Ian James

The Desert Sun

Nestled in thick brush high in the San Bernardino Mountains, bunker-like structures protrude from the rocky slopes. Built with stone and concrete and secured with metal doors and padlocks, these vaults are connected to a series of stainless steel pipelines that run down the mountainside like veins.

The food and beverage giant Nestlé uses this system, which includes boreholes and tunnels drilled deep into the mountainside, to collect water and pipe it out of the San Bernardino National Forest. The water is bottled and sold as Arrowhead 100% Mountain Spring Water.

Federal regulations, however, include strict requirements for bottled water that's labeled as “spring water.” And the top official at the national forest suggested recently in an internal email that Nestlé may not be complying with the regulations and that the Food and Drug Administration should look into it.

In the April 19 email, San Bernardino National Forest Supervisor Jody Noiron told other officials in her agency that an FDA counterpart would be “discussing this case w her upper managers.”

“FDA has full discretion on whether or not to followup on non-compliance issues like this, it’s a case by case basis,” Noiron said in the email. “Nestlé is non compliant w their labeling, lots to consider on their end. Their legal counsel may want to consult w our legal counsel.”

In a June 20 email, Anam Drumheller at the FDA provided Noiron with the name of “our legal counsel that will be working from FDA’s side on this issue.”

The emails were obtained in response to a request under the Freedom of Information Act by lawyers representing environmental groups, and were provided to The Desert Sun along with other documents.

The emails didn’t give details about why Nestlé was considered non-compliant or what exactly was being followed up on by the FDA.

Under federal regulations, the FDA defines spring water as water that “flows naturally to the surface of the earth.” The water may be collected at a spring or through a borehole tapping the underground source that feeds the spring.

Among other things, regulators may ask bottling plants to demonstrate that “an appropriate hydraulic connection exists between the natural orifice of the spring and the bore hole.”

The regulations also include another specific requirement: water must keep flowing “to the surface through a natural orifice.”

To investigate the matter, Desert Sun journalists spent a day visiting several of Nestlé's water sources on the mountainside, and there were no signs of any flowing water on the ground – just ferns, thorny bushes, granite boulders and dusty soil.

Some of the local activists who are opposed to Nestlé's use of water from the forest have begun questioning whether the company might be violating the federal regulations.

“There’s a big difference between a surface spring and groundwater. Either there’s a natural spring – surface water – or they’re taking groundwater,” said Amanda Frye, a Redlands activist who has urged state and federal authorities to shut down the pipelines in the national forest.

“There’s no spring naturally running,” Frye said, standing beside one of the company’s water-collection structures. “Nestlé is taking the forest’s groundwater.”

The Forest Service, however, has started taking a different position on the issue, at least publicly. When asked about the emails this week, Forest Service spokesperson Brandon Honig said: “Nestlé is currently compliant with FDA.”

Honig said Noiron wasn’t available for comment, and he didn’t have an explanation for the different position. When it comes to bottled water regulations, Honig said, officials at the FDA are the experts.

Deborah Kotz, an FDA spokesperson, said the agency cannot comment on or confirm any ongoing investigations.

As a general procedure, Kotz said, when the FDA learns about potential violations, the agency can initiate actions including warning letters, injunctions, seizures of products and prosecutions.

“Such action is handled on a case by case basis,” she said.

Nestlé Waters North America is the largest seller of bottled water in the country, with $4.5 billion in sales last year.

If the federal government were to rule against Nestlé Waters in a substantial way, huge sums would be at stake for the company. Nestlé has told the Forest Service that in addition to the millions of dollars it has invested in its water infrastructure, holding on to the Arrowhead brand is financially important.

Nestlé has told the agency that if it were to lose access to water from the national forest, that could have “significant market impacts” and could risk job losses among its 1,200 employees in California who are connected with the Arrowhead brand. The company has said water from the Arrowhead springs “may not be replaceable.”

Nestlé Waters North America, which is part of Switzerland-based Nestlé, said Arrowhead bottled water fully meets the FDA’s definition of spring water.

Nestlé Waters said no one at the company was available for an interview, but Larry Lawrence, the company’s natural resources manager in California, responded to emailed questions.

Lawrence said he led representatives of the Forest Service and the State Water Resources Control Board on tours of spring sources in Strawberry Canyon in December 2015 and June 2016, and “showed them, among other things, the points at which the various springs emerge.”

“Some of the water is collected in a collection system constructed at the location of the spring to capture it in a sanitary way, so obviously no one visiting the site would see water flowing on the ground at those locations,” Lawrence said. “Some of it is collected through boreholes tapping the same underground formation feeding natural springs, and we showed these springs” to Forest Service and State Water Board officials.

