How Nestlé Gets Away With Pumping California’s Water for Next to Nothing

The company pulls millions of gallons from a nearby creek — while paying an annual fee that’s lower than some gym memberships

To reach Well Complex 7, you must wind along Highway 18 as it rises 5,642 feet above sea level through the San Bernardino National Forest, the green mountains framing the sprawl of the Inland Empire. Near the burg of Rimforest, you park on the shoulder and descend into a narrow canyon along the west fork of Strawberry Creek, where the chaparral blocks out the gusts of wind and noise of the road. Then follow the trail past California myrtle to a concrete-and-stone bunker, cracked from decades of use.

Gary Earney, a retired 30-year veteran of the U.S. Forest Service, is leading me and 25 activists on a hike to the complex of four wells, which diverts water from an underground spring 400 feet inside the mountain. From there it travels via four-inch steel pipes down the face of the canyon to a tank four-and-a-half miles away, eventually finding itself in bottles bearing the Arrowhead brand name. It sells for $2 a liter.

Since the Swiss food-and-beverage conglomerate Nestlé acquired Arrowhead in 1992, it has paid the forest service just $524 a year for access to the water. A little solar panel provides all the power needed to control the flow; no staff oversees operations. The water rights themselves, which the company says are based on a 19th-century possessory claim, cost nothing.

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Last year Nestlé’s 12 wells pulled 36 million gallons from Strawberry Creek. That’s a fraction of the $7.5 billion in global sales the nation’s largest bottled water producer totaled last year, but the math still galls. “A simple back-of-the-envelope calculation tells us that Nestlé is making hundreds of millions of dollars from this water,” says Peter Gleick, president of the Pacific Institute and author of Bottled and Sold: The Story Behind Our Obsession with Bottled Water. “They’re converting a public resource into private profit.”

You would think that an operation like this on public land would generate government interest. But despite the ongoing drought, the forest service allowed the permit for the operation to expire in 1988. It has not scientifically evaluated the effects of groundwater extraction on wildlife and the environment since then, letting Nestlé continue to pump as long as it pays the tiny access fee.

The arrangement caught the public’s attention only last year, owing to a series of articles in a small Palm Springs-area newspaper called The Desert Sun, but the reaction was swift, with activists picketing and filing a lawsuit. The outcome of the suit may determine the fate of the natural spring water business throughout the state.

Entrepreneurs have harvested water from underground springs in Southern California since the earliest settlements; missionaries tapped springs in the Arroyo Seco to operate mills and tanneries. Before 1914, Californians could claim rights to the water simply by posting a notice and constructing facilities to withdraw it. In the early 20th century the Elysian Spring Water Co. maintained an operation near the future site of Dodger Stadium. Sparkletts still has a bottling plant in Eagle Rock, where it once relied on a spring. There are 108 bottled water plants statewide, according to the California Department of Public Health. Arrowhead began bottling water in 1909, and the brand has been tapping Strawberry Creek since the 1920s.

Nestlé reports that its California operations amount to 705 million gallons per year. That equals around 0.008 percent of the state’s total water use—far less than the quantities reserved for agriculture or domestic needs. “Bottled water overall is not a stressor on the system,” says Gleick. “The right question is, what are withdrawals doing to a local stream or local groundwater basin? That’s the issue in San Bernardino.”

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At their peak Arrowhead wells drew as much as 170 million gallons annually from Strawberry Creek, compared with last year’s 36 million. The U.S. Geological Survey plots the normal stream flow discharge for the creek based on 94 years of data. The median level in June is anywhere between 1.7 and 2.3 cubic feet per second. With rains from El Niño barely reaching Southern California this year, no day in June saw stream flows above 1.2, and most have been closer to 0.67. Last year “held the record low flows for many dates, and there is a good chance we will be seeing the lowest on record very soon,” says former forest service wildlife biologist Steve Loe. Like Earney, he’s a well-publicized critic of Nestlé’s presence.

Less water in the creek means decreased habitat for vegetation and various species. Whether the groundwater extraction is harming the environment here is an open question, however, because of the lack of testing. “Nestlé could be having a terrible impact or a negligible impact,” says Gleick. “The U.S. Forest Service hasn’t looked.”

National forests are not national parks. The forest service has an explicit mandate to facilitate multiple uses of the land it manages. Springwater is only part of the picture; oil extraction, ski resorts, and mining and timber operations can be found on forest service property, too. But the federal agency is supposed to balance commerce with habitat maintenance and conservation, ensuring that the resources removed are only in excess of the needs of the forest.

