D.C. Venue For BlueTriton’s Strawberry Creek H2O Diversion Suit Shifted To Riverside

By Mark Gutglueck
BlueTrition Brands’ lawsuit challenging the U.S. Forest Service’s order that the company discontinue the diversion of water out of Strawberry Canyon in the San Bernardino Mountains, filed in the United States District Court for the District of Columbia in August, must be heard in Riverside Federal Court, a federal judge ruled this week.
For more than 90 years, BlueTriton and its corporate predecessors, including Nestlé Waters of North America, Inc., Nestlé, Perrier, BCI-Arrowhead Drinking Water Company, Beatrice Foods, Coca-Cola Bottling Company of Los Angeles, Rheem, Arrowhead® Mountain Spring Water Company, California Consolidated Water, Arrowhead Water Corporation, Arrowhead Springs Corporation and Arrowhead Hot Springs Company, diverted water from Strawberry Creek and one of its tributaries located between the 5,200-foot and 5,600-foot elevation in the San Bernardino National Forest, using the water for their bottling operations. That diversion began in August 1930, originally involving water taken from a single “bedrock crevice” spring along Strawberry Creek at an elevation of 5,600 feet. Subsequently, in 1933 and 1934, California Consolidated Waters developed three springs using adits – horizontal borings – and then added 10 further horizontal borehole wells to tap spring water aquifers in the mountainside, thereupon transporting the forest spring water through a pipeline down the mountain, giving twenty percent to half of the water thus obtained to the Arrowhead Springs Hotel and then bottling and selling the rest, marketing it under various names, including Arrowhead, Puritas, Arrowhead and Puritas, Arrowhead Puritas, Arrowhead® Spring Water and Arrowhead® Mountain Spring Water among them.
Because a private entity cannot claim water rights on federal forest land that did not exist prior to the dedication of the forest as a national asset, the companies in question had to apply on a continuous basis for a water drafting permit to take the water, renewing it on an annual basis for a $524 fee.
While the Arrowhead Puritas Water Bottling operation was yet under BCI’s control in the mid-1980s, Arrowhead Puritas’s U.S. Forest Service-issued water drafting permit in Strawberry Canyon expired, and the BCI-Arrowhead® Drinking Water Company applied to extend the permit. In 1987, while that application was yet being processed, Perrier purchased the BCI-Arrowhead® Drinking Water Company.
The then-pending water extraction permit renewal required a U.S. Forest Service review of the water drafting arrangement and its environmental/ecological impact, which the U.S. Forest Service then did not have the immediately available resources to carry out. In a gesture of compromise, Perrier was allowed, pending the eventual Forest Service review, to continue to operate in Strawberry Canyon by simply continuing to pay the $524-per year fee to perpetuate the water extraction under the terms of the expired permit. In 1992, Nestlé acquired the Arrowhead brand from Perrier. Nestlé continued to pay the $524 annual fee without renewing the Strawberry Canyon operation 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 and then what became Nestlé Waters of North America, Inc.
A statewide drought lasting more than five years manifested in 2011. As the drought advanced, the environmental groups Save Our Forest Association, Inc., the Story of Stuff Campaign, the Center for Biological Diversity and the Sierra Club began 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 of North America to continue its operations in Strawberry Canyon for 28 years after its permit expired. At that point, the Forest Service initiated the long forestalled environmental review.
In April 2016, the United States Forest Service held a public scoping meeting, at which it proposed a 5-year National Environmental Policy Act study to determine the possible impacts of the water diversions. The California Water Resources Control Board became involved in the matter, at which point Nestlé made the claim that it was entitled to the forest water it was drafting based upon a right to water that had been passed along to it by its chain of corporate predecessors stretching back to water use on the mountain prior to the formation of the San Bernardino National Forest.
The California Water Resources Control Board in 2017, based upon surveys of pump meters and other available data, found that Nestlé had been drafting 192 acre-feet (62.56 million gallons) of water from Strawberry Canyon on average per year over the previous decade. This was, the California Water Resources Control Board said, far in excess of the 26 acre-feet of water (8.47 million gallons) per year that was the historic use threshold and which would have been a prudent limit on the water to be taken. Thus, the California Water Resources Control Board, in a report released on December 21, 2017, officially declared that Nestlé should be limited to no more than slightly over 13.5 percent of the 192 acre-feet it had been diverting, issuing an order that the company help itself to no more than 26 acre-feet of water from Strawberry Canyon per year.
Nestlé defied that order and continued to divert roughly the equivalent of the 192 acre-feet that had been its recent pattern.
