One Rock-backed BlueTriton plans California water board appeal

The former Nestlé Waters North America was acquired by One Rock Capital and Metropoulos & Co for $4.3bn earlier this year and has been directed to 'stop its unlawful activities' by regulators.

One Rock Capital Partners-backed BlueTriton plans to appeal a draft cease and desist order from the California State Water Resources Control Board accusing the bottled water supplier formerly owned by Nestlé of unauthorized water diversion.

The Stamford, Connecticut-headquartered company’s late April statement was issued on the same day the SWRCB announced its finding of multiple violations within the San Bernardino National Forest by the former Nestlé Waters North America. The SWRCB updated an investigation that began in 2015 into accusations the Nestlé unit had diverted spring water without valid rights, caused injury to public trust resources and submitted incorrect or incomplete reporting.

The draft order directed the company to “stop its unlawful activities” and gave Nestlé 20 days to respond before the State Water Board would issue a final order. The 20 days are to expire May 16.

“The SWRCB’s staff report and draft cease and desist order, which is part of the normal investigative process, errs with respect to several critical hydrological and legal conclusions,” Blue Triton wrote in a late April statement, which said it planned to pursue all legal options and comply with the final determination of any appeal process.

“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 them.”

The water rights in question were among assets sold by Vevey, Switzerland-headquartered Nestlé to New York-headquartered One Rock and Metropoulos & Co, a food and brands-focused family office, for $4.3 billion in deal finalized at the end of March. The Arrowhead brand spring water involved in alleged violations at San Bernardino National Forest’s Strawberry Creek were included in the transaction, as were US and Canada brands including Poland Spring, Deer Park and Zephyrhills, among others.

In early April, the company announced its re-branding from Nestlé Waters North America to BlueTriton, a reference to the Greek god of the sea designed to reflect its role as “a guardian of sustainable resources and provider of fresh water.”

Jule Rizzardo, branch chief for permitting and enforcement for the SWRCB’s water rights division, told Agri Investor late last week her office had not yet been formally notified of any response by BlueTriton/Nestlé. SWRCB confirmed Monday it had not yet been notified of any formal BlueTriton response.

She explained there are several steps of a hearing process that could take months before the draft order will be elevated for a final vote before the state’s Water Resources Board. Part of what has made the Nestlé/BlueTriton complaint so complex, she said, is that the company’s operations involve a special use permit issued by the US Forest Service and the SWRCB’s initial report prompted thousands public responses that took years to investigate.

The SWRCB’s statement highlighted that its draft order comes at a time when Governor Gavin Newsome has directed state agencies to “track and actively respond to” changing conditions with an eye toward supporting California’s water resilience after a second consecutive dry year. SWRCB has received complaints about just under 100 potential water rights violations throughout California, Rizzardo said, adding there are currently between 10 and 15 potential enforcement actions at various stages of development.

“It’s a good time to remind folks that this is what we do and why we do it,” said Rizzardo. “These are exactly the kind of complaints that we receive during a drought. These are exactly the kind of complaints that we need to take seriously.”

BlueTriton and Nestlé declined to comment and One Rock did not reply to messages seeking further detail.