He said Forest Service regulators have visited the springs again, most recently in July.

“We only recently became aware that the Forest Service had any questions regarding the labeling of our Strawberry Canyon spring water under FDA’s standard of identity regulations,” Lawrence said. “We immediately provided the FDA with full information on the issue that had been raised. FDA reviewed the information and has now clarified for the Forest Service that FDA has no issue with the company’s continued labeling of the water as ‘spring water.’”

The issue of whether water piped from the forest legally qualifies to be sold as “spring water” could turn into yet another challenge for Nestlé as the company tries to keep its lucrative bottled water operation going in the national forest.

Last month, lawyers for two environmental groups – the Story of Stuff Project and the Courage Campaign Institute – filed a lawsuit accusing the FDA of failing to respond in a timely manner to their request for documents under the Freedom of Information Act.

Rachel Doughty, one of the lawyers representing the groups, said the FDA agreed to release hundreds of pages of documents and she expects to receive them this week. She said she knows a complaint was made but said it’s unclear what the documents will include.

California regulators have also spent more than a year investigating whether Nestlé holds valid water rights, and a separate trove of documents, released to The Desert Sun by the State Water Resources Control Board, shows the investigation is turning out to be complicated, with a great deal of back-and-forth between state officials and the company’s lawyers on its water rights claims.

Nestlé’s use of water from the national forest has sparked strong opposition and protests during the past two years after a 2015 Desert Sun investigation revealed that the Forest Service has been allowing the company to continue drawing water from the national forest using a permit that lists 1988 as the expiration date.

The Forest Service subsequently announced a review of the permit and in March 2016 released a proposal to grant the company a new five-year permit. The issue also prompted a federal lawsuit by environmental groups, which are appealing a ruling that allowed Nestlé to continue piping water out of the forest.

Activists have urged the Forest Service to crack down, arguing that taking water from the forest harms spring-fed Strawberry Creek and the wildlife that depends on it. Last year, Nestlé’s opponents submitted a petition that they said was signed by more than 280,000 people demanding the Forest Service carry out a “thorough and unbiased” environmental review.

Gary Earney, a retired Forest Service employee, knows all of Nestlé’s water sources and pipelines because years ago he visited them as part of his inspection duties while he was in charge of administering permits.

In principle, he’s not opposed to Nestlé drawing water from the forest, but he thinks the company should only be able to use water when it’s “surplus to the needs of the environment.” And he believes the Forest Service should be controlling and regulating how much water is taken.

“Water’s going to be the thing that we fight over in Southern California, and I think this is going to be one of the beginning efforts,” Earney said. “We have a national forest here for a reason, and we need to make sure it has the water it needs. I don’t think it has enough. We’re losing tens of millions of gallons to Nestlé.”

Carrying a walking stick and wearing chaps to guard against rattlesnakes, Earney set out into the forest to visit Nestlé’s water-collection structures.

Reaching one of them, he squatted down and put his ear to the steel pipe.

“There’s water in this,” Earney said. Yet he added that all around the wells, he hasn’t seen a single natural spring flowing.

“It’s significant because there’s a legal difference between spring water and groundwater,” Earney said. “And in my opinion, they’re not selling spring water, they’re selling groundwater. And the groundwater is owned by the national forest.”

Frye, who was following along, looked sadly at the dry boulders below the well.

“Just think how pretty that would be if the water was flowing,” she said.

While there was no water visible flowing down the mountainside, portions of Strawberry Creek continue to flow at lower elevations.

From a ridge atop the mountains, you can look down into a rocky canyon on the creek’s east fork – which is fed by an adjacent watershed where Nestlé has no wells – and see a serpentine ribbon of water running through the creek channel.

Still, Frye pointed to surveys by Forest Service officials that she read about in some of the documents released by the agency.

In notes of a June 14 visit, for example, a Forest Service employee wrote that one spring site “currently has no flow but has riparian veg and moist soil.” In the channel below another site, she wrote: “Sediment looks dry and could not find significant moisture in the top 7”.”

In another survey on Oct. 19, 2016, Forest Service officials visited the site of a spring where the agency has a 1928 right to use up to 9,000 gallons a day, most recently for the purpose of “wildlife enhancement and fire protection.”

The document, which included photos showing the dry spring site overgrown with vegetation, said “there was no discernible flow.”

It’s not clear how the Forest Service might use the results of those surveys, or if Nestlé’s opponents will seek to challenge Nestlé under the FDA regulations. But elsewhere, in Connecticut, a newly filed federal lawsuit targets the Nestlé brand Poland Spring Water, accusing the company of bottling “common groundwater and illegally mislabeled it as '100% Natural Spring Water.'”

