By Mark Gutglueck
The State Water Resources Control Board’s hearing relating to the proposed issuance of a cease-and-desist order to BlueTriton Brands, Inc. curtailing that company’s drafting of water from the San Bernardino National Forest’s Strawberry Canyon resumed this week after a two-week hiatus.
In April 2021, One Rock Capital Partners, LLC in partnership with Metropoulos & Company, having formed Triton Water Holdings, Inc., purchased all of the American and Canadian assets of Nestlé Waters North America, Inc. with the exception of its Perrier bottling rights.
Overnight, Nestlé Waters North America, Inc. was rechristened BlueTriton Brands, Inc, and One Rock/Metropoulos took possession of operations relating to Poland Spring® Brand 100% Natural Spring Water, Deer Park® Brand 100% Natural Spring Water, Ozarka® Brand 100% Natural Spring Water, Ice Mountain® Brand 100% Natural Spring Water, Zephyrhills® Brand 100% Natural Spring Water, Arrowhead® Brand Mountain Spring Water, Pure Life® and Splash.
In making the buyout from Nestlé, it seems that One Rock/Metropoulos had not taken full stock of the controversy surrounding Arrowhead Mountain Spring Water, a flagship brand celebrated as being “bottled from a higher source” in marketing campaigns. Within one month of the acquisition, BlueTriton found itself faced with the prospect that it would need to reduce by more than 95 percent the amount of water it was diverting from near the top of the San Bernardino Mountains to provide its customers with the Arrowhead product.
The Arrowhead Mountain Spring Water bottling operation had been obtained by Nestlé Waters North America, Inc. as a consequence of Nestlé’s 1992 acquisition of Perrier, which came amidst some confusion about the chain of title to Arrowhead, which was included within the portfolios of otherwise non-existent entities, shell companies or distributorships such as the Arrowhead Water Corporation and Great Spring Waters. Perrier had acquired Arrowhead from the BCI-Arrowhead Drinking Water Company, a division of Beatrice Foods, in 1987.
There had been several companies bottling water under brands incorporating the Arrowhead name, some going back to the first decade of the 20th Century. Names used over the years included Arrowhead, Puritas, Arrowhead and Puritas, Arrowhead Puritas, Arrowhead Spring Water and Arrowhead Mountain Spring Water among them, all under the aegises of the Arrowhead Hot Springs Company, Arrowhead Springs Corporation, Arrowhead Water Corp, Arrowhead Mountain Spring Water Company, Coca-Cola Bottling of Los Angeles, Rheem, and California Consolidated Water Company.
Arrowhead’s pre-1930 bottling operations had drawn water from a spring near the privately-owned historic Arrowhead Hotel as well as from Arrowhead Springs on the east side of Arrowhead Mountain and in Coldwater Canyon at a level below the San Bernardino National Forest, which was established higher up in the San Bernardino Mountains in 1893.
At the time of a corporate transition in 1930, one of the Nestlé/Blue Triton predecessors had begun water drafting operations at the approximate 5,200-foot to 5,600-foot elevation in the San Bernardino Mountains, within the national forest. Water rights cannot be awarded on U.S. Forest Service land. Nor is it possible for an entity to assert prescriptive rights to water on U.S. Forest Service land. Prescriptive water rights, sometimes referred to as appropriative water rights, are created when a water user infringes upon the established water rights of another entity by means of trespass or unauthorized taking of that water. Upon making what would otherwise be illegal or illicit use of a given quantity of water openly and without the use of force for a period of five or more consecutive years, under California law, the interloper who took the water can then claim an annual right to the minimum amount of water taken during each of all of the five years. While the appropriative rights are granted to anyone making such a showing of use of another private citizen’s or local or state agency’s water, federal law supersedes state law, and federal law does not permit the federal government’s water rights to be taken away or stepped upon by prescription.
So, despite the consideration that BlueTriton’s corporate predecessors had been drafting substantial amounts of water from what is referred to as Strawberry Canyon at the 5,200-foot-to-5,600-foot elevation level in the National Forest, neither Blue Triton, nor Nestlé nor Perrier nor any previous company bottling water under the Arrowhead brand had established water rights in Strawberry Canyon.
In 1978 the U.S. Forest Service issued a permit for a pipeline conveyance system involving water drafting in Strawberry Canyon to the Arrowhead Puritas water bottling operation, then under the ownership of Beatrice Foods, for a standard fee of $524. The permit granted no water rights. Under the ownership of Beatrice Foods, Arrowhead Puritas had morphed into the BCI-Arrowhead Drinking Water Company. When the Arrowhead Puritas water drafting permit in Strawberry Canyon expired, the BCI-Arrowhead Drinking Water Company applied to extend the permit. In 1987, while that application was still pending, Perrier purchased the BCI-Arrowhead Drinking Water Company.
The water pipeline conveyance extraction special use permit renewal process entailed a U.S. Forest Service review of the water drafting arrangement and its environmental/ecological impact, which in the late 1980s and 1990s 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 U.S. 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 bottling operations 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.”
The diversion of that water left a parched and dewatered forest canyon below Strawberry Canyon, which burnt in the “Old Fire” in 2003.
Nestlé’s intensive water-drafting activity was long decried by environmentalists. That water removal came under increasing criticism as a statewide drought, which lasted for more than five years after it 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 28 years after its permit expired. At that point, the Forest Service moved to make an environmental review. In the meantime, Nestlé continued its water extraction, pumping an average of 62.56 million gallons of water annually from the San Bernardino Mountains. Environmentalists 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 or make an accurate accounting of the water it was taking, and wreaking environmental damage by its action.
