BlueTriton Has No Forest H2O
Rights Cal Water Board To Confirm
The State Water Resources Control Board and the California Environmental Protection Agency have given a penultimate indication that the Arrowhead brand spring water bottling operation will no longer be able to draft water from ten of its thirteen spring water sources in Strawberry Canyon at the roughly 4,200-foot-to-5,400-foot elevation in the San Bernardino National Forest. The order left open the possibility that the three remaining sources of water in Strawberry Canyon from which BlueTriton Brands draws the water it bottles as Arrowhead Spring Water, consisting of three boreholes, could also be shut off if the company’s water rights at those facilities is challenged.
For more than 80 years, several companies bottling water under brands incorporating the Arrowhead name, including 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, took water out of Strawberry Canyon without any validly established rights to that water. While there had been a water bottling operation using the Arrowhead name prior to 1930 that drew 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 the 2,000-foot elevation below the San Bernardino National Forest, Charles Anthony, general manager of the bottling operation and vice president of Arrowhead Springs Corporation and acting president of the Arrowhead Springs resort property in the 1920s and 1930s, through sleight of hand made what has through an exhaustive search of historic records been determined to have been an illegal shift by which his company began taking water higher up the mountain in the National Forest. That diversion has continued, and formed the basis by which BlueTriton Brands, by purchasing the Arrowhead Bottling Water operation from Nestlé, was as recently as last year drafting up to 196 acre-feet of water from Strawberry Canyon.
In 1928, Anthony entered into talks with California Consumers Co., parent of California Consolidated Waters Co., 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.
The water rights conveyed in this transaction consisted of nothing more than an unsupported assertion of those rights made up by Anthony’s lawyer on the spot.
Arrowhead was required to provide a warranty title of water rights. Arrowhead Springs attorney and former California Assemblyman Byron Water wrote a letter in which these “water rights” were manufactured. 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.
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 the 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 Resources Control 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.
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 whether BlueTriton was making unauthorized diversions of water and if a cease-and-desist order should be issued.
After extensive hearings held last year and more than seven months during which Lilly examined evidence and testimony presented and the issuance of a tentative draft order that was publicly reviewed in April and part of May 2023, Lilly has made a finding that BlueTriton’s diversions of water through its Tunnels 2 and 3, and its Boreholes 1, 1A, 7, 7A, 7B, 7C and 8 in Strawberry Canyon for its beneficial uses are subject to the State Water Board’s water-right permitting and enforcement authorities and that BlueTriton does not have any water rights that authorize such diversions or beneficial uses.
Lilly made a further finding that the San Manuel Band of Mission Indians, which has come into possession of the Arrowhead Springs Hotel and its surrounding property, has riparian rights that authorize BlueTriton to divert water through its facilities for deliveries to the San Manuel Band for riparian uses on the Arrowhead Springs Hotel property.
Lilly ordered that BlueTriton is to limit its diversion of water through its Tunnels 2, 3 and 7, and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8 to the amount of water BlueTriton delivers to the San Manuel Band of Mission Indians and that BlueTriton shall not divert into its water-conveyance pipeline any flow from the tunnel or borehole that exceeds the amount that BlueTriton is delivering to the San Manuel Band.
Lilly imposed on BlueTriton a strict water use accounting mandate to be achieved by BlueTriton establishing and maintaining totalizing flow meters and meter records sufficient to create daily records of diversions, deliveries and discharges from its boreholes and tunnels in Strawberry Canyon. The results of that monitoring, Lilly ordered, is to be provided to the State Water Board’s Division of Water Rights Enforcement Section, including the daily amounts of diversions at each of the Strawberry Canyon facilities, the total daily amounts of diversions by all these facilities; the daily amounts of deliveries to the San Manuel Band for its riparian uses, the daily amounts of water diverted at each of Boreholes 10, 11 and 12; the daily amounts of the total diversions at Boreholes 10, 11 and 12; the daily amounts of water delivered to tank trucks from BlueTriton’s facilities, the daily amounts of water discharged to Strawberry Creek through BlueTriton’s discharge facility near Boreholes 10, 11 and 12; and the daily amounts of water discharged or delivered anywhere else, with a description of each point of discharge and each point of delivery. Those accountings of daily diversions, deliveries and discharges, Lilly said, “shall be sufficient to account for all diverted water. If there are any differences between the total amounts diverted on any day and the total amounts delivered and discharged on the same day, then BlueTriton shall explain the reason or reasons for the differences.
BlueTriton is required, under Lilly’s order, to provide reasonable access to the State Water Board’s enforcement section personnel to inspect BlueTriton’s facilities and records.
BlueTriton’s delivery of water from Tunnels 2 and 3 and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8 for deliveries to the San Manuel Band are subject to BlueTriton’s special use permit from the San Bernardino National Forest and all applicable laws, Lilly said, and he made clear the order does not adjudicate the San Manuel Band’s land or riparian right claims, and the order does not limit the State Water Resources Control Board or any other regulatory agency or court from taking future action regarding these claims.
The draft cease-and-desist order issued in April 2021 pertained only to Tunnels 2, 3 and 7, and Boreholes 1, 1A, 7, 7A, 7B, 7C and 8 in Strawberry Canyon. Lilly said that 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, the proposed order issued today, May 26, does not contain any prohibitions relating to boreholes 10, 11 and 12. Lilly noted that such restrictions may be put in place in the future.
“The enforcement section may investigate such diversions and, if it deems it appropriate, prepare a new draft cease-and-desist order regarding those diversions,” he wrote in the proposed order.
Any interested party, meaning presumably any resident of California, may submit a written request to the clerk of the State Water Resources Control Board describing which actions the party requests the board to take, including an explanation of the reasons for the party’s request. Any such request must be submitted within 31 days of the release of the proposed order, that is by Monday, June 26, 2023.
Any party submitting such a request is called upon to transmit it by U.S. Mail and e-mail to: Courtney Tyler, Acting Clerk of the Board
State Water Resources Control Board
P. O. Box 100
Sacramento, CA 95812
and to Administrative Hearing Officer Lilly at firstname.lastname@example.org.
The State Water Resources Control Board is to consider finalizing and adopting the proposed order during the board’s July 18, 2023 meeting.