Nestlé threatened with cease-and-desist over alleged illegal water use

Rows and rows of water bottles.

The snow hasn’t completely melted in the Sierra Nevada, but most of California is already deep into a drought. Over 96 percent of the Golden State is experiencing moderate to exceptional drought, compared with 36 percent last year, which was the worst year for wildfires since record keeping began. Meanwhile, in the San Bernardino National Forest, Nestlé continues to pump hundreds of thousands of gallons a week to sell as bottled water.

The folks at California’s State Water Resources Control Board aren’t amused. This week, they issued a cease-and-desist order, demanding that Nestlé “immediately cease all unauthorized diversions of water.”

Nestlé has been pumping water from a creek that feeds the Santa Ana River, which supplies a significant portion of Orange County’s drinking water. The company argues that it has water rights to the creek that date back to 1865, and while the water board admits that may be true, the board says that the company has grossly overdrawn its amount.

In the national forest, Nestlé collects the water through boreholes and tunnels that are drilled deep beneath the mountains, which travel downhill to a collection tank. Trucks then transport the water to a nearby bottling plant, where its sold under the Arrowhead name. As a conglomerate, Nestlé has a long history of selling bottled water, including under higher-end names like Perrier. Earlier this year, Nestlé spun off its North American bottled-water group to two private equity firms for $4.3 billion.

Nestlé acquired water rights in the San Bernardino Mountains when it bought Perrier in 1992, which itself had purchased the Arrowhead Drinking Water Co., which was founded in 1894 to sell “medicinal” water. Where Nestlé seems to have gotten itself into trouble was by overestimating the capacity of an early 20th-century train car.

A key contract from 1909 said the Arrowhead source would supply a bottled-water company with seven train cars of water per week. Nestlé, which bought those rights, said that tank cars from that era could hold 15,000 gallons. But Amanda Frye, a local activist, thought something was amiss, so she did some digging. After sifting through archives, she found buried in legal documents evidence that the actual train cars used carried 6,500 gallons—less than half what Nestlé claimed.

If the state water board is successful, it’s possible that Nestlé would only have rights to 2.36 million gallons of water per year, a far cry from the reported 58 million gallons last year. The company has 20 days to appeal the order and ask for a hearing. If the order is upheld and goes into force, Nestlé face fines up to $1,000 per day or ten-times that amount if a drought is declared.

The company has courted controversy over the years with its bottled-water operations. Last year, it lost battles in Oregon and Pennsylvania to build bottling plants that would have drawn from local aquifers. In 2005, its then-CEO got into hot water when, in a documentary, he appeared to say that access to water is not a human right.

One opinion, which I think is extreme, is represented by the NGOs, who bang on about declaring water a public right. That means that as a human being you should have a right to water. That’s an extreme solution. The other view says that water is a foodstuff like any other, and like any other foodstuff it should have a market value. Personally, I believe it’s better to give a foodstuff a value so that we’re all aware it has its price, and then that one should take specific measures for the part of the population that has no access to this water, and there are many different possibilities there.

The issue in the San Bernardino Mountains is more than about people having access to water, though that is of course a key dimension. Rather, it’s also about whether the watershed’s forest has enough water to sustain itself. In the last several years, drought conditions have exacerbated fire seasons in California, turning forests that would otherwise be vulnerable but resilient into veritable tinderboxes. Many trees plan for dry years by growing deep taproots to reach subterranean water. Draining rivers and aquifers makes that supply harder if not impossible to reach, stressing the trees further. Without deep reserves, the trees are more likely to go up in smoke.

The resulting fires don’t just devastate forests. As we’ve seen in California over the last several years, they also wipe out entire neighborhoods and send dangerous, sooty smoke billowing over nearby cities. Those clouds are laden with fine particulates, which aggravate respiratory conditions, sending many vulnerable people to the hospital. There’s also increasing evidence that particulate matter (and wildfire smoke more specifically) causes myriad health problems in children. Studies have found associations between components of wildfire smoke and asthma, ADHD, autism, lifetime cancer risk, blood pressure, and more.

Whether Nestlé’s water rights are upheld or curtailed, it’s likely there will be more battles bottled water. The practice of selling the natural resource at a premium has always been controversial, and this fight in the context of California’s fire season only adds to that. Water rights in the West have always been fraught, and climate change is likely to ratchet up tensions further as droughts become more extreme and prolonged.