration. The permit was again amended on June 24, 1981. At that time, an amendment was made to the termination clause of the permit stating that the permit, as amended, would ‘expire and become void on 8/2/1988.’ The permit does not convey any water rights. The USFS has never confirmed that Nestlé has a valid water right to the water it diverts from the Strawberry Creek drainage, and recent investigations have found that there are no pre-1914 water rights as professed by Nestlé. The permit is nontransferable except by payment of a fee and the permission of the issuing officer or his successor. Upon such permission, the terms of the permit require issuance of a new permit to the new owner. Although the United States Forest Service has acknowledged the expiration of the permit, it has affirmatively allowed Nestlé’s occupancy of the forest to continue for nearly thirty years ‘until the permit can be re-issued, based on its continued adherence to the terms of that permit, and its payment of the required annual fee.’ In October 1991, an application to expand development of further water resources in the west fork of Strawberry Creek was denied based upon the negative impacts the USFS expected it to cause to riparian habitat.”
The suit maintains that the United States Forest Service has allowed Nestlé to make alterations that were neither specified in the expired permits nor in any subsequently issued permits.
“In 1992, the West Strawberry diversion improvements were maintained and upgraded with the consent of the USFS,” the suit states. “In 1993, rock slides and flooding washed out 3,000 feet of pipe and the United States Forest Service granted authorization to repair the West Strawberry diversion improvements. In 1994 an application for a new well to be part of the West Strawberry diversion structures was denied, even though an existing well was proposed to be abandoned. The reasons given by the United States Forest Service for this denial included that the water extraction levels on the forest were then believed to be at the maximum allowable. In 2002 Nestlé claimed to be the holder of the permit. The USFS has never issued a special use permit to Nestlé for the West Strawberry diversion structures. In 2003 significant repairs were again made to the West Strawberry diversion structure, with the USFS’s knowledge and consent, following fire-caused land sliding and flooding.”
According to the suit, the United States Forest Service’s management comes across as entirely insensitive to the implication inherent in allowing Nestlé to carry on as if it has an entitlement to the forest’s water and has not taken seriously its role of safeguarding the San Bernardino Mountains’ water from exploitation by a private sector profiteer.
“In a letter to Nestlé dated April 7, 2015, the U.S. Department of Agriculture, Office of the General Counsel stated that: ‘In the interim, until the US Forest Service renders a decision on Nestlé’s permit application, the current amended permit remains in full force and effect according to its terms, including those provisions requiring compliance with all relevant state and local laws, regulations and orders.’ By this letter, the Forest Service has stated its intent to allow the unpermitted activities to continue indefinitely,” the lawsuit states. “The USFS annually accepts payment from Nestlé in exchange for permission to continue to allow the West Strawberry diversion structure to occupy forest land. Defendants have violated Federal Land Policy Management Act, 43 U.S.C. §§ 1761-66, by allowing Nestlé to continue operations and to modify and replace parts of the West Strawberry diversion structure without a valid special use permit in effect.”
The suit states “Nestlé’s operation of the West Strawberry diversion structures must be ceased by the United States Forest Service unless and until it issues a valid special use permit for those operations. The permit does not provide for renewal, and because the permit has expired, the USFS does not have the discretionary authority to renew the permit. Nestlé has never been the valid holder of the permit. If the USFS decides to issue a new special use permit to Nestlé, the water diversions and operations currently taking place may need to cease or be curtailed to protect forest resources pursuant to the requirements of the San Bernardino Land and Resource Management Plan. In making its determination whether, or under what terms and conditions, a new special use permit might be issued to Nestlé, because significant new information and new circumstances have occurred since the permit was issued, the USFS must conduct appropriate environmental analysis pursuant to the National Environmental Policy Act, 42 U.S.C. § 4321 et seq., ensure that Nestlé has valid and adequate rights to any diverted water, ensure consistency with the San Bernardino Land and Resource Management Plan, and comply with other laws. For these reasons, defendants actions in allowing Nestlé’s ongoing operation, modification, and replacement of the West Strawberry diversion structure without a valid special use permit are arbitrary, capricious, and otherwise not in accordance with applicable law under the Administrative Procedure Act, 5 U.S.C. § 701 et seq.”
The suit then lays out what remedies the plaintiff’s expect.
“Plaintiffs respectfully request that this court enter judgment providing the following relief: (1) Adjudge and declare that defendants’ action allowing operation of Nestlé’s pipeline and water extraction facilities in the absence of a valid special use permit violates the Federal Land Policy Management Act, and the Administrative Procedure Act; (2) Issue an injunction requiring defendants to prohibit operation or modification of the West Strawberry diversion structure unless and until a valid special use permit authorizing such action is in effect; (3) Order defendants to comply with Federal Land Policy Management Act, the National Forest Management Act, the National Environmental Policy Act, and the Administrative Procedure Act in connection with Nestlé’s diversion of water from the Strawberry Creek watershed.”
Though it is the current forest supervisor of the San Bernardino National Forest, Jody Noiron, who is named as one of the defendants in the suit, it is anticipated that as the matter proceeds through the legal system, major focus will be vectored to the actions of one of her predecessors, Gene Zimmerman, under whose watch review for and issuance of a new permit for Nestlé was delayed and then discontinued, and who then went to work for the Swiss company after his retirement. This has raised the specter of an unseemly conflict of interest at the least and a quid pro quo tantamount to the bribery of a federal official in the more extreme views of others, a circumstance in which the honesty and ethics of all federal employees have been tarnished by a “revolving door” ethos that allows retired public officials to enrich themselves at the public’s expense by moving into high paying positions benefiting the entities they had been called upon to regulate when they were government employees. Zimmerman is not the only example of a federal official overseeing the San Bernardino National Forest subsequently reaping a financial reward through employment with Nestlé upon retirement from employment with government. Ann M. Veneman, who was the U.S. Secretary of Agriculture from 2001 through 2005, is now on Nestlé’s board of directors. The USFS is a division within the Department of Agriculture.
