Nestlé and California Groundwater (Part 2)

Editor’s note: This is the second of two articles published concerning California groundwater, both historically and at present. This week’s article examines the future of water policy. Part one can be seen here.


According to the United States Geological Survey, California pumped about 125 acre-feet of groundwater from Central Valley aquifers between 1920 and 2013. Putting that in perspective, that is “enough fresh water to provide every person on earth with a 30-year supply of drinking water.” As a parched California now “faces [its] worst drought in decades,” water usage remains at the forefront of public debate. Though there are several causes for the groundwater depletion, the Arrowhead case is an example of how these challenges play out and expose the environmental issues at stake in the debate.

The main protagonists in this case study are the California State Water Board—the powerful state body that presides over the regulation of water supply in the State of California—and Nestlé, the multi-billion dollar conglomerate. While the California State Water Board declared that Nestlé’s inherited water permit was void and subsequent pumping in the San Bernardino Mountains was illegal, the United States (U.S.) Forest Service deemed the permit valid, resulting in a fraught legal discrepancy that placed Nestlé at the center of California’s groundwater debate.

Why did the State Water Board reach its decision? The answer, according to the State Water Board, was simple: Nestlé’s pumping permit was null and void. “While Nestlé may be able to claim a valid basis of right to some water in Strawberry Canyon,’ the board says in its report, ‘a significant portion of the water currently diverted by Nestlé appears to be diverted without a valid basis of right.’” According to the published report, which took two years to investigate, the State Water Board articulated “that of the 62.6 million gallons of water that Nestle says it extracted from the San Bernardino spring each year on average from 1947 to 2015, the company may only have a right to some 8.5 million gallons.” The regulatory proclamation stemmed from a series of complaints and allegations, including the “the diversion of water without a valid basis of right,” which emphasized concern “[a]bout the impacts of Nestlé’s diversions during California’s recent historic drought.” Consequently, the state argued that Nestlé “should apply for a new permit and ensure all of its water diversions comply with California regulations.” Recently, the State Water Board further excoriated Nestlé, brandishing a Cease and Desist Order on April 23, 2021 alongside a revised report “to address alleged violations” in groundwater extraction.

While the State Water Board deemed Nestlé’s groundwater pumping in the San Bernardino mountains illegal, Nestlé disagreed with the illegality of its permits, a position bolstered by a federal judge’s ruling and the U.S. Forest Service. In 2016, U.S. District Court Judge Jesus G. Bernal found that Nestlé still owned pumping rights in the San Bernardino Mountains, despite the fact that the company’s permit was “28 years out of date.” Specifically, Judge Bernal ruled that Nestlé was permitted to pump groundwater under its original 1988 permit “until the Forest Service takes action on [its renewal].” Judge Bernal added that even in light of the permit’s expiration, Nestlé was allowed to continue to extract water for its bottled water “because corporate executives attempted to renew the permit in May 1987, but did not hear back from the Forest Service.” “‘Plaintiffs do not identify and the Court cannot find any authority holding that an agency’s failure to act within a reasonable time can invalidate before it is finally determined by the agency,’” Judge Bernal wrote. Clearly, there is a discrepancy between the perspective of the State Water Board declaring Nestle’s inherited water permit void while U.S. Forest Service deems it valid.

While the discrepancy in the opinions of the State Water Board and Nestlé on the validity of the latter’s pumping permits is clear, so too is the groundwater pumping debate, which also highlights a key tension between the corporate economic benefits and the social issues surrounding reduced water supply. At the core of the debate, is a question about whose welfare should be prioritized in decisions about groundwater pumping in California. Nestle exports water to the rest of the country and the rest of the world. That provides benefits to consumers all over the world. But it comes at the expense of local Californians who may rely on the groundwater being pumped. Further complicating the issue, Nestle is far from the only entity depleting California groundwater.

Though the legal tussle between the State Water Board and Nestlé captures much of the press and public discourse and raises important policy questions on natural resource conservation, water extraction in California needs to be put into perspective. While 3.1 billion gallons of groundwater are bottled in California, only 725 million gallons are bottled by Nestlé. Yet, that water usage amount is dwarfed by the 4.1 trillion gallons of water used by residents every year, and does not include the agricultural use of water (the latter of which constitutes of 80% of water consumption in the state annually).

In 2018, California’s agricultural industry was worth $50 billion dollars. While that financial statistic is eye-popping for sure, it implies a simple yet significant question: what is a necessary ingredient for farmers to literally reap the fruits of their labor? The answer is simple: water, and lots of it. According the Public Policy Institute of California, the California agricultural industry utilizes 80% of water use in California. Though farmers historically used a combination of federal, state, and locally owned surface and groundwater resources, the prolonged droughts exposed the vulnerabilities of the agricultural industry, especially the limited capacity of the groundwater aquifers. In summary, the report conclude that in order for California to remain an “agricultural powerhouse” while not depleting its aquifers during times of drought, five policy changes should be implemented: 1) the strengths and weaknesses exposed by the droughts should inform future water policy, 2) groundwater management must be a top priority, 3) the integration of surface water and groundwater is paramount, 4) “water markets provide essential flexibility, and 5) “[a]gricultural stewardship can do more to support the environment.

Bringing all of these factors together, it is clear that the groundwater debate in California is multivariable and not just a black-and-white dispute between the State Water Board and Nestlé over an expired permit. Although this dispute over an expired permit is highly publicized of California’s groundwater debate, the Nestlé case study represents only 23% of groundwater that is bottled in the state. Moreover, Nestlé’s pumping of groundwater is dwarfed in comparison to the California agricultural industry that consumes 80% of the state’s water resources. Major policy changes are necessary to enable the State of California to allocate its water resources more effectively, build resilience for future droughts, and combat Climate Change.


Image courtesy of Flickr. Originally published by S&S on Sept. 15, 2021.


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