Following a two-year investigation, state officials in late 2017 arrived at a tentative determination that Nestlé could continue to divert up to 26 acre-feet of water (8.47 million gallons) per year. Nestlé had gone far beyond the water drafting limit the company was entitled to, the State Water Resources Control Board said, and was actually drafting 192 acre-feet (62.56 million gallons), such that 166 acre-feet (54.09 million gallons) the company was taking annually was unauthorized, according to a report released on December 21, 2017.
The Water Rights Division of the State Water Resources Control Board called upon Nestlé to immediately end its diversions beyond the 26-acre-foot threshold or otherwise marshal evidence supporting its level of diversion.
Nestlé, despite being unable to produce any historical record of water rights approaching the volume of its diversion, continued to maintain it had established rights to roughly 190 acre-feet of water per year in Strawberry Canyon. The company refused to comply with the State Water Resources Control Board’s mandate, continuing to take 144 acre-feet in 2017, 141 acre-feet in 2018, 210 acre-feet in 2019, and 180-acre feet in 2020. By 2020, Nestlé was in negotiations with One Rock Capital Partners, LLC and Metropoulos & Company for the sale of Nestlé Waters North America. In late March 2021, in what was represented as a $4.3 billion transaction, that deal was closed.
A month later, on April 23, 2021, the State Water Resources Control Board’s Division of Water Rights, through its permitting and enforcement branch, issued a cease-and-desist order relating to the Strawberry Canyon water diversion activity. Initially, that cease-and-desist order went to Nestlé Waters North America, as the State Water Resources Control Board had not been informed of the buyout of Nestlé Waters North America, including the Arrowhead Spring Water bottling operation, by One Rock Capital Partners, LLC and Metropoulos & Company.
By that point, the State Water Resources Control Board had revised the maximum amount of water to be diverted from Strawberry Canyon to 7.26 acre feet per year.
In the April 23, 2021 notice, signed by Julé Rizzardo, the assistant deputy director for the permitting and enforcement branch of the State Water Board’s Division of Water Rights, a revised report of investigation and a draft cease-and-desist order was served upon Nestlé Waters North America, Inc., informing it to end its unauthorized and unlawful activities, which was defined in the cease-and-desist order as taking any more than 7.26 acre-feet (2.342 million gallons) of water annually out of Strawberry Canyon.
The draft order alleged that Nestlé’s diversion and use of water from Strawberry Creek in San Bernardino County violated or threatened to violate the prohibition in Water Code section 1052 against the unauthorized diversion or use of water subject to Division 2 of the Water Code. The draft cease-and-desist order notice, issued under Water Code section 1834, advised Nestlé that if Nestlé wanted to request a hearing on the draft order it had to submit a written request for a hearing to the administrative hearing office within 20 days from Nestlé’s receipt of the notice.
On May 11, 2021, eighteen days after the issuance of the notice, Robert E. Donlan of Ellison Schneider Harris & Donlan, L.L.P., the law firm representing BlueTriton Brands, Inc., filed a request for a hearing on the matters and allegations in the draft cease-and-desist order notice, noting that BlueTriton is the “successor by name change” to Nestlé.
Donlan asserted that BlueTriton is “the owner of the water rights and obligations subject to the notice.”
Even before One Rock/Metropoulos closed the deal with Nestlé for the Nestlé Waters North America buyout, inquiries were made, including ones by the Sentinel, with regard to whether One Rock/Metropoulos fully understood that Nestlé’s claim to rights to water in Strawberry Canyon was in dispute. One Rock Capital Partners, LLC and Metropoulos & Company nonetheless proceeded with the Nestlé Waters North America buyout.
After it became widely known that Donlan and his firm were seeking the hearing on behalf of BlueTriton, a multitude of entities and individuals, many of whom had been instrumental in prompting the State Water Resources Control Board to make its inquiry into the activity in Strawberry Canyon, made requests to weigh in on the matter and add additional hearing issues. Those parties eventually grew to include the San Bernardino Valley Municipal Water District; the Center for Biological Diversity; the Sierra Club; the California Department of Fish and Wildlife; the Story of Stuff Project; Steve Loe, a retired U.S. Forest Service biologist; Hugh Bialecki, a Lake Arrowhead-based dentist who is the president of the Save Our Forest Association; Amanda Frye, a Redlands resident who has done extensive historical research relating to water rights holdings and claims by various entities and corporations in San Bernardino County; Victor Vasquez, who has worked within the Division of Water Rights of the State Water Resources Control Board; Anthony Serrano, a resident of Highland and water user in the Bunker Hill Basin, where water originating in Strawberry Canyon eventually flows; and Tomas Eggers, a water resources control engineer employed by the State of California.
Despite the earlier insistence of One Rock/Metropoulos/BlueTriton corporate officials that they were knowledgeable about the disputes over the water rights in Strawberry Canyon, when Donlan and his law firm were faced with the prospect that many of those who had been raising that issue, in some cases as early as 2014, were intent on participating in the hearing, Ellison Schneider Harris & Donlan filed a motion with the administrative law judge who was to be the hearing officer, Alan Lilly, seeking to prevent Vasquez, Loe, Frye, Eggers and Bialecki as well as Rachel Doughty, an attorney representing the Story of Stuff Project, from testifying or participating in the hearing, claiming they did not qualify as expert witnesses and any information they would bring to the discussion was irrelevant.