John Heil, the lead spokesman for the USFS in the Southwest, told the Sentinel, “We cannot discuss ongoing or pending litigation,” but offered the following statement, “The San Bernardino National Forest is currently working with the Nestlé Corporation to begin the process of evaluating the potential environmental effects of Nestle’s infrastructure on National Forest System lands for the purpose of transmitting water across those lands. Nestlé has requested renewal of the permit and is providing information necessary to begin the National Environmental Policy Act analysis. With the start of the National Environmental Policy Act process, the forest will develop a proposed action for the issuance of a new Nestlé permit which the public will then be invited to review and comment on before next steps are taken.”
Heil continued, “Under current Forest Service policy and regulation, Nestlé is authorized to transmit water across NFS lands under the terms of its original permit while the renewal application is processed. The State of California is responsible for monitoring the quantity of water extracted from National Forest System lands for various uses and has the primary legal responsibility for the administration of water rights. Nestlé is obligated to report the quantity of water taken annually to the state, and the forest has not been informed of any issues with Nestlé’s water rights or reporting compliance. The National Environmental Policy Act analysis is comprehensive and will likely take at least 18 months. Until the analysis is complete, we cannot speculate on the outcome.”
Heil said that “Given the current drought situation and the governor’s recent executive order, the region will be working in conjunction with the state to determine how best to manage the impacts of the current drought on water uses. The region will also be looking at its special uses permits relating to water and has developed a drought committee which includes review of Forest Service practices that involve the use of water.”
Jane Lazgin, the corporate spokeswoman for Nestlé of North America, told the Sentinel, “Because we are not named in the lawsuit, we will not comment on it. With regard to questions about the permitting process, we want to ensure the public our permit remains in full force and effect. The permit remains in effect because we took the proper procedural step to request the renewal of the permit before it became due.”
She continued, “I have not seen the lawsuit but I can say we have been operating in the canyon for more than a hundred years and we have other sources for our Arrowhead brand in California. But since that is the original source and an important one for Arrowhead it is in our interest to manage that resource for long term sustainability. The permit is for the maintenance of a pipeline and the permit for the use of the pipeline remains in full force. We think it is in the best interest of all parties to move the permit renewal process forward. We are encouraged that the United States Forest Service has made the renewal of the permit a priority and we continue to abide by all of the laws relating to the operation of our facility in Strawberry Canyon.”
Zimmerman told the Sentinel, “The state has jurisdiction over water in the forest. Nestlé was entitled to it. It is Nestlé’s water. It is not the Forest Service’s water. The state might have a different view, but probably not. They [Nestlé and its predecessors] were taking it for over 100 years, close to or before the formation of the National Forest. The permits are for the pipeline and its facilities.”
Zimmerman said he and his staff were overwhelmed with work and for that reason had not gotten around to reviewing Nestlé’s permit.
“The way things are done in the Forest Service is a program of work is developed by the staff that worked for me, my appointees and the district rangers. They were responsible for the workload, if you will. They developed the program of work – projects – for me and my approval. There were times I added a few things if the budget allowed it. To the best of my recollection, that permit was never reviewed because we had higher priority work and there were no issues or problems associated with Nestlé’s pipeline. We had higher priorities. We had the MWD [Metropolitan Water District] pipeline. We had power lines. We had new construction that required special use permits that were going to have a much greater impact on the land. We had a very small budget and we would have spent more time on the renewal of the Nestlé permits if I could have hired more staff, but at the time, given what our budget was, we had issues to work on that were more important.”
As to whether Nestlé has in the past drawn and is continuing to draw more water than the forest’s ecosystem can sustain, Zimmerman said, “I’m not a specialist in that area but again, it is not the Forest Service’s water. It is Nestlé’s water. I came up in the Forest Service during a time when we issued permits and ninety-nine percent of the time when the time came, we renewed those permits. Occasionally, where it could be demonstrated that there was new information and that there was a change to a given habitat, there might be some adjustment to the permits. But when people were given a permit and then made improvements, when the time for renewal came up, whether it was after five years or ten years or twenty years, we did not reject the renewal of the permits.”
Zimmerman dismissed accusations that he had been influenced by his post-Forest Service employment relationship with Nestlé.
“That is below the belt,” he said. “Anyone who knows my work knows I am a person of high integrity. I have so many awards for my time with the Forest Service that I am almost ready to throw them away. I have awards from the Secretary of Agriculture and the chief of the Forest Service on down. I did not get those awards by favoring some people over others. My work for Nestlé runs somewhere between five to seven days per year.”
Gary Earney, whose 31-year career as a forester with the United States Forest Service included 29 years in the San Bernardino National Forest and fourteen years working under Zimmerman, said blaming Zimmerman for the current circumstance would be wrong. “I am not aware of any quid pro quo arrangement between Gene Zimmerman and Nestlé,” Earney said. “I knew Gene to be aggressive in the way he tried to manage a large complex forest without adequate funding and staffing. I give him credit for the good work he did over those years under very trying circumstances.”
As for the continuation of Nestlé’s use of the mountain water and the long-delayed reevaluation of that company’s permits, Earney said, “I am not opposed to drawing surplus water out of the forest but I am opposed to drawing water out of the forest without a quantitative analysis. I believe in this case the Forest Service should do that analysis itself or if it doesn’t have sufficient staff, then it should be done by an independent entity with no association with Nestlé, so there is no possibility of any conflict of interest.”
By Mark Gutglueck