By Amanda Frye
Nestlé, a Swiss corporation which has been extracting water from an environmentally sensitive area in the San Bernardino Mountains without the properly-established water rights to do so for more than three decades and bottling it under the Arrowhead brand name, is on the brink of selling its water-related corporate holdings to another investor.
Nestlé has been reported to be in negotiations with One Rock Capital Partners, LLC , a private equity firm heavily funded by Asian investors, over the sale of Nestlé’s North American bottled water business, which includes the local Arrowhead Water bottling operation. In June 2020, Nestlé Waters of North America, Inc. announced it was going to sell its bottled water business in a push toward sustainability.
In 2015, Nestlé’s Arrowhead water withdrawals from the San Bernardino National Forest came under review and its expired permit questioned. Nestle takes groundwater from the headwaters of Strawberry Creek near Red Rock Wall and Highway 18 at the 5,000 foot level within the San Bernardino National Forest. Nestlé’s has a series of horizontal wells bored hundreds of feet into the mountainside draining millions of gallons of forest groundwater each year. A stainless steel pipeline system conveys the extracted forest groundwater southward to the 2,000-foot elevation level at the mountain’s foothills, where it is picked up by trucks near the site of the historic Arrowhead Springs resort and then taken to Nestlé’s water bottling operations and is sold as “Arrowhead 100% Mountain Spring Water.”
Since 2015, Nestlé’s water diversion and water rights in the San Bernardino National Forest have been under investigation by the California Water Resources Board, which has oversight on all California water rights and diversions, including those on federal lands within the state. Pending is the board’s final report of its investigation. In December 2017, the water board’s initial review of its investigation limited Nestlé’s taking of water to 26 acre feet annually, but Nestlé has refused to comply, continuing to take 144 acre feet in 2017, 141 acre feet in 2018 and 210 acre feet in 2019, with no indication of compliance in 2020 or 2021.
An acre foot equals 325,851.4 gallons or 43,560 cubic feet, the amount of water that would cover one acre, 43,560 square feet, to the depth of one foot.
The streambed of upper Strawberry Creek is dry as Nestlé’s nearby stainless steel pipeline drains millions of gallons of forest groundwater. The national forest water was reserved upon its founding in 1894 for nearby communities and irrigation. Forest waters are essential for supplying water to the Santa Ana River and for local groundwater recharge. Nestlé, which has intensified the deterioration of the ecology in Strawberry Canyon and the national forest by its water extraction for years, is seeking to negate its responsibility and liability by selling the water bottling operation and walking away with $4 billion.
Elsewhere in San Bernardino County, in Deer Canyon above Rancho Cucamonga, Nestlé extracts roughly 76 million gallons annually from springs at that location.
A review of the historical record indicates that Nestlé has no water rights within the San Bernardino National Forest at the 5,000 foot level, but has conflated Strawberry Canyon with the original 1910 Arrowhead water bottling operation at a natural water source on the grounds of the privately-owned Arrowhead Springs Hotel at the 2,000-foot elevation level in the foothills of the San Bernardino Mountains, where one of its corporate predecessors had established water rights, which were not passed on to the Arrowhead water bottling successors.
The Forest Service has not resolved this discrepancy, but is waiting on the California State Water Resources Board’s final report of its investigation into the matter. A new permit for Nestlé’s pipeline was issued in June 2018, with minimal mitigation measures despite an initial ruling by the state water board to reduce the water taken out of Strawberry Canyon while the investigation is pending.
Decades ago, Nestlé’s corporate predecessor Arrowhead Puritas was extracting water from Strawberry Canyon based on a ten-year permit issued by the National Forest Service in 1978 and renewed annually at a cost of $524 per year. Arrowhead Puritas was bought out by Beatrice Foods and then morphed into the BCI-Arrowhead Drinking Water Company, which acquired the still-active permit. The BCI-Arrowhead Drinking Water Company applied to extend that permit and, in 1987, while that application was still pending, Perrier purchased the BCI-Arrowhead Drinking Water Company. The then-pending water extraction permit renewal required a U.S. Forest Service review of the water drafting arrangement and its environmental/ecological impact, which at that point the U.S. Forest Service did not have the immediately available resources to carry out. In a gesture of compromise, Perrier was allowed, pending the eventual Forest Service review, to continue to operate in Strawberry Canyon by simply continuing to pay the $524-per year fee to perpetuate the water extraction under the terms of the expired permit. 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, which at that time existed under the name of the “Arrowhead Mountain Spring Water Co,” one that was never listed legally in corporate filings, but which is currently operating under Nestle Waters of North America, Inc.
By Amanda Frye