More than a year after intensive in-depth hearings into the drafting of water from Strawberry Canyon at the roughly 4,200-foot-to-5,400-foot elevation in the San Bernardino National Forest, the State Water Resources Control Board and the California Environmental Protection Agency have issued a tentative ruling that Blue Triton Brands has no water rights and must discontinue its removal of water at the upper reaches of the canyon.
For the time being, it appears, Blue Triton will be allowed to withdraw water from the lower reaches of the canyon and provide it to the San Manuel Indian Tribe and use it for its Arrowhead Spring Water bottling operation. The State Water Resources Control Board and the California Environmental Protection Agency nevertheless said that the water board’s enforcement division could at this point seek a cease and desist order against BlueTriton to prevent it from drafting water from the springs located mid-canyon and that they could not rule out that a ruling barring that diversion would be granted.
The issued ruling is not final and the public and all parties who provided input during the hearing last year will have an opportunity to offer comment until early next month. 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.
In 1928, Charles Anthony, general manager of the bottling operation and vice president of Arrowhead Springs Corp., acting president of the Arrowhead Springs resort property and Arrowhead Springs Corporation in the 1920s and 1930s, entered into talks with California Consumers Co., parent of California Consolidated Waters Co., founded in February 1929, regarding the sale of the Arrowhead water bottling operations. In exchange for a $100,000 commission, Anthony executed the deal, in so doing providing a warranty title of water rights.
Arrowhead was to provide a warranty title of water rights. Former Arrowhead Springs attorney and former California Assemblyman wrote a letter about the “water rights.” In a letter dated February 14, 1929, Byron Waters, as the legal representative for the Arrowhead Hot Springs property asserted that water rights “belonging to the company” were to be sold as part of the deal, without providing any documentary proof to the effect that Arrowhead Hot Springs Resort owned the rights.
The California Consolidated Waters Company was formed in 1929 for the purpose of purchasing the Arrowhead Water bottling operation from the Arrowhead Springs Hotel. The purchase merged three Los Angeles-based companies that bottled and distributed “Arrowhead Water,” “Puritas Water” and “Liquid Steam.” The property, bottling operations, water distribution and administration of Arrowhead Springs Company, Arrowhead Puritas and the water bottling division of Merchants Ice and Storage were all administered by California Consolidated Waters Company, which was owned by the California Consumers Company. Soon after, California Consolidated Waters, on the basis of a single pipeline permit that was not based on any water rights and without having obtained a diversion permit, in August 1930 started diverting spring water from a single “bedrock crevice” spring in the San Bernardino National Forest along Strawberry Creek at an elevation of 5,600 feet. Subsequently, in 1933 and 1934, the company put in place tunnels, ultimately accompanied by holes and horizontal wells at or near the headwaters of Strawberry Creek in Strawberry Canyon. Strawberry Creek was noted in maps and springs studies prior to diversion to be a perennial stream which was fed by abundant flowing headwaters springs.
It was the seller Arrowhead Springs Corporation, not the United States Forest Service nor the State Water Resources Board, that granted California Consolidated Waters Co. the unwarranted right to develop the springs and divert the water from the Strawberry Creek headwaters. By 1934, California Consolidated Waters, had developed three springs using adits – horizontal passages bored into rock for drainage purposes – and then added 10 horizontal borehole wells to tap spring water aquifers in the mountainside, thereby diverting the forest spring water through a pipeline down the mountain, giving twenty percent to half of the water thus obtained to the hotel and then bottling and selling the rest. This unauthorized twenty percent giveaway to the Arrowhead Springs owners is still going on today.
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 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 prescriptive 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.
In 1931, the Del Rosa Mutual Water Company, an appropriator of water on East Twin Creek downstream of the Arrowhead Springs Hotel (and downstream of the confluence of Strawberry Creek and East Twin Creek), filed a lawsuit to enjoin the taking of any water either by Arrowhead Springs Corporation or California Consolidated Water Company from East Twin Creek or Strawberry Creek.
The Del Rosa suit did not involve the San Bernardino National Forest nor the State of California. A finding in that case was that neither Arrowhead Springs Corp nor California Consumers Co. had previous water rights which extended back to the founding of the San Bernardino National Forest on February 25, 1893.
