California Water Resources Control Board Drafts Cease and Desist Against Nestlé

The California Water Resources Control Board drafted a cease and desist order against Nestlé of Friday, asking the Swiss company to stop removing millions of gallons of water a year out of the San Bernardino National Forest in Southern California.

Press play to hear a narrated version of this story, presented by AudioHopper.

For several decades, Nestlé’s water operation, primarily for its Arrowhead brand of bottled water, has been called out by many groups for contributing to the California water crisis, causing harm to the area, and not being charged enough for the operation. Currently, the U.S. Forest Service issues a permit fee of $2,100 a year to Nestlé to operate in the National Forest, but does not charge for water or for an easement on federal property.

Nestlé has dodged previous scandals in the past, such as the 2015 investigation that found that Nestlé had been using a permit that expired in 1988, and a 2017 California Water Resources Control Board warning over water rights.

However, continued public and environmentalist pressure, as well as a looming drought in California, resulted in the Water Resources Control Board’s order on Friday, calling Nestlé’s Arrowhead operation an “unauthorized diversion and threatened unauthorized diversion from Strawberry Creek.”

“It is concerning that these diversions are continuing despite recommendations from the initial report, and while the state is heading into a second dry year,” said assistant deputy director of the Division of Water Rights Jule Rizzardo on Friday. “The state will use its enforcement authority to protect water and other natural resources as we step up our efforts to further build California’s drought resilience.”

In addition to the drought threat, multiple violations were also laid out in the order, including much of the water not being lawfully diverted. While the Water Resources Control Board didn’t issue Nestlé any fines with the order draft on Friday due to wanting Nestlé to comply with the order, the Board did note that it may be possible should they still not comply. Fines of up to $1,000 per day dating back to 2017 could also be issued.

Nestlé may also lose access to the San Bernardino National Forest if the order is approved, due to the federal permit being dependent on state law compliance.

“The current permit and any future permits require the permittee to comply with State law, including its water rights. Otherwise the holder is in violation of the permit,” noted a San Bernardino National Forest spokesman on Friday.

While Nestlé can request a hearing on the matter to challenge the cease and desist, the Board approving the order would halt most water gathering from the National Forest.

A cease and desist order after a sale

Complicating matters further is Nestlé recently selling the Arrowhead brand, as well as the Strawberry Creek operation to two private equity firms for a reported $4.3 billion, where it will run under BlueTriton Brands. While the payment of a fine amounting to just over $1 million would not be a large financial loss, the removal of the San Bernardino National Forest as a source of spring water could severely hurt the brand.

“For more than 125 years, BlueTriton Brands and its predecessors have sustainably collected water from Arrowhead Springs in Strawberry Canyon,” said a BlueTriton Brands spokesman to the Globe. “We take pride in being good stewards of the environment, while providing an excellent product loved by Californians.

“We are disappointed with the recommendation by the State Water Resources Control Board (SWRCB) staff concerning our water rights in Strawberry Canyon. The SWRCB staff report and draft cease-and-desist order, which is a part of the normal investigative process, errs with respect to several critical hydrological and legal conclusions. They are contrary to California water rights law and a departure from long-standing SWRCB practice and precedent. It is our view that they have not fairly considered the extensive information and data we have provided to them. As such, BlueTriton Brands will pursue all legal options available to correct the SWRCB staff’s misinterpretation of established California water law.”

“Following the conclusion of the appeal process, we will comply with any final determination concerning a cease-and-desist order. In the meantime, we will continue to cooperate with the Board and staff.”

Water experts also noted that Strawberry Creek is only one of many bottle water source battles currently occurring worldwide.

“Across the nation, and the world, bottles water companies are getting more and more flak over normal citizens who see these big operations and profits as being substantially negative to the people who live there through huge profits being made despite  little, if any, being taxed, and environmental damage,” explained John Brewster, a water rights consultant who has been a part of many bottled water rights cases, to the Globe. “The Strawberry Creek dispute in California is one of the bigger ones because of how many things have gone wrong there over the years, whether it be using expired permits or just plain not paying for the water.

“And right now in California, drought is a big concern. That water can be used to renew the environment around there or tapped for public use. Rather than pay for expensive bottled water, it can be  sold for pennies by a public system. Or be held as an emergency resource. The skies the limit. For Nestlé , they have been attacked for allegedly trying to privatize water and other similar allegations for years. That baggage may not help them in this case.”

Nestlé will have 20 days to appeal the State Water Board’s order, with the draft order to be decided on the next Board meeting on May 4th.

Editor’s Note: This article was updated to include additional information from a spokesperson for BlueTriton Brands.