More than 600 water-related projects have expired permits in California alone. Earney, who administered the last ten-year permit for Arrowhead (the one that expired in 1988), chalks up the delay in renewals to a lack of resources, dating to a sizable budget cut in 1981. The Pacific Southwest Region of the forest service administers 15,000 special- use permits, despite the reduced staffing. “New proposals are submitted weekly,” says John Heil, spokesman for the forest service. “The special-uses workload remains significant and is ongoing.”

Nestlé declined to provide a spokesperson for this article, but on its Web site the company claims to take “water management very seriously” and “consistently monitor our spring sources for long term sustainability.” The company used similar arguments when attempting to set up a water-bottling plant in Hood River County, Oregon; however, residents voted overwhelmingly to block the project. Monroe County, Pennsylvania, also recently blocked a proposed water-extraction facility. And the backlash from The Desert Sun’s reporting has activists targeting Strawberry Creek.

In October three groups filed a lawsuit related to Nestlé’s operation at the creek: the Center for Biological Diversity, the state-based Courage Campaign Institute, and the Story of Stuff, a nonprofit known more for making socially conscious viral videos about consumerism. Rather than suing Nestlé, they focused on the forest service for letting the company pull water with an expired permit. The idea is to get the forest service to issue a new permit. That would trigger a review to test whether there is enough water to sustain the forest and to fill Arrowhead bottles. If not, the permit would have to be denied by law, and activists surmised that Nestlé couldn’t pass that test. “The Story of Stuff is not a litigation organization,” says Stiv Wilson, director of campaigns for StoryofStuff.org, on our hike to Well Complex 7. “But we decided this was the only way to go.”

Months of research also
 led to the finding that Nestlé 
might not own the water 
rights in the first place. It 
turns out the name on the permit and on invoices, Arrow
head Mountain Spring Water
 Company, isn’t registered in 
California, and the entity supposedly holding the water
 rights, Arrowhead Drinking
 Water Corporation, was “surrendered” decades ago, suggesting it gave up its rights
 to do business in the state. Moreover, the initial possessory claim from 1865 didn’t include Strawberry Creek, according to Amanda Frye, a local activist who spent months combing land grant archives to verify Nestlé’s claims. In the process she found a newspaper clipping from 1886 declaring, in her words, that “the original pipeline and water rights were for Coldwater Canyon,” which adjoins Strawberry Creek. The Secretary of State’s office has suggested that corporate subsidiaries don’t necessarily have to be registered in California, but the State Water Resources Control Board is investigating the issue.

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That’s not the only consequence so far. In December the forest service opened a review of Nestlé’s Strawberry Creek operations to assess whether, as required by agency policy, “man and nature can exist in productive harmony” if a permit were to be reissued. Months later the forest service proposed a five-year permit, which would require resource-protection measures, ongoing habitat studies, and “adaptive management” that could alter and even cancel the permit if harmful impacts were discovered. All of this would proceed only pending an environmental review, and the forest service acknowledged that initial studies from Nestlé “suggest that water extraction is reducing surface flow in Strawberry Creek.”

The plans don’t specify whether the environmental assessment would entail a comprehensive look at the hydrology or a more minimal review. So the Story of Stuff and its partners argued for the comprehensive option in a district court hearing on June 13. There’s also apprehension that because Nestlé will have to fund the research, it would be able to select the researchers. And during the review, Nestlé can continue to divert water, making it impossible to set a baseline for stream flow. “The watershed is extremely stressed and needs to recover,” Loe tells me. “Continued removal of massive amounts of water will never allow for recovery.” He and Earney still give occasional tours of the wells.

In April, a few months after my Well Complex 7 excursion, I attended an open house at forest service headquarters in San Bernardino, where residents could question the staff and deliver formal comments. Skepticism was the dominant mood. Two burly men grilled environmental coordinator Tasha Hernandez. “What interest is there to the public to taking the water out of the mountain?” one queried. The other asked about fees. Hernandez explained that they were determined at the federal level by the acreage used. I pointed out that the total fee was $524 a year. “That’s it?” one of the guys exclaimed.

“What concerns me,” another resident said to forest service hydrologist Robert Taylor, “is you study this for 20 years and you find out there was more water. Meanwhile Nestlé got water for 20 years!” Taylor replied, “I’d appreciate it if you put that down as a comment and provide it to us.” The comment period ended in May, with more than 38,000 comments logged, most of them from residents seeking to end Nestlé’s operation. It could take a year or more before a final decision is made.

Nestlé isn’t going quietly. It has accused the forest service of threatening the water rights of bottlers around the state with its intervention. And it’s countered with a proposal for voluntary measures, but the company hasn’t shown any patience with federal oversight or environmental concerns. Asked on Southern California Public Radio last year whether it would reduce water extraction, Nestlé Waters North America CEO Tim Brown said, “Absolutely not. In fact, if I could increase it, I would.”

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