In the late 1950's and early 60's, the Southern California area was in the midst of a rather long and extensive drought. Due to extremely large demands on water from Big Bear Lake for irrigation in the San Bernardino/Redlands area  Big Bear Lake had been reduced to little more than a large "mud puddle". 

While it was generally agreed that the Dam was originally constructed to provide irrigation water to downhill users, the extensive recreational community of Big Bear Lake decided in 1964 to attempt to gain control of Big Bear Lake. The main difficulty lay in the fact that an irrigation reservoir, by its nature, experiences drastic changes in the lake level to meet the irrigation needs downstream; whereas, the recreational interests on the lake required a reasonably stable lake level.

In 1964, by an overwhelming vote, the people of Big Bear Lake created the MWD with the express purpose of attempting to stabilize the level of Big Bear Lake. Shortly thereafter, the original Board of Directors of the MWD decided that the best approach would be to condemn the Lake. What ensued was a thirteen year legal battle which finally led to an out of court settlement in early 1977. The final settlement can be broken down into two parts: the first being the acquisition of the real property around and under Big Bear Lake; and the second being the resolution of the use of water in Bear Creek.