Lilly denied that motion.
When the hearing began in early January, the primary witness for BlueTriton was Larry Lawrence, the natural resources manager with BlueTriton Brands. Lawrence held a similar position with Nestlé Waters North America.
A mechanical engineer by training, Lawrence offered an overview of the water collection and diversion facilities in use by BlueTriton Brands at the confluence of the east and west forks of Strawberry Creek.
Lawrence said that prior to 2021, the excess water collected by Nestlé from Strawberry Creek had been deposited in Waterman Canyon, two watersheds over from Strawberry Canyon, where the cisterns that Nestlé had for the collection of the water ultimately used in the Arrowhead Spring Water bottling operation are located. Since 2021, Lawrence said, Nestlé and now BlueTriton had in large measure been complying with the Forest Service’s instructions to discharge the excess water in lower Strawberry Canyon, although roughly 20 percent of the diverted Strawberry Creek water is sent to the mountain base grounds of the historic Arrowhead Hotel now owned by the San Manuel Mission Indian Tribe.
Lawrence was cross examined by multiple parties.
The hearing resumed this week and was conducted in an electronic format, with those participating doing so remotely, using Zoom videoconferencing.
Amanda Frye testified on January 31.
Frye, a resident of Redlands, is a nutritional scientist and author. She previously worked in a survey office and is well-versed in map reading, surveying and legal property descriptions. Among the publications that have published her work is the Sentinel.
In her non-sworn opening statement, Frye said she had conducted unpaid independent research investigating the matters in this case regarding the water rights, the history, the springs and what she characterized as the unauthorized water diversions in Strawberry Canyon by BlueTriton Brands, Inc. and its corporate predecessors. She said she had hiked through Strawberry Canyon on numerous occasions, “observing the dewatered Strawberry Creek and BlueTriton’s pipeline and spring diversion sites.”
Frye said that “any claims within the forest boundaries had to be made in
1893,” at the time of the founding of the San Bernardino National Forest. “Neither BlueTriton nor their predecessors have owned land nor water rights in the San Bernardino National Forest Strawberry Creek headwaters,” Frye asserted. “In 1930, BlueTriton’s predecessor, California Consolidated Water Company, encroached into the forest’s Strawberry Creek headwaters and started diverting spring water from Strawberry Canyon with neither a valid water right nor state appropriation/diversion permit. This encroachment occurred before the Del Rosa judgment.”
The Del Rosa lawsuit was a lawsuit over appropriative water rights brought in the early 1930s by the plaintiff Del Rosa Mutual Water Company, represented by attorney Ralph Swing, against D.J. Carpenter, Isabel Turner, George Mason, J.B. Jeffers, L.R. McKesson, the National Thrift Corporation of America, the National Thrift Corporation, California Consolidated Water Company and California Consumers Company, the Arrowhead Springs Company and Arrowhead Springs Corporation. The lawsuit was settled by a stipulation of those rights on October 19, 1931.
The Del Rosa lawsuit, Frye said, “did not state that the Strawberry Creek headwaters, located within Township 2 North, Range 3 West were in the San Bernardino National
Forest. Neither the United States Forest Service nor the State Water Board were parties to the case.”
Frye said, “BlueTriton’s predecessors continued diverting Strawberry Creek spring water, expanding the water take from one spring in 1930 to building three spring adits/tunnels and using 10 borehole horizontal wells to tap spring aquifers in Strawberry Canyon carrying billions of gallons of the forest water down the mountain to be trucked to a bottling facility and sold back to the public as ‘Arrowhead® Mountain Spring Water.’”
An adit is a horizontal passage bored into earth, stone, a boulder or a hillside for drainage purposes.
Frye said, “Location is essential to understanding this case. The Public Land Survey System is used to identify location in the historic records, withdrawal sites and property boundaries. BlueTriton takes and diverts the public’s forest water from the mountain top Township 2 North, [starting at 5,600 feet above sea level] then pipes the water to the mountain base about 2000 feet above sea level at Township 1 North [where the water is then dispatched by truck to a bottling facility]. The true Arrowhead Springs are located on private land below the landmark Arrowhead at the mountain base. The first Arrowhead bottled water came from Coldwater Creek near the landmark Arrowhead at the mountain base which was a different watershed and not downstream from BlueTriton’s water withdrawal from unnamed springs in the Strawberry Creek headwaters. The Strawberry Creek headwaters spring numbers are from BlueTriton’s predecessor, and are not the true Arrowhead Springs.”
Frye said that “Historic records show that prior to diversion, Strawberry Creek was a perennial stream that flowed even during dry months, with headwater springs feeding a vibrant flowing creek lined with scrub oak, chamise, alder, dogwood, cedar, sycamore, willow, ferns, bay laurel and thimbleberry. Prior to diversion, Strawberry Creek was used for recreational trout fishing. Today, Strawberry Creek has diminished flow and a dry creek bed with impoverished fauna and flora that no longer can support trout since fish need water to survive.”
In bringing her opening statement to a close Frye implied that Nestlé had hoodwinked One Rock/Metropoulos by selling it non-existent rights to Strawberry Canyon water, noting that “The evidence reflects that BlueTriton has neither valid water rights nor authorized diversion permits in the Strawberry Creek headwaters, including no evidence to pre-1914 rights. The business name “Arrowhead Mountain Spring Water Company” was a name used in the 1990s on printed letterhead, permits, invoices, and newspaper articles for the Strawberry Canyon spring water diversion; yet, this name does not appear in BlueTriton’s chain of title; thus, the chain of title was broken.”