Nestlé denies the claims, saying all of its water meets federal and state regulations.

Forest Service officials have said Nestlé’s 1978 permit, which was issued to predecessor Arrowhead Puritas Waters Inc., remains in effect while they consider the company’s renewal application.

That position was upheld in federal court last year. The judge ruled the permit is still valid because in 1987 the company that owned Arrowhead at the time took the proper step of writing to the agency to request a renewal, and then never received a response. The appeal by three environmental groups is pending before the Ninth Circuit Court of Appeals.

Nestlé’s permit allows the company to use its horizontal wells, pipelines and water collection tunnels in the mountains near San Bernardino. The Forest Service, which does not charge any fee for the water, has been charging the company an annual permit fee of $624.

The company reported drawing about 32 million gallons of water from the national forest in 2016. The water flows downhill through Nestlé’s pipeline to a roadside tank, where it is moved to tanker trucks and hauled to a bottling plant about 30 miles away in Ontario.

Water from Arrowhead Springs was first bottled for sale more than a century ago. It’s named after the famed arrowhead-shaped natural rock formation on a mountainside north of San Bernardino and the springs near it — both hot and cold springs that flow from the mountain. The hot springs were once the central attraction of a glamorous hotel, which closed in the late 1950s and now stands vacant at the base of the San Bernardino Mountains.

Nestlé has owned the Arrowhead brand since it acquired Perrier in 1992.

Documents previously released by the Forest Service show that in the 1990s and early 2000s, there were discussions within the agency about conducting a review of the permit and carrying out environmental studies, but those steps didn’t lead to action. When floods and mudslides in 2003 destroyed portions of Nestlé’s pipes, the Forest Service allowed the company to rebuild and didn’t require a new permit.

Gene Zimmerman, the forest supervisor who was in charge at the time, retired in 2005 and has since done paid consulting work for Nestlé.

In explaining the nearly three decades of inaction on the permit, Forest Service officials have cited a heavy workload of other priorities, wildfires and floods, a tight budget and limited staffing.

READ MORE: Protesters call for shutting down Nestlé’s bottled water operation

READ MORE: Court ruling allows Nestlé to keep piping water out of national forest

The Forest Service aims to release a decision this fall “about whether to issue Nestlé a 5-year permit and what the terms of that permit should be,” Honig said. “In advance of that decision, we are reviewing the impacts on the environment of issuing such a permit.”

Nestlé has insisted its operation isn't causing any harm in the forest.

Lawrence said the company has prepared about 70 separate studies, reports and other materials, and provided them to the Forest Service. He said Nestlé has been regularly communicating with the agency to provide information and is awaiting its decision.

Nestlé Waters operates five bottling plants in California. Another of the plants is located on the Morongo Band of Mission Indians’ reservation in Cabazon.

On its website, the company says Arrowhead bottled water comes from 13 “mountain spring sources in and West of the Rockies.” It lists the namesake Arrowhead Spring as a single site, calling it “our original spring source.”

Regulators at the State Water Resources Control Board began an investigation last year in response to complaints by several people, including Frye, who questioned whether Nestlé actually holds valid water rights.

In response to a request by The Desert Sun under the California Public Records Act, the board recently released documents relating to its investigation, including emails, letters and other documents it received from Nestlé.

The emails and letters reveal discussions about subjects ranging from the FDA’s requirements to the distinctions between surface water and groundwater, which fall under separate, different systems of water rights.

With surface water, California and other western states use a “first-in-time, first-in-right” system in which the first party to use water from a stream or river obtains a priority right. With groundwater, in contrast, California law says landowners have a right to pump water from beneath their property, and generally no one holds priority rights.

The company responded to detailed questions about its water rights claims and its water sources, and provided well drilling records and other documents. Some of the pages were partially redacted to remove information deemed to be “trade secrets.”

In a letter on March 11, 2016, Nestlé said water bottling began at Arrowhead Springs in the late 1800s and the company is now the “successor-in-interest to the rights of Arrowhead Springs Corporation and California Consolidated Water Company.”

The company referred to a 1930s lawsuit over the area’s water – in which Del Rosa Mutual Water Company sued to block the taking of water by the other companies – and said under the judgment, Nestlé Waters “has the clear right to capture and use the waters in Strawberry Creek.” It also said “to the extent that any water captured by (Nestlé Waters) could be classified as groundwater,” the specific wording of the judgment “adjudicated the right to develop, capture, and use this water under California state law.”

In another document, which also was submitted to the Forest Service, Nestlé laid out its case saying the historical basis of its rights “includes both surface water and subterranean water.”

