Nestlé, the world’s largest bottled water company, continues to take millions of gallons of free water from the San Bernardino National Forest two hours east of Los Angeles, 17 months after California regulators told them they had no right to much of what they'd taken in the past. And federal officials are helping them do it, despite concluding Nestlé is drying up springs and streams and damaging a watershed.

The company says it is legally entitled to every drop, and is "sustainably collecting water at volumes believed to be in compliance with all laws and permits at this time," according to emailed responses to questions from The Desert Sun.

The company reported piping 139 acre-feet — or 45 million gallons — of water from the springs and slopes of the popular national forest last year as part of its Arrowhead brand operations. They were required to pay about $2,000 for a new federal permit, but no fees for the water, which is theirs to use for retail sale. Some conditions were imposed in a management plan that they originally drafted, which was signed in March by the forest's district ranger.

State rights

The state’s top water rights enforcer said in a recent interview that while he and his staff had advised the multinational company in December 2017 not to continue taking unauthorized water, it will take at least another six months for his team to finalize their investigation, and, if necessary, issue penalties.

"We hope by next December" the report will be complete, said Victor Vasquez, the senior engineer who heads water rights enforcement for the California Water Resources Control Board. He noted the draft report had taken two years to complete, and said his staff is working hard on the final version after receiving additional input from Nestlé and the public. "The issues we're examining are very complex, very technically complicated... this has a lot of geology involved in it, and a lot of legal aspects."

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Vasquez and Nestlé also noted that state regulators had found that the company is entitled to up to 26 acre-feet of surface water and 126 acre-feet of groundwater piped from horizontal wells, for a total of 152 acre-feet.

Vasquez' team concluded that in past years the multinational had taken as much as 356 acre-feet of unauthorized water, and advised them to "immediately cease any unauthorized diversions." So far, according to required state records, Nestlé is staying within the 152 acre-feet limit, though they submitted a response to the state saying they actually have rights to at least 271 acre-feet.

Opponents dispute those claims.

"Based on the evidence gathered by the Water Board's investigators and others, we believe that Nestlé is diverting water for bottling to which it has no legal right," said Michael O'Heaney, executive director of Story of Stuff project, a global citizens' group that helped unearth data about Nestlé. "The Water Board has no choice but to end Nestlé's unauthorized removal of water and hold the company accountable to the people of California for its wrongdoing over many years. We continue to encourage the Water Board to complete its work in the most timely and thorough way possible."

Local activist Amanda Frye, who researched and submitted historical documents to the investigators, says a bottling operation which began in 1909 was in a different area, not the national forest, and that the company has no right to water based on that claim.

If state investigators conclude that the multinational has been taking water improperly, it could face fines of between $500 and $1,000 a day for every day it has continued to take it since the end of 2017, when the notice was sent. It’s not clear how that would affect the company's bottom line.

Nestlé SA, headquartered in Vevey, Switzerland, is the world's largest food company, according to a spokesman, and its Paris-based subsidiary Nestlé Waters is the largest bottled water company. Its profits were a reported $10.5 billion last year.

With 87 locations in 33 countries, the company bottles and sells several other spring water brands, such as Deer Park, Ice Mountain and Poland Spring. It relies on sites in California, Colorado and Canada for its Arrowhead label, distributed across the West Coast.

In documents submitted to the forest service, Nestlé said if it lost access to water from the national forest, it could have “significant market impacts” and risk job losses among 1,200 employees connected with the Arrowhead brand.

The battle over Nestlé’s operation in the southern California forest is one of several across the country in recent years, including in Oregon, Michigan and Pennsylvania, seeking to block it from siphoning water from springs and aquifers.

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State and federal agencies began examining Nestlé’s bottled water operation in the San Bernardino National Forest following a 2015 investigation by The Desert Sun, which revealed that federal officials were allowing the company to draw water from the forest with a permit that listed 1988 as the expiration date and without examining impacts on the environment, during a prolonged drought. The reporting prompted petitions, protests, a lawsuit against the U.S. Forest Service and multiple complaints to the state water board.

Nestlé has insisted it holds rights to the water that are “among the most senior” in California. The company could appeal any enforcement decision, triggering an in-depth hearing before the entire water board, which has the authority to make the final call. If the board concludes a company was taking water wrongly and they refused to comply, the matter could be referred to the state attorney general.