Frye said a principle in law is that “a seller cannot legally sell, transfer or deed what he does not own; therefore, the purchaser of such fraudulent transactions can claim no ownership title. Records reflect that BlueTriton predecessors did not have a valid water right in Strawberry Creek headwaters and gave away any possible pre-1914 water rights in the 1930s. Thus, it appears that BlueTriton purchased only a water bottling operation. It is the purchaser who has the burden of due diligence to understand what he is buying.”
In California, a water right obtained prior to 1914 is given special status as a “pre-1914 appropriative water right.” A water user with a pre-1914 right, on non-federal land, needs no water right permit unless the use of the water increases beyond the amount of water used prior to 1914, in which case the user must obtain a permit for the new amount unless it can be established that there was a plan in place before 1914 to use the additional water after 1914.
In her sworn testimony, Frye said her research had shown that the “Arrowhead Drinking Water Company was surrendered in 1987 and was no longer an active California business entity in 2015.” She said the water tapping systems in Strawberry Canyon “were registered nonetheless to the Arrowhead Drinking Water Company. The business name Arrowhead Mountain Spring Water Company is handwritten on the 1978 expired permit and was in the 1990s US Forest Service record, documents, letterhead, in correspondence, invoices and even found in newspaper articles showing the exportation of water to Japan.”
BlueTriton during the hearing was represented in the main by Robert Donlan and another attorney with the water law practice group of Ellison Schneider Harris & Donlan, Shawnda Grady.
Over the course of Frye’s testimony, as well as before it began, Grady lodged multiple objections to both the rationale for Frye’s testimony, the basis for her testimony, the foundation for her testimony, Frye’s lack of qualifications and expertise as well as the substance of her statements and the statements themselves.
At one point, Lilly responded to Grady’s objection with regard to Frye’s alleged lack of expertise and qualifications, which included an assertion that Frye was proffering inexpert opinions.
“Based on her extensive research, she is entitled to give these opinions,” Lilly said. “As far as what weight I or the State Water Board will give them, that is another question. Since she’s apparently not qualified as a lawyer with requisite knowledge for legal opinions, [it] might not have a large amount of weight, but I’m going to allow her to testify because I believe she has some knowledge sufficient to testify.”
Frye related that she had made an extensive survey of the area on her own by hiking there, which had given her the opportunity to compare and contrast the condition of Strawberry Canyon in recent years with an account of its water resources described by W. P. “Penn” Rowe, a civil engineer who had made extensive field notes of the springs in Strawberry Canyon in 1930, preparatory to those springs being tapped and diverted.
“The headwaters appear basically as a dry creek,” she said, with “no continual creek flow and no visible natural springs.” In comparison, Rowe’s field’s notes, Frye said, referenced a stream that was “flowing.”
At that point, Grady raised an objection to Frye’s characterization of Rowe’s observations as “relying on hearsay” evidence.
Lilly overruled the objection.
What she had observed in recent years in Strawberry Canyon, Frye said, was vastly different from what was described in Rowe’s 1930 field notes and reports.
Frye dated the initiation of the effort by the Consolidated Water Company, a BlueTriton, corporate predecessor, to remove water from Strawberry Canyon as August 1930.
She then referenced Rowe’s field notes corresponding to the springs in Strawberry Canyon which today have been supplanted by the facilities BlueTriton is using to divert the Strawberry Creek water.
She said Rowe’s July 3, 1930 field notes “describe the natural spring site and how much water was in Strawberry Creek’s headwaters, the ecosystem prior to diversion. On July 3, 1930, Rowe described the highway spring. This spring was described as being developed by digging into rock. The highway spring flow was described by Rowe on July 3, 1930: ‘Water runs down the top of bedrock and comes out under boulders.’ He recorded the flow at that point as five gallons in 74 seconds, making note that in May [1930] it was five gallons in 60 seconds.”
She compared what Rowe had encountered nearly 92 years ago with what is presently the case in Strawberry Canyon.
“Now, this headwater springs is barely wet, and now the diversion pipe dribbles water to a creek a few feet away from the natural spring site. The flow was small, enough to fill some water to Strawberry Creek for a few yards,” she said, adding, “In October 2016, I sent a Freedom of Information Act request to the U.S. Forest Service for documents relating to this highway springs. The original appropriation permit was obtained in 1928 to divert water for use along the highway and a drinking fountain along the Red Rock Wall Overlook. The diversion permit was for 6.25 gallons per minute or 9,000 gallons per day. U.S. Forest Service reports indicate that a minimum 6.25 gallons per day from this highway springs, 6108, was going to be required, otherwise water extractions could be shut off or reduced. Based on the site, it is questionable this minimum flow monitoring and water shut-off is occurring. The U.S Forest Service Highway Springs no longer expresses under the described boulders. Now there is just a dry creek bed. Below that dry creek bed and boulders is a spring box that myself and others have seen referenced as Spring 1. This sits below the highway spring and the boulders. I have also seen this referred to as Spring Box 8 or 1-8 Complex. I have never seen any natural flowing water at this sight, only a dry creek bed.”
Frye said that “Prior to diversion, Rowe notes on July 3, 1930, Spring 1 output was five gallons in 27.2 seconds. Rowe’s notes describe Spring 1 as in a hollow below the highway springs. Spring 1 was not diverted until 1948, and prior to diversion in April 1948, Spring 1 output was recorded at 10.5 gallons a minute.”
