Background
Inland Empire Waterkeeper and Orange County Coastkeeper sued Corona Clay Company under the Clean Water Act, alleging that the company violated stormwater-permit requirements at its clay-recycling facility near Temescal Creek. After an initial defense verdict, the Ninth Circuit ordered a new trial in light of intervening precedent governing indirect discharges. At the second trial, Corona conceded under then-controlling law that Temescal Creek was a “water of the United States,” and the jury found 12,541 permit violations. The district court later imposed more than $1.8 million in penalties.
About six months after the second verdict, the Supreme Court decided Sackett v. EPA, which narrowed the Clean Water Act’s coverage to relatively permanent bodies of water. Corona then argued that Temescal Creek did not satisfy that standard. The district court rejected Corona’s jurisdictional challenge and denied post-trial relief, reasoning in part that Corona had not contested the creek’s status during the second trial.
The Court’s Holding
The Ninth Circuit held that whether Temescal Creek qualifies as a “water of the United States” is a merits question, not a prerequisite to federal subject-matter jurisdiction. The district court therefore had authority to adjudicate the citizen suit regardless of whether the plaintiffs ultimately could prove that the creek fell within the Clean Water Act’s coverage, and the panel affirmed the denial of Corona’s motion to dismiss.
The panel nevertheless held that Corona was entitled to relief under Federal Rule of Civil Procedure 59. Before Sackett, Ninth Circuit precedent effectively foreclosed Corona from disputing the Clean Water Act’s coverage because Temescal Creek is a tributary that flows into the Santa Ana River. Sackett substantially changed the governing law, Corona raised the issue at its earliest procedural opportunity, and its earlier concession reflected the legal standard then in force rather than an admission of the natural facts required by Sackett.
Because the existing record did not permit the appellate court to determine whether Temescal Creek is relatively permanent and otherwise satisfies Sackett, the panel reversed the denial of Rule 59 relief and remanded for further proceedings. The district court may consider limiting those proceedings to the creek’s status as a water of the United States.
Key Takeaways
- Whether a waterbody falls within the Clean Water Act’s statutory coverage concerns the merits of a citizen suit, not the federal court’s subject-matter jurisdiction.
- An intervening change in controlling law may justify a new trial on an issue that a party previously bypassed when binding precedent made the challenge futile, provided the party raises it at the earliest opportunity.
- Corona’s prior concession that Temescal Creek was a water of the United States did not foreclose reconsideration because that mixed legal and factual conclusion was contingent on pre-Sackett law.
Why It Matters
The decision gives litigants a path to seek Rule 59 relief when new controlling precedent revives an issue that was effectively unavailable at trial. It also draws a consequential distinction between the Clean Water Act’s regulatory reach and a federal court’s power to hear a case.
For Clean Water Act litigation, the ruling underscores that a tributary relationship alone may not establish federal coverage after Sackett. Courts may need factual findings about a waterbody’s relative permanence and physical characteristics before imposing liability and substantial civil penalties.