Feds keep water flowing, despite harm to springs and streams

After their own review, forest service officials issued an updated permit last year. This March, they finalized an “adaptive management plan" that allows Nestlé to keep taking water from Strawberry Creek, above the historic Arrowhead Hotel grounds, with flexibility for possible adaptations if needed.

The plan, which Nestlé said it drafted then submitted to federal officials for review and approval, was signed by the district ranger in March. It lets the company pipe water for up to five years, as long as surveys show it's “excess” water that isn’t needed for forest resources. It also requires biological surveys and "mitigation" of any harm to species at risk of extinction. Initial studies found no federally endangered species on site, and varying degrees of risk or benefit to others.

Nestlé must also conduct paired surveys of a naturally flowing water basin and the Strawberry Creek basin from which it takes water. In a visit to the national forest in 2017, Desert Sun journalists confirmed that while the creek’s east fork was flowing freely, the western fork — which lies in the watershed below Nestlé’s boreholes and tunnels — was just a trickle.

Nestlé collects water from the national forest north of San Bernardino using a system of boreholes and water tunnels drilled deep into the mountainside. The water is piped downhill to a roadside tank, where it is pumped into tanker trucks and hauled to a bottling plant about 30 miles away.

Extraction damages natural resources

The watershed is currently "impaired" according to earlier studies validated by federal officials.

"The current water extraction is drying up surface water resources (springs and streams) that would have normally been perennial water resources," and "this extraction of water... is not in accordance" with a land management plan, federal staff concluded in 2018.

But the new management plan doesn't require all of Strawberry Creek to be restored to natural, free-flowing levels, only to a "functioning at risk" rating.

A San Bernardino forest spokesman said he couldn't define the ratings or comment on why full restoration wasn't being required. He provided an earlier environmental review that said while it was impaired, the changes to be undertaken in the adaptive management plan would be a step in the right direction, moving it up one level to "functioning at risk."

Critics said the forest service's decision was wrong.

"We believe the right place for this water is in the San Bernardino National Forest, not in Arrowhead's plastic bottles," said O'Heaney in an email. "The Forest Service has a duty to maintain the Forest for generations to come. And while it is right to have finally taken action after years of ignoring Nestlé's water removal, the only way to fully restore Strawberry Creek is to let these waters flow freely. Our goal shouldn't be an ecosystem 'at risk,' it should be a thriving Forest."

Steve Loe, a retired biologist who worked for the U.S. Forest Service for more than 30 years, including on the San Bernadino forest, said of the decision to let them keep taking water, "it stinks."

He said a wet winter like this year's would have been the perfect time to allow the creek to begin to recover and provide critical habitat for diminishing wildlife, including three songbirds, the speckled dace fish and the mountain yellow-legged frog.

Nestlé said in an email that the company was following the guidance prescribed under the management plan it initially drafted, which it said it did in accordance with forest policies. "The (US Forest Service) itself can best address the government’s rationale for various requirements under its permitting structures."

The statement added, "We recognize the great responsibility that we have as stewards of this precious resource. We are committed to ensuring that Arrowhead Springs will continue to be managed for long-term sustainability as has been the case over the past 122 years of operations in Strawberry Canyon."

Loe said he believed local forest officials had done the best they could with the management plan, because he believes they are facing enormous pressure from Trump administration officials overseeing the agency, who are pushing to allow natural resources to be taken and used by industries as much as possible.

While not commenting on Loe's charges, a forest spokesman said, "The District Ranger made the decision based on an analysis conducted by an interdisciplinary team of resource specialists. Guidance was provided by the forest, Regional Office and Washington Office."

Loe said he also was grateful to hear the state was still investigating, fearing political pressure might have ended that probe.

Secret reviews of watershed impacts?

Despite opponents’ requests, many of the federally required surveys will be conducted by Nestlé or its paid consultants. The results could also be kept private, based on proprietary claims by the company, although they will be shared with officials. Forest staff retain the right to do inspections and to make modifications.

"The Forest Service has to approve the studies, they oversee and monitor them, but it's Nestlé that hires the consultants and conducts the studies," said O'Heaney of Story of Stuff. “We wanted a reading room set up where the public could come and review those documents. We think it’s the right of citizens to have access to that information.”

A forest service spokesman said he couldn't immediately comment on whether the studies would be kept private.

Janet Wilson is senior environment reporter with the Desert Sun, and authors Climate Point for USA TODAY. She can be reached at janet.wilson@desertsun.com and @janetwilson66. Arizona Republic reporter Ian James contributed to this report.