At present, Frye said, based on her own observation, just down from Spring Box 1, there is “no natural spring expression.”
With regard to the discharge pipe near that location, Frye said, “Sometimes when I’ve been up there, there’s water expressing from the discharge pipe, usually not.”
In making her presentation relating to her observations of the condition of Strawberry Canyon in recent years, Frye presented photographic evidence taken during hikes in the area.
Frye continued, saying, “July 3, 1930, Rowe describes Spring 2 site flow as five gallons in 5.1 seconds. Rowe describes Spring 2 as coming out of bedrock through small crevices west of [Spring] Number 1 and 500 feet lower in elevation. Now there’s just a vault, no natural stream of spring flow, and it’s just a birdbath filled with a discharge pipe dribbling water.”
Frye went on.
“On July 3, 1930, Rowe recorded Spring 3 output at five gallons in 15.4 seconds,” Frye testified. “He described the spring as water from a lot of bedrock and the headwaters of Strawberry Creek.”
She contrasted the 1930 circumstance to the condition today.
“All that is at the vault,” Frye said, is a “pipeline, dry creek bed.”
Frye said she had first gone to Spring 4 on December 4, 2021. The situation at Spring 4, which is not diverted or developed, is a natural spring flow and extends a few yards downstream and then stops.
According to Frye, “Rowe on July 3, 1930, describes Spring 4 as ‘big springs. Five gallons in 4.5 seconds. Water from one big crevice.’ Rowe noted that Spring 2 and 3 formed streams that flowed into Spring 4.”
In contrast, Frye said, “Now there are no streams flowing from Spring 2 or 3 into Spring 4.”
Frye further testified, “The first spring I ever visited was Spring Site 7. When I hiked to Spring 7, all that was visible was a vault, pipes and a dry spring bed. In October 2017, I hiked up Strawberry Creek from City Creek Road to the Strawberry Creek east-west confluence below BlueTriton Springs 10, 11, 12. The contrast between the east and west branch was striking. BlueTriton takes water above the west Strawberry Creek branch. The west branch above the confluence was more like a stagnant wet marsh that was easy to walk through versus the untapped east branch, which was rapidly flowing with several inches of water deep, even in October. The differences between the impoverished west branch and the vibrant east branch of Strawberry Creek was visibly noticeable. Nestle’s take above the west branch appears to have negative impact on the creek.”
Grady objected, suggesting Frye had not signaled in advance that she was going to make reference to Spring 7 in making her application to participate in the hearing.
Rachel Doughty, the attorney for the Story of Stuff Project, found a reference to Spring 7 in the preview of the evidence Frye had provided to the State Water Resources Control Board in preparation for her appearance. Lilly overruled Grady’s objection.
“This testimony is relevant to the base flows that Mr. Rowe observed in 1930,” Lilly said.
In distinguishing between the locations where BlueTriton’s pre-1930 corporate predecessors had their water drafting facilities and the springs in Strawberry Canyon that are now being diverted, Frye in her testimony strove to demonstrate that the Arrowhead water bottling operation associated with the Arrowhead Springs Hotel in the first decade of the 1900s, the 1910s and the 1920s drew its water in the foothills of the San Bernardino Mountains just above the City of San Bernardino and outside the confines of the San Bernardino National Forest. Strawberry Creek in Strawberry Canyon is located higher up in the San Bernardino Mountains, within the national forest. Two key and separate locations, Frye said, were San Bernardino Township 1 and San Bernardino Township 2.
She said the original source for the bottled Arrowhead water was in Township 1 North, where the springs and hot springs associated with the hotel are located.
“That was located at Township 1 North,” she said. “The hot springs was well known to Indian tribes and early settlers.”
Her geographical references, she said were “based upon the Public Land Survey System,” which specifies townships, which consist of six-mile by six-mile squares containing 36 one-mile by one-mile sections. Within those townships are east and west ranges.
In the relevant area, the two townships Frye referenced – Township 1 North and Township 2 North – are oriented relative to the San Bernardino Meridian, which runs along the south end of Township 1 North.
“Township 1 North,” Frye said, covers the “mountain base, the Arrowhead Landmark, the hot springs, Coldwater Canyon, the Arrowhead Springs Hotel and Indian Springs.”
Frye said that Township 2 North covers land that is “beneath the Rim of the World” along with Highway 18 and BlueTriton’s water withdrawal sites “within the San Bernardino National Forest.”
She stated, “The early withdrawal sites were at Township 1 North Range 4 West based on records I found at the San Bernardino County historical archives.”
Strawberry Canyon, in contrast, lies within Township 2 North Range 3 West.
Further proof that the original water supply for water bottled using Arrowhead in its brand name came from low in the San Bernardino Mountains south of the national forest consists of San Bernardino Superior Court case records, Frye testified.
“There were two court cases,” she said. “In 1912-1913, Arrowhead Hot Springs versus Arrowhead Cold Springs Company, Case 12532 San Bernardino County Superior Court. It gives the Arrowhead Hot Springs property legal description in the complaint, Township 1 North Range 4 West-Range 3 West. This is at the base of the mountain in Township 1. This describes the original source for Arrowhead water bottling was from Coldwater Creek from springs coming off the rock of Arrowhead Mountain in Coldwater Canyon. There’s repeated testimony describing what that looked like. So, we know that the original site for withdrawal was at the base of the mountain and from Coldwater Creek.”