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The emails show Nestlé has hired Rita Maguire, an influential water attorney who was director of the Arizona Department of Water Resources from 1993 to 2001. In an email on April 21, 2016, Maguire responded to Felicia Marcus, chair of California’s State Water Board, who had requested a summary of Nestlé’s permit renewal process.

“The pipeline has been transporting Nestlé’s pre‐1914 surface water rights at Arrowhead Springs since at least 1929,” Maguire said in the email. She said the company’s rights “to these spring waters trace back to a possessory claim recorded in San Bernardino County on March 21, 1865.” She also said there is “extensive historic evidence” showing the water rights have been in use “continuously since the late 1800s, prior to the establishment of the national forest.”

State officials have continued to ask for more information. In July 2016, Maguire sent a board attorney “as-built” drawings of the company’s infrastructure, asking that the information not be released for reasons that included “trade secrets” and preventing any “malicious tampering.”

When the state released the document, it redacted many of the pages but left intact others, stamped “CONFIDENTIAL,” with details about each of the water sources – including its two water tunnels, which were built in 1947. Each tunnel is about five feet high. One is 37 feet deep and the other extends 89 feet into the mountainside.

The document also lists 10 boreholes, ranging in depth from 120 feet to 397 feet. In another document, the company said those holes were bored into the mountainside in the 1950s and 1970s, and were re-drilled between 1992 and 1994.

State regulators’ questions about water rights and the “chain of title” continued in other emails. They also asked for documents relating to compliance with FDA rules.

In January, Maguire sent the state studies on FDA compliance that were carried out by consultants in the late 1990s.

One 1998 report by The Hydrodynamics Group said two of the boreholes were “not in compliance with the new FDA regulations” and that “no natural orifice continues to flow as required by the FDA regulations.”

A later 1999 report by a different firm, Dames & Moore, found just the opposite, saying that “the term ‘Mountain Spring Water’ is a correct and appropriate description for this spring water.”

Maguire wrote to Ken Petruzzelli, an attorney in the State Water Board’s Office of Enforcement, that the 1999 report “is a more comprehensive report, providing an in-depth evaluation of the spring sources that make-up Arrowhead Springs” and that it “replaces all prior compliance documents.”

She said the earlier “materials should not be relied upon for an accurate description of the current conditions and infrastructure at Arrowhead Springs.”

READ MORE: Activists appeal ruling in legal fight over Nestlé bottled water

Asked about the investigation this week, Petruzzelli said it’s still underway.

“It’s complicated – one, because it involves both groundwater and the interaction of groundwater and surface water in particular,” Petruzzelli said, “and two, because it involves very old water rights. And investigations involving old water rights are always difficult because of the old historical record.”

He said a “significant volume of documentation” is involved and he doesn’t know when the investigation will be finished.

For Nestlé’s part, Lawrence said the company has responded to every request from state regulators and is working with them to ensure they have all the information they need.

“The chain of title of the Arrowhead Water Rights is well documented and clearly establishes that Nestlé Waters North America is the legal and valid successor-in-interest,” Lawrence said. “These rights have remained unchallenged for nearly a century.”

Nestlé has said it holds rights that are “among the most senior water rights” in California.

Frye, however, has studied the historical documents in detail and thinks the company doesn't have valid rights. She said the 1865 possessory claim cited by the company staked out 160 acres near the base of the mountains around the future hotel site, yet Nestlé is drawing water from locations about 2.5 miles away and much higher in the mountains, at an elevation of around 5,000 feet.

"We’ll have to have the state water resource board rule on that," she said. "I’d like to see the water returned and stay in the forest, where it’s supposed to be."

As Frye and Earney walked on, they passed oaks, California bay laurels and elderberry bushes. Butterflies floated through the brush, and Steller's jays let out loud calls from the trees.

Reaching one of the water tunnels that was built in 1940s, Frye stood by its metal door.

She pointed out there's no mention in the FDA regulations of tunnels being an approved method of collecting spring water.

“They’ve gotten away with this because nobody can see,” Frye said. “Somebody’s going to have to sort it out.”

The locked metal door was cool to the touch. Through vents in the door, the sound of running water came drifting out.

“It sounds like a bathroom and someone left the sink running. It just goes on every day like this,” Frye said.

“They’re taking a lot of water out of this mountain. It’s sick. And the plants and animals suffer,” she said. “And you know, why should you have somebody, especially a foreign corporation, come in and steal from America? These are our natural resources and they belong to us, and our forest.”

Ian James covers water and environmental issues for The Desert Sun. Contact him at ian.james@desertsun.com or on Twitter: @TDSIanJames