Meanwhile, a San Bernardino County resident, Amanda Frye, carried out an exhaustive examination of the historical record, including documents that had lain in the county’s archives untouched for more than five, six, seven and eight decades. What Frye unearthed were the details of how and when Charles Anthony, who in 1929 and 1930 was the owner of the Arrowhead Springs Hotel and Arrowhead Hot Springs Resort and their affiliated water bottling operation, and Anthony’s attorney, former California Assemblyman Byron Waters, substituted nonexistent rights to water at the 5,200-to-5,600 elevation for actually existing water rights closer to the 2,000-foot elevation. This was done when Anthony sold the water bottling enterprise near Arrowhead Springs Hotel and Arrowhead Hot Springs Resort to the California Consolidated Water Company/California Consumers Company.
Frye collated documentation to show that Nestlé’s claim to holding water rights relating to water usage and bottling activity in the forest at the elevation higher than 5,000 feet in Strawberry Canyon was spurious, and that no such water rights there extended back to prior to the founding of the San Bernardino National Forest on February 25, 1893. Rather, the historic documentation Frye retrieved from the county’s vaults showed that the rights Nestlé was referencing pertained to an area much more proximate to the Arrowhead Springs Hotel and Arrowhead Springs Resort in Coldwater Canyon at an elevation of 1,867 feet.
Frye went public with the information she had uncovered, providing it to the California Water Resources Control Board, the U.S. Forest Service and the press.
In relatively short order, corporate officers at the Nestlé Waters of North America headquarters in Greenwich, Connecticut and Nestlé, S.A. headquarters in Vevey, Switzerland grew acquainted with what Frye had uncovered and began casting about for a fix. Meanwhile, Nestlé continued to suck water out of the aquifer in the San Bernardino Mountains like never before.
Quietly, Nestlé initiated negotiations with potential investors and speculators in water resources to explore unloading those elements of its portfolio that represented potential liability going forward. Among those who demonstrated interest were Metropoulos & Company. During preliminary discussions in 2020, Nestlé ascertained that the company, which was co-founded by C. Dean Metropoulos, a Greek-American billionaire investor and businessman and his two sons, Daren and Evan, was focused more on acquiring the entirety of its American/Canadian water portfolio than a few spin-offs. Metropoulos & Company specializes in acquiring classic or iconic American and European brands that are struggling or going into eclipse, particularly ones dealing in food products, and then transforming them through modernization and promotion to reestablish their viability and popularity with consumers, thus enhancing the value of the companies or corporations.
It appears that in its dialog with Metropoulos & Company, Nestlé, contrary to what had been documented by the contents of Frye’s research compendium, represented that its corporate predecessors began accessing and diverting water from sources within Strawberry Canyon prior to the establishment of that area as the San Bernardino National Forest, assertions which Metropoulos & Company took at face value.
Metropoulos & Company, having partnered with One Rock Capital Partners, LLC, tendered a $4.3 billion offer to Nestlé S.A. to acquire Nestlé Waters of North America, extending 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. Not included in the deal were Nestlé’s North American marketing rights to Perrier®, S.Pellegrino® and Acqua Panna®. The offer was accepted in February 2021 and was finalized two months later, with the holdings having been consolidated under the name BlueTriton Brands.
The timing of the finalization of the Nestlé Waters of North America acquisition by One Rock and Metropoulos could not have been better for Nestlé, nor could it have been worse for One Rock and Metropoulos, at least insofar as the Arrowhead Spring Water division was concerned. Just days after the BlueTriton takeover, the California State Water Resources Control Board, responding to citizen complaints, issued a draft cease and desist order against Nestlé on April 23, 2021. 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 matter 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.”
The record had to be corrected and the draft cease and desist order redrafted to reflect that it was BlueTriton Brands that had come under the board’s authority, and which had to abide by the order.
BlueTriton contested the order, which resulted in the California State Water Resources Control Board commissioning Alan Lilly, an administrative hearing officer, to conduct an inquiry into the matter, consisting of a series of public hearings that took place between August 2021 and July 2023. Expert witnesses brought in by BlueTriton testified along with witnesses called by the attorneys representing the state water board.
After a consideration of all of the evidence and testimony, Lilly issued a tentative ruling on April 21, 2023 and postdated to April 23, 2023, stating that BlueTriton has no water rights in Strawberry Canyon and could not continue to draft water from the ten founts it had in the canyon’s upper reaches but could continue to take water from three sources in the lower portion of the canyon.