Further indication that water bottled under the Arrowhead brand did not come from Strawberry Canyon until after 1930 is provided by, she said, “the Del Rosa judgment. Consolidated Water Company tried to obtain water rights at the current site location. The case never mentioned that the land was in Township 2 North Range 3 West [nor] was located in the San Bernardino National Forest. Neither the U.S. Forest Service nor the State of California were involved in the cases. Adverse possession does not apply to federal land.”
Yet more evidence that BlueTriton has no claim to the water in Strawberry Canyon consists of a line contained in San Bernardino National Forest historic records kept in an archive in Riverside County, Frye said. A document she located dated April 28, 1966 is a memorandum concerning all of the applications to appropriate water within the boundaries of the San Bernardino National Forest up until that time. On page 10 of that memorandum is reference to the highway spring that Rowe had described in his July 3, 1930 field notes. The fifth line on page 10 in the April 28, 1966 memorandum places the highway spring within Township 2 North Range 3 West and gives the California Division of Highways jurisdiction over the spring, which was used to provide motorists with a drinking fountain, with that jurisdiction being granted to or claimed by the California Division of Highways on October 31, 1928. The jurisdiction over the highway spring was later transferred to the U.S Forest Service, Frye noted.
“There are no other applications in the San Bernardino National Forest for any of BlueTrion’s predecessors,” she said.
Within the San Bernardino County Hall of Records are multiple references to the appurtenances for the Arrowhead bottled water operations in the first three decades of the 20th Century. Included in these, Frye said, were a “1929 pipeline survey and easements,” as well as a licensed land surveyor’s map. “The first thing to notice is the maps are in Township 1 North,” she said. “These maps show that the pipeline in 1929 was only at the mountain base.”
Frye said, “The early history of the Arrowhead bottled water is tightly intertwined with the Hot Springs Hotel, especially since the Coldwater Creek fed by springs off of Arrowhead Mountain was the source of the first water for bottling. The history of the Arrowhead Springs Hotel, the recorded deeds, give the location of this hotel and the Arrowhead Springs property at the base of the mountain Township 1 North.”
Any legitimate claim to water that BlueTriton may have in the area pertains to a source in an area outside Strawberry Canyon, Frye said, “since BlueTriton’s interest is derived from the property and the water bottling was first located at the base of the mountain.”
She said this is backed by “property deeds recorded between 1915 to 1925 on the Arrowhead Springs real property. If you notice in those deeds, it only contains real property at the base of the mountain in Township 1 North. The associated water rights go with the real property.”
Frye noted that from 1920 to 1924, while the Arrowhead Springs Hotel was being used as an asylum for shellshocked and gassed veterans of World War I, documents were generated which demonstrate the water at the hotel was being obtained from Indian Springs located in Township 1 North.
“In 1925, the hotel and water business were sold, and used as collateral for the issuance of a gold bond,” Frye stated. “Documents for the bond issuance give the hotel property and the associated water rights as being in Township 1 North Range 4 and 3 West.”
Frye further located documentation for a series of agreements involving Charles Anthony, the water bottling manager and the vice president of the Arrowhead Springs Corporation. Some of those documents show Anthony was approached by the California Consumers Company to sell off the water bottling company. The title insurance policy describing what was to be conveyed in the sale excludes any surface rights, the hot springs and anything reserved by the U.S. Government, which would include water rights in the forest, Frye pointed out.
“Thus, there was nothing ever in Strawberry Creek and Canyon, even up through 1929,” she said. “It was always at the base of the mountain.”
According to Frye, the notice of intended sale included certain water rights and easements relating to the sale of the hotel property. “We know that those are in Township 1 North Range 4 West based on deeds,” she said. Byron Waters, the attorney who drew up the documents for the sale, wrote that all water rights in the possession of the hotel would be transferred, Frye said, and in the title insurance policy there are exclusions and exceptions. Excluded, she said, are water reservations in the San Bernardino National Forest, and anything involving adverse possession, surface streams and hot springs belonging to the Arrowhead Springs Corporation.
“So, the clause alone would have excluded anything in Strawberry Creek in the upper canyons in Township 2 Range 3 West in the San Bernardino National Forest,” she said. “It also would have excluded Indian Springs, because actually that was located, based on the 1929 Survey map, in the San Bernardino National Forest. The terms ‘belonging to grantor’ are key. The grantor, Arrowhead Springs Corp., only owned property in Township 1 North, and that did not include anything in the Strawberry Creek headwaters, Township 2 North.”
Also testifying this week was Hugh Bialecki, a Lake Arrowhead-based dentist who is the president of the Save Our Forest Association.
Bialecki stated that as early as September 2014, he had expressed concern about water depletion in Strawberry Canyon and wanted to have an informational exchange with U.S. Forest Service representatives on the subject, but was not able to get them to schedule such a meeting. In a March 2015 letter to then-Regional Forester Randy Morris, Bialecki proposed a National Environmental Protection Act study of the situation in Strawberry Creek and objected to continued water diversions there, which he asked to be halted until there was a thorough review of all aspects surrounding the special use permit for the water pipeline that had been issued to Arrowhead Puritas/Beatrice Foods in 1978 and which had expired in 1987, and was being automatically renewed on an annual basis.
Bialecki said he had also sought to address the issue of what he said were Nestlé’s illegally-claimed water rights, specifically the lack of recorded claims at the water withdrawal sites in Strawberry Canyon and Indian Springs. He made, he said, multiple attempts to communicate with the United States Forest Service regarding what he called “this previously wrong expired permit” to draw water from Strawberry Creek.