The Arrowhead Water Bottling company, under various names and corporate configurations, including divisions of Standard Oil of California and Rheem Manufacturing, continued to operate, drawing water from Strawberry Canyon throughout the 20th Century. In 1969, it was acquired by Coca Cola Bottling Company of Los Angeles and in 1978, Chicago-based Northwest Industries acquired Arrowhead Puritas when it bought Coca Cola Bottling. In 1982, Northwest Industries unloaded Coca-Cola Bottling to Beatrice Foods. BCI subsequently acquired Beatrice in a leveraged buyout. While under BCI’s control, the Arrowhead Puritas water drafting permit in Strawberry Canyon expired, at which point 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. Later the name “Arrowhead Mountain Spring Water Company” was handwritten on the permit. The name “Arrowhead Mountain Spring Water Company” is not in BlueTriton’s chain of title. Nevertheless, it was used during the 1990s in United States Forest Service correspondence, including on invoices and in spring site records for the water pipeline system in Strawberry Canyon. At that time, newspaper articles show the company using that name was bottling and shipping Arrowhead water to Japan. This was water extracted from public land – Strawberry Canyon in the San Bernardino National Forest. The diversion of that water left a parched and dewatered forest canyon below, which burnt in the “Old Fire” in 2003.
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,” one that was never listed legally in corporate filings, but which operated under Nestlé Waters of North America, Inc. until it was acquired by BlueTriton Brands.
Nestlé’s intensive water-drafting activity, which was long been decried by environmentalists, came under increasing fire 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 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 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. The request for a hearing stated that BlueTriton is the “successor by name change” to Nestlé, is “the owner of the water rights and obligations subject to the notice, and is authorized to request a hearing in this matter.”
BlueTriton, through Donlan and Ellison Schneider Harris & Donlan, on August 5, 2021 made a motion to dismiss the State Water Board prosecution team’s draft cease-and-desist order. The
In 2021, BlueTriton, under the aegis of the Arrowhead Spring Water Bottling Company, diverted 143 acre-feet of water from Strawberry Creek.
Also in 2021, the U.S. Forest Service granted BlueTriton a new pipeline permit, despite the ongoing water rights case and a change in ownership.  The permit required a “valid proof of water rights.” The draft cease and desist order, which has now been confirmed by the tentative State Water Resources Control Board and the California Environmental Protection Agency ruling, maintains that BlueTrition holds no valid water rights in the Canyon or anywhere in the forest.
Multiple parties made requests to add additional hearing issues. Those additional 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.
On November 4, 2021, the administrative hearing officer assigned to the case, Alan Lilly, rejected the motion to dismiss the prosecution team’s draft cease and desist order, ruling that the public hearing to be conducted was to involve examining evidence and considering arguments relevant to 1) whether the respondent, BlueTriton Brands, is violating prohibitions against the unauthorized diversion or use of water; 2) If any such violations or threatened violations are occurring, whether the State Water Board should issue a binding cease-and-desist order to BlueTriton Brands under Water Code section 1831; and 3) if the State Water Board decides to issue a cease-and-desist order to BlueTriton Brands under Water Code section 1831, then what provisions should be in the order.
After extensive hearings held last year and more than seven months during which Lilly examined evidence and testimony presented, California case law and the tangle of titles and water rights assertions relating to the Arrowhead water bottling operations in all of their corporate guises, he issued a tentative ruling stating that Blue Triton has no water rights and cannot continue to draft water from the upper portion of Strawberry Creek in Strawberry Canyon. “[T]his order directs the respondent, BlueTriton Brands, Inc., to cease its diversions through its Tunnels 2, 3 and 7, and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8 in the Strawberry Creek watershed in San Bernardino County for its water-bottling operations because BlueTriton does not have any water rights that authorize these diversions and uses,” Lilly wrote.
While Blue Triton henceforth is not entitled to any water for its bottling operation, it can for the time being provide water drawn from lower down in the canyon to the San Manuel Indian tribe for its use, including at the historic hotel property.
“This order does not prohibit BlueTriton from continuing to divert water through these facilities for deliveries to the San Manuel Band of Mission Indians for beneficial uses at the Arrowhead Springs Hotel property, and this order does not prohibit BlueTriton from continuing to divert water through its Boreholes 10, 11 and 12 for its water-bottling operations or deliveries to the San Manuel Band.”
Still, the draft order states, “[O]ur cease and desist order limits the amount of BlueTriton’s total diversions from Tunnels 2 and 3 and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8 during each day to the amount BlueTriton delivers to the San Manuel Band on during the same day.”
