Background
Inland Empire Waterkeeper and Orange County Coastkeeper sued Corona Clay Company under the Clean Water Act, alleging violations of stormwater-permit requirements at Corona’s clay-recycling facility near Temescal Creek. After an initial defense verdict, the Ninth Circuit ordered a new trial in light of intervening precedent addressing indirect discharges and because of erroneous instructions concerning monitoring and reporting violations.
At the second trial, Corona stipulated that Temescal Creek was a “water of the United States,” as then-governing Ninth Circuit precedent treated seasonally intermittent tributaries flowing into protected waters as covered by the Act. The jury found 12,541 permit violations, and the district court assessed more than $1.8 million in penalties. After the Supreme Court’s decision in Sackett v. EPA narrowed the definition of federally protected waters, Corona sought dismissal for lack of subject-matter jurisdiction or, alternatively, a new trial. The district court denied both requests.
The Court’s Holding
The Ninth Circuit held that whether Temescal Creek qualifies as a water of the United States is an element going to the merits of the Clean Water Act claims, not a prerequisite to federal subject-matter jurisdiction. A good-faith allegation of a Clean Water Act violation gave the district court jurisdiction, even if plaintiffs ultimately could not prove that the creek fell within the Act’s coverage. The panel therefore affirmed the denial of Corona’s motion to dismiss.
The court nevertheless held that Corona was entitled to relief under Federal Rule of Civil Procedure 59. Before Sackett, Ninth Circuit precedent made a challenge to Temescal Creek’s status futile; Sackett substantially changed the governing standard by requiring a relatively permanent, standing, or continuously flowing body of water. Because Corona raised the issue at its earliest available opportunity and had not admitted the underlying facts necessary to satisfy the new standard, the district court abused its discretion by denying relief.
The existing record did not permit the Ninth Circuit to decide whether Temescal Creek satisfies Sackett. It reversed the denial of Rule 59 relief and remanded for further proceedings, while allowing the district court to 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 coverage is a merits question, not a limitation on a federal court’s subject-matter jurisdiction.
- An intervening change in controlling law may justify a new trial on an issue not previously litigated when prior precedent foreclosed the issue and the party raises it at the earliest opportunity.
- Corona’s earlier stipulation that Temescal Creek was a water of the United States did not bind it after Sackett because the stipulation rested on the legal standard then in force, and Corona had not conceded the facts required by the new test.
Why It Matters
The decision clarifies that disputes over the Clean Water Act’s geographic reach generally affect liability rather than federal judicial power. A defendant’s successful showing that a waterbody is not federally protected defeats the claim on the merits but does not retroactively eliminate subject-matter jurisdiction.
The ruling also provides a pathway for post-trial relief when an intervening Supreme Court decision revives an argument that binding precedent previously made futile. For Clean Water Act litigants, it underscores that tributary status alone may not establish federal coverage after Sackett; the waterbody’s permanence and physical characteristics may require additional factual development.