Bialecki also presented photographs he had taken that documented the circumstances relevant to his testimony.
Grady objected to Bialecki’s testimony and presentation of evidence on technical grounds, arguing that Bialecki was permitted to participate and make statements pertaining to policy rather than on evidentiary grounds, and that this had been changed abruptly just before his appearance as a witness. Grady said Bialecki’s exhibits and testimony in writing were not provided sufficiently in advance of his appearance, that is, by the December 17 deadline Lilly had set for such submissions. Grady further suggested that Bialecki’s statements had no relevance to the issue being considered by the State Water Resources Control Board.
Lilly overruled the objection, and offered Grady an assurance that only the information deemed relevant to the question of whether the cease-and-desist order should be granted would be considered in his final ruling.
“Certainly, at the end of the day we will only consider evidence that is relevant to the hearing issues as we prepare our post order,” Lilly said. Lilly said he was indulging all members of the public who wanted to participate in the hearing process, insofar as they had input, information or evidence that had a bearing on the matter. He said the State Water Resources Control Board had a policy of allowing interested parties who are not represented by attorneys to participate in the hearings.
Anthony Serrano, a Highland resident, gave brief testimony. Highland draws some of its water from the Bunker Hill Basin.
Serrano submitted exhibits, stating “From a local resident’s standpoint in the city of Highland, it is clear to us who have worked on water diversion projects in our community over the years, the Bunker Hill Basin was affected by the diversion of water.”
Grady objected to Serrano’s testimony and offerings as lacking a proper foundation.
Lilly overruled the objection, stating, “At least parts of each document are relevant to the hearing issues,” and he said what is not relevant will be omitted from the final report and will not be used or relied upon in the drafting of the proposed order.
Testifying this week as well was Steve Loe, a retired U.S. Forest Service biologist who had 30-years’ experience working within the San Bernardino National Forest as well as for the forest service in Prescott Arizona for four years, Eureka, California for three years and Tucson, Arizona for three years.
Water diversion from Strawberry Creek by BlueTriton, Nestlé and their predecessors, Loe said, “has completely stopped any flows from reaching the main stem of Strawberry Creek. Strawberry Creek used to have over a hundred gallons per minute and the headwaters springs, just 1, 2, 3 and 4, that’s now down to a half of a gallon per minute.”
Rachel Doughty, representing the Story of Stuff Project, asked, “To what degree has BlueTriton’s diversion impacted the natural spring flows and base flows near the diversions?”
“They’ve completely eliminated them,” Loe said.
Loe identified W.P. Rowe as “an engineer hired in ‘29, ‘28 maybe, to start working on the Strawberry Springs and determining what the flows were and whether or not they could be diverted, and if they were diverted, what the outputs would be so that BlueTriton’s predecessors could make decisions along with the hotel property on development of those springs.”
Loe said Rowe used methods and techniques in his measurements that were accurate and consistent with what is still used by engineers, and that Rowe’s measurements were credible, detailed and meticulous.
Based upon Rowe’s recorded findings, the riparian landscape of Strawberry Canyon in 1929 and 1930 was far superior compared to what exists there now, Loe testified.
“It was much more lush at that time,” Loe said. “There’s whole sections of stream a half-mile long that no longer have surface flows. That’s a major, major loss.”
Chris Sanders of Ellison Schneider Harris & Donlan cross examined Loe on behalf of BlueTriton, and wrung from him that he is not a licensed civil engineer, is not a licensed hydrologist, is not a registered hydrologist, is not a licensed geologist, not a trained or certified historian and is not an attorney.
Lilly took it upon himself to question Loe.
In response to a question from Lilly, Loe said that the junction of flow from all of the upper springs at the head of Strawberry Creek is at Station 123+00 or 12,300 feet upstream from the old intake to the 4-inch pipe from Strawberry Creek to the Arrowhead Hotel which was laid in 1929.
Lilly asked Loe about his understanding of who built the water intakes and pipelines in Strawberry Canyon.
“The Arrowhead Springs Hotel and Consolidated Water had a deal,” Loe responded. “I’m not sure if Consolidated had any money in that original 1929 pipe to the hotel pick-up, but then from there it went up the west fork of Strawberry Creek and Consolidated Water paid for that. Consolidated Water paid for the pipeline from the springs down to connect to the Consolidated Water link to the Arrowhead Springs. It was an in-stream diversion, from what I can tell, so they connected pipeline together is what happened.”
Lilly referenced Weir 3 Station 1 in Strawberry Canyon, and asked Loe if it had been laid in 1929.
Grady objected that Lilly was asking questions without providing the basis for the foundation of Loe’s statements in response.
“You’re asking questions of a witness, and asking him to speak as if what he says is necessarily fact, without asking the basis of any of these opinions, the documents that lay the foundation for those opinions,” Grady said.
Lilly sustained the objection to his own question and then restated the question to ask Loe, based on his review of all of the Rowe papers and other historical documents, what his understanding was as to the date the pipeline from the weir at Station 0 or Station 1 to the Arrowhead Hotel was established.
“Based on your reading of historical documents, who installed the pipeline?” Lilly asked.
“Arrowhead Springs Hotel as far as I know,” Loe responded. “There may have been a contribution from Consolidated Water. Arrowhead Springs Holtel in collaboration with Consolidated Water.”