The order, while allowing BlueTriton to continue to utilize water from the Boreholes at the lower reaches of the canyon in its bottling operation, leaves a path for that water usage to be subject to a future cease and desist order.
“Because the Division of Water Rights Enforcement Section’s draft cease-and-desist order did not contain any provisions that would have prohibited BlueTriton from diverting water through its Boreholes 10, 11 and 12, this order does not contain any such prohibitions. The enforcement section may investigate such diversions and, if it deems it appropriate, prepare a new draft cease-and-desist order regarding those diversions,” according to the draft order.
The draft order noted the enforcement division’s initial draft cease and desist order did not direct BlueTriton to stop its diversions at Boreholes 10, 11 and 12, instead seeking a requirement that BlueTriton submit a report “more precisely determining the amount of flow at Boreholes 10, 11 and 12 that if not diverted would have otherwise surfaced naturally at a spring.” The order then made clear that in its closing arguments to the administrative hearing officer after evidence presented during the hearing justified including in the order a discontinuation of BlueTriton’s water diversion from the three lower elevation boreholes. The order explains that “In its closing brief to the administrative hearing officer, the prosecution team stated: ‘The draft cease and desist order did not propose restricting diversions from Boreholes 10, 11, and 12, because information available at the time could not rule out the possibility that up to 100 percent of the water diverted and used from these points of deliver was developed water, and therefore not subject to the permitting authority of the State Water Board.’ The prosecution team’s closing brief then discussed the testimony and evidence presented during the hearing, which the prosecution team argues demonstrates that no water diverted through these boreholes is developed water.”
Since the hearings commenced without any indication that BlueTriton’s water use at boreholes 10, 11 and 12 was being challenged, it would be a violation of that company’s due process rights to add boreholes 10, 11 and 12 to the proposed or real restrictions contained in the cease and desist order, the order states.
That did not rule out a future effort to end Blue Triton’s water diversions from the lower elevation boreholes, however, according to the order.
“In this proceeding, the division’s draft cease and desist order and revised report of investigation did not allege that BlueTriton’s diversions through Boreholes 10, 11 and 12 were unauthorized diversions,” the order states. “Absent such allegations, these documents did not provide sufficient notice to BlueTriton under Water Code section 1834, subdivision (a), for us to be authorized to issue a cease and desist order to BlueTriton regarding these diversions. We therefore deny the request in the prosecution team’s closing brief for us to issue such a cease and desist order. This denial is without prejudice to the division’s rights to conduct further investigations regarding these diversions, or to issue a new draft cease and desist order regarding them.”
All parties and the public have until May?? to comment on the draft order, after which the enforcement division will issue a finalized version.
BlueTriton’s representatives offered no comment on the draft order by press time.
Amanda Frye, who offered testimony in the case with regard to the historic record relating water rights and water drafting operations within the Forest and in Strawberry Canyon going back to the 1890s, commended Lilly on his patience, thoroughness and persistence in conducting an examination of the full range of issues with regard to BlueTriton’s diversion of the canyon’s water. She said, however, that she believed his and the State Water Board’s inclusion of a reference to the San Manuel Tribe’s reception of the water being diverted by BlueTriton to be unwarranted.
“The Tribe was not party to the case nor was there adequate information as to ownership, water rights or anything else involving the current Arrowhead Springs Property and the Tribe,” Frye said. “I believe that Mr. Lilly has overstretched by including the tribe or making conclusions about their water rights, if indeed they have any, as that would be a separate case from that involving BlueTriton.”
She said that she and others will seek to have the reference to San Manuel removed from the order before it is finalized.
Frye said it was her perception all along that there were substantive legal issues involved in Nestlé’s and then BlueTriton’s diversion of water to which they possessed no rights from federal land.
“I believe that the public trust has been violated with BlueTriton and their predecessors taking California’s water and our National Forest water,” she said. “The water in the National Forest is there to protect the watershed for the surrounding communities, which includes the Bunker Hill Basin.”
She called upon the U.S. Department of Justice to make an examination of the matter.
Steve Loe, a now retired U.S. Forest Service biologist who testified during the hearings last year, said, “Based on the wording of this, BlueTriton has no water rights at the upper springs. The Department of Water Resources did not make a determination as to springs [i.e. boreholes] 10, 11 and 12 because they weren’t included in the original cease and desist order. This does not preclude anyone from making the same argument on the lower springs. But the Water Resources Board could not include that in this order because it wasn’t included in the cease and desist order as it was originally drafted.