According to the tentative ruling, Blue Triton henceforth was no longer entitled to any water from the top of the canyon, but was to be permitted for the time being to provide water drawn from lower down in the canyon to the San Manuel Indian Tribe for its use. The San Manuel Tribe of Mission Indians is the current owner of the historic Arrowhead Springs Hotel and its surrounding property.
On September 19, 2023, the California State Water Resources Control Board finalized the cease & desist order forcing BlueTriton to stop the removal of tens of millions of gallons of water annually from the Strawberry Canyon spring complex by November 1, 2023. The order reiterated the finding that BlueTriton has no water rights on U.S. Forest Service land.
Just a little over a month later, on October 24, BlueTriton, represented by John Kinsey and Nicholas Cardella of the Fresno-based law firm Wanger Jones Helsley and Robert Donlan, Christopher Sanders and Shawnda Grady of the Sacramento-based law firm Ellison Schneider Harris & Donlan, filed a lawsuit against the State Water Resources Control Board in Fresno Superior Court, challenging the board’s finalized cease and desist order.
The legal theory BlueTriton sought to pursue in the case is one that holds that there is a distinction in California water law between surface water and subsurface water and that the State Water Resources Control Board’s authority extends only over surface water and not to water drafted out of the water table or aquifer. Since the Arrowhead Spring Water operation consists of borings, tunnels and adits which tap into subsurface water, according to BlueTriton’s legal team, the State Water Resources Control Board’s cease-and-desist order was illegitimate and the ultimate conclusion that BlueTriton had not established water rights to the water it is drafting in Strawberry Canyon within the San Bernardino National Forest is moot and therefore inapplicable, as only the U.S. Forest Service has authority with regard to underground water within its jurisdiction. Thus, the U.S. Forest Service special use permit bought for a $524-per year fee issued to Nestlé and subsequently to its corporate successor, BlueTriton, provides a fully proper, appropriate and both administratively and legally defensible basis to have allowed the drafting of that water in the past, at present and into the future, Kinsey, Cardella, Donlan, Sanders and Grady maintained.
The filing of the lawsuit brought with it a staying of the water use restrictions imposed by the cease-and-desist order, thus allowing BlueTriton to continue it diversion of water from Strawberry Canyon unabated.
BlueTriton’s strategy, of course, was dependent upon the U.S. Forest Service continuing to permit the company to capture water as it and its corporate predecessors had done for decades. That stratagem failed, however, when, in a letter dated July 26, 2024, San Bernardino Mountain District Ranger Michael Nobles informed BlueTriton it must “cease operations” in the San Bernardino National Forest and remove all of the siphoning and drafting equipment along with its pipelines used to collect and transfer water from Strawberry Canyon, located above the 5,000-foot elevation, to a facility further down the mountain.
In the letter to Louis Mixon III, who is BlueTriton’s senior natural resource manager, Nobles wrote, “After careful consideration and review of the information provided by BlueTriton, I regret to inform you that your application dated February 21, 2023 for use and occupancy of lands and resources of the San Bernardino National Forest (SBNF), has been denied. As a consequence of this denial, BlueTriton’s current permit terminates, and it must cease operations on SBNF lands. The Forest Service repeatedly requested BlueTriton provide additional information necessary to assure compliance with BlueTriton’s existing permit, and evaluate BlueTriton’s application for a new permit. Several of our requests, particularly those concerning the use of the water being taken from SBNF lands, were consistently left unanswered by BlueTriton. As we repeatedly explained, this information was necessary to evaluate compliance with your current permit, and to provide adequate information to consider your application. BlueTriton’s refusal to provide the information provides us no alternative to denying your application. Pursuant to the terms of BlueTriton’s prior special use permit (FCD728503), that permit is now terminated as a result of this denial.”
Nobles said that based upon his analysis, “BlueTriton’s application has not sufficiently demonstrated that all construction, reconstruction, operation and maintenance of tunnels on the National Forest use practices that minimize adverse effects on groundwater aquifers and their surface expressions [and] that the water extracted is excess to the current and reasonably foreseeable future needs of the forest resources.”
In that letter Nobles requested that BlueTriton provide him with a plan/timetable for removing all its pipes and equipment.
In a quick turnaround, BlueTriton on August 6, 2024 sued Nobles, four of his U.S. Forest Service supervisors and the U.S. Forest Service in federal court in Washington D.C.