Lilly then posed one more question regarding diversions from Strawberry Creek to the Arrowhead Springs Hotel crucial to whether BlueTriton could establish water rights in Strawberry Canyon dating from before the 1893 founding of the San Bernardino National Forest.
“Based on your review of all the historical documents, do you have any information or understanding that there were any diversions from Strawberry Creek to the Arrowhead Springs Hotel any time before 1929?” Lilly asked.
“It appears that there may have been a pipeline that predated the one that we just looked at by maybe six months to a year into the bottom of Strawberry Creek about a half a mile up from the hotel, but it looks like that was quickly abandoned, I think,” Loe said. “My opinion is because of several factors: 1) There wasn’t a whole lot of water getting there and 2) it appeared to cross the creek, which would have been very hard to maintain with the flows we get in that area with floodwaters. I think at some point very quickly… and it may have just been blueprints is all that they had. I think they very quickly then decided to go up the way they went all the way to where the hotel pick-up is and did that in 1929. I think all that happened in 1929.”
Lilly then asked if he was aware of any diversions from Strawberry Creek before 1929.
“No,” Loe said.
Lilly asked about the Cold Creek pipeline and when it was built.
“I think it was about the same time. It may have been earlier. So, it may have started earlier in 1929, maybe even ‘28, but it was basically at the same time, from my understanding.”
Lilly asked who built it
“I have a feeling it was probably a joint thing again,” Loe said. “For sure, the hotel was getting water from Coldwater [Canyon], so I know they were involved. Rowe did some of the work. So, I don’t know. It could have been a cooperative deal again or it could have all just been the hotel.”
Lilly asked for a conversion of one miner’s inch flow under a four-inch head.
“It said 11 inches in some spots [of the documentation he consulted] and then it said nine inches in others,” Loe said. “It said nine inches was southern California versus Northern California. So, I tried both figures to see what correlates to what Rowe was coming up with in gallons per minute, and determined that consistently throughout he used nine gallons per minute.”
Grady asserted that BlueTriton was not being given a fair shake during the hearing and that Lilly was tailoring his rulings and allowing testimony that was prejudicial to her client. Alluding to questions Lilly had himself asked of Loe, she further suggested that Lilly is siding with the State Water Resources Control Board and the various other participants in the hearing against BlueTriton.
“I want to note for the record that we object to the fact that we are layering what’s being deemed cross examination and redirect where we have aligned parties all versus BlueTriton, and so what we instead seem to be having is a multiple-layer direct tag-team approach to this proceeding,” Grady said. “We’re just feeling a little bit like old television wrestling instead of an actual proceeding.”
Lilly responded, saying, “I don’t know what your analogy is, but just to clarify, number one, I do not represent any party and I’m not taking any position. I have no idea where I am going to come out on any of these issues, so I disagree with your characterization, your words suggesting that my questions were aligned with any party. Secondly, beyond that I think that rules and Government Code 11513 subdivision b allow for that. I don’t think that there’s any provision there [to disallow seeking clarification from a witness], whether cross examination is friendly or neutral. They appear to allow for redirect within the scope of cross examination. So, for those reasons I overrule your objection.”
Grady, said she respectfully disagreed and that “This proceeding has lost track. We have absolutely no indication of the scope of what’s being presented in this parallel prosecution.”
As part of the hearing process, Lilly has called for a “site visit,” that is, a walking tour of Strawberry Canyon in which he and those wishing to participate can survey the canyon and Blue Triton’s water diversion, along with a helicopter flyover of the site involving himself and attorneys willing to participate as well as a yet-to-be-arranged tour of the Arrowhead Springs Hotel and the springs at the base of the mountains from which the hotel and associated water bottling operations historically derived their water. The hotel is now owned by the San Manuel Band of Mission Indians, which yet must consent to the tour.
Robert Donlan, as the lead legal representative of BlueTriton, made a strategic decision to have his legal team hold back on presenting certain testimony and evidence in the early stage of the hearing, instead opting to present that during the hearing’s rebuttal phase, which has yet to come. Donlan wanted Lilly to delay the site visit until after the rebuttal evidence is presented because, he said, “We think our rebuttal testimony will be very helpful to your understanding of the watershed. To take that rebuttal testimony before you go out into the field, we think, will lead to a much more informed site visit for the hearing officer.”
Lilly, however, expressed his intention of making the site visit at the earliest opportunity, tentatively set for February 16 and 17. He said he would be willing to sojourn from Sacramento to Strawberry Canyon a second time if some ground is covered during BlueTriton’s rebuttal that encourages him to make a second tour.
In response, Donlan, came across as being himself reluctant, reflecting the attitude of BlueTriton, to have the site visit take place.
“I do not think it’s an efficient use of the state’s resources to go down there twice, perhaps not even once,” Donlan said. “There are some concerns with my client about the expanding scope of this site visit, and I do want to state now, early, that we’ve talked about indemnification and waivers in the past. We haven’t heard anything from you about that. There’s some work that needs to be done before my client will let me and my colleagues participate in a site visit with the potential exposure to liability. If there is an injury – and there will be with the group you are talking about some level of injury; hopefully there’s no serious injuries – I think it’s reasonable to assume there’s some exposure to liability that BlueTriton Brands has. Whether it’s on federal land or not, you are visiting facilities that are controlled by BlueTriton, a private party. You have folks that are participating in this hearing that could get hurt. So, I’m telling you what our limitations are. You can do with that what you want. There may be some limitations on BlueTriton and its team’s ability to participate without some liability protections.”