As a biologist with an understanding of the hydrology of the canyon, Loe said, “It is clear [boreholes] 10 11 and 12 are the same kind of springs as the others included in the order.”
Just as the order leaves the way clear for those seeking to end BlueTriton’s water use in the canyon to call for another cease and desist order, Loe said, BlueTriton can seek a water use permit.
“This does leave that open,” Loe said.
The coalition of environmentalists and people seeking to protect the forest, Loe said, is as or more determined to prevent BlueTriton’s diversion of the Strawberry Creek water as BlueTriton is determined to continue taking it, Loe said.
“We will ask for the same decision on [boreholes] 10, 11 and 12 that was made on Tunnels 2, 3 and 7 and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8,” Loe said.
The prevailing evidence presented during last years hearings was that BlueTriton had no right to the water drawn from boreholes 10, 11 and 12, he said.
“Information that came out during the hearing is that the Tribe is currently using water provided to it by Blue Triton, with 20 percent going to the tribe and 80 percent being used by Blue Triton in its bottling operation per the current agreement,” Loe said. “It’s not clear what the agreement between Blue Triton and the tribe involves.”
Based on the testimony during the hearing last year, Loe said, it looks as if “Blue Triton is not using all of the water it is taking high up in the canyon and is dumping some of the water back in the creek well below that. They don’t have enough use for it and are therefore removing it from top and releasing it by 10, 11 and 12, which is dewatering the upper part of the stream.”
The draft cease and desist order, released today and postdated to April 23, contains, Loe said, “requirements that BlueTriton monitor water coming out of the [boreholes] and make sure water from the mountain does not exceed the amount of water the tribe could use in one day, ensuring it is not used for bottling. This is going to significantly curtail what they were doing. They can no longer take water from the upper springs, which was formerly where the majority of the water was coming from. Lower, it is not clear, but we are estimating they will be able to take about a tenth of the water they were taking before. They are making it off limits for Blue Triton to run a bottling operation that will ruin the canyon.”
Lilly and the enforcement division were not preventing BlueTriton from applying for a permit to engage in substantial water diversions, Loe said.
“He [Lilly, the administrative law judge who conducted the hearing and was the prime arbiter with regard to whether the cease and desist order should be issued] was saying, ‘Just like everyone else, you can apply for a permit and go through the hoops, but that doesn’t mean you will necessarily get it.’ BlueTriton may be able to get a permit, but I would think it is doubtful. What they would be asking for is to have an effect on the whole watershed and they would be appropriating at least some of that water from downstream users. I think they will have to content themselves with whatever water they can get from the tribe at the hotel. There is though, an opening for them if they want to try.”
There remains a mystery with regard to how at least some of the water is being used, Loe said.
The tribe has property that entails some order of a dike and a reservoir below the National Forest in the San Bernardino Mountain foothills where some or all of the water from lower Strawberry Canyon is being conveyed. Lilly wanted to tour that property as part of the hearing process, but the San Manuel Tribal Chairman, Kenneth Ramirez, refused to provide access to the property for surveying purposes, based upon the claim that the property was ancestral Indian land, telling Lilly that a video of the property taken by tribal members would have to suffice as the survey of the property needed for informing the State Water Resources Control Board’s decision-making process.
“The tribe refused to let us go on their property,” Loe said. “There was evidence that 20 percent of the water BlueTriton was taking went to the tribe and 80 percent to Blue Triton. Now, they don’t have water rights at Tunnels 2, 3 and 7, and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8. The State Water Resources Control Board did not include [boreholes] 10, 11 and 12 because those weren’t included in the original cease and desist order.”
Loe said that Lilly is recognizing that the “Tribe has some riparian rights, but I believe that will eventually be taken out. Giving the tribe water rights in the forest opens a whole new can of worms. An outside entity cannot have water rights in the National Forest. If the tribe exercises rights, downstream users would likely get involved.”
Loe said a coalition of environmentalists and those merely looking out for the forest wil; “ask that no decision be made on the Arrowhead Springs riparian rights.”
Loe said he believed Nestle pulled a fast one on BlueTriton’s parent companies, One Rock Capital Partners, LLC and Metropoulos & Company.
“Nestle knew how shaky the water rights were and did not divulge that to BlueTriton,” Loe said.
Any battle on that will likely play out in a courtroom in Manhattan, while the fight that matters, to preserve the integrity of Strawberry Canyon, Loe said, will take place in the board meeting room of the State Water Resources Board in Sacramento.