Previously, BlueTriton maintained in its dealings with the California Water Resources Control Board and before the California Superior Court that the U.S. Forest Service was its ally in that it had historically tolerated its water drafting in the San Bernardino National Forest, which, the company asserted, undercut the state’s contention that the company had no water rights at the 5,000-plus elevation level in the San Bernardino Mountains. In its August 6 federal suit filed in the United States District Court for the District of Columbia, however, the lawyers for BluetTriton – George Sibley and Kevin Elliker of the Richmond, Virginia-based law firm of Hunton Andrews Kurth and attorney Todd Mikolop of Hunton Andrews Kurth’s Washington, D.C. office – took an opposite tack. Sibley, Elliker and Mikolop maintained that Nobles, in his role as the Front Country District Ranger in the San Bernardino National Forest, as well as Danelle Harrison, in her official capacity as the forest supervisor of the San Bernardino National Forest and Nobles’ immediate supervisor, along with Jennifer Eberlein, the regional forester for the Pacific Southwest Region of the U.S. Forest Service; Christopher French, the deputy chief for the National Forest System of the U.S. Forest Service; Randy Moore, the Chief of the U.S. Forest Service and the United States Forest Service, had overstepped their authority in ordering the removal of BlueTriton suction pumps, siphoning devices and pipes from Strawberry Canyon. In doing so, Sibley, Elliker and Mikolop maintained, the U.S. Forest Service, Moore, French, Eberlein, Harrison and Nobles had taken “action [that] is unlawful” and which was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” as well as “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.” The lawyers sought, on BlueTriton’s behalf, a declaration from the court that denying the permit renewal is a violation of the federal Administrative Procedures Act and further requested that the court vacate and set aside the U.S. Forest Service’s denial of the permit renewal by issuing “a preliminary and permanent injunction prohibiting the U.S. Forest Service from denying or otherwise unreasonably restricting plaintiff’s access to Arrowhead Springs.”
The defendants, referred to as respondents, sought a change of venue to the federal court nearest San Bernardino County, that being the federal court in Riverside. BlueTriton’s legal team opposed that change of venue motion.
This week, on December 23, Federal Judge John Bates granted the change of venue request, stating in his decision that the two grounds that BlueTriton used for filing the suit in the United States District Court for the District of Columbia were insufficient to keep the case before the court on the other side of the continent from where events relative to the issue being litigated were taking place. BlueTriton filed suit in Washington, D.C. because French, as the deputy chief for the National Forest System of the U.S. Forest Service and Moore, as the chief of the U.S. Forest Service, live within or near Washington, D.C. Bates, however, noted, “BlueTriton does not allege that any of those defendants participated in the decision-making process on BlueTriton’s permit, nor does BlueTriton posit that any action, even insignificant, occurred in the district.”
Furthermore, Bates, wrote, “BlueTriton’s attempt to frame this case as an issue of national importance is unpersuasive.”
Moreover, Bates reasoned, those involved in the actual decision to remove the BlueTriton water drafting operation from the San Bernardino Mountains are based in Southern California and in San Bernardino County in particular. “BlueTriton’s underlying claim centers on the use of land and water in California, which ‘is a localized interest because its management directly touches local citizens,’” Bates wrote in his decision. “The government [i.e., the U.S. Forest Service] contends that the public and private interest factors favor transfer because ‘[t]he land at issue, the decision-makers, third parties with a vested interest in the outcome of this case, and the parties to previous litigation concerning BlueTriton’s permits are all located in the Central District of California,’ plus the case has ‘no meaningful ties to the District of Columbia.’ BlueTriton seeks relief that would permit its occupancy of California land and use of California water. That this directly touches California and her citizens is abundantly clear. To put it plainly, BlueTriton’s claim involves an application made in California for a permit to occupy federal land in California; how USFS officers in California adjudicated that application, including their consideration of a California state agency decision regarding California water rights; and a decision that will affect California’s environment—an issue on which Californians have expressed significant interest. Taken together, the public interest factors strongly favor transfer.”
In his conclusion, Bates wrote, “BlueTriton challenges a decision made by a USFS official in California about water rights and environmental regulation in California—an Administrative Procedures Act challenge with overwhelmingly local effects. As a result, California and her citizens have a substantial interest in the resolution of this case. Cases that involve water rights and environmental regulation ‘should be resolved in the forum where the people whose rights and interests are in fact most vitally affected by the suit’ are located. Because venue is proper in the transferee district and both the public interest and private convenience factors strongly favor transfer, the court will grant defendants’ motion to transfer the case.”
In reaction to the lawsuit, the U.S. Forest Service has postponed until January 15, 2025 the date by which BlueTriton must begin removing its infrastructure from the San Bernardino National Forest.

Leave a Reply