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 Corona prevailed at the first trial, the Ninth Circuit ordered a retrial in light of intervening precedent governing indirect discharges and procedural permit violations.
At the second trial, Corona stipulated that Temescal Creek was a “water of the United States,” and the jury found 12,541 permit violations. The district court ultimately imposed more than $1.8 million in penalties. After the Supreme Court narrowed the meaning of “waters of the United States” in Sackett v. EPA, Corona argued for the first time that Temescal Creek was not covered by the Act and sought dismissal or a new trial. The district court denied both forms of relief.
The Court’s Holding
The Ninth Circuit held that whether Temescal Creek qualifies as a water of the United States concerns the merits of the Clean Water Act claims, not the federal court’s subject-matter jurisdiction. It therefore affirmed the denial of Corona’s post-judgment motion to dismiss for lack of jurisdiction.
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 because the creek was a tributary that flowed into the Santa Ana River. Sackett’s relative-permanence standard made that previously foreclosed issue viable, and Corona raised it at the earliest opportunity while the district court retained jurisdiction. Because the existing record did not establish whether Temescal Creek satisfies Sackett, the panel reversed the denial of Rule 59 relief and remanded for further proceedings, which the district court may limit to that question.
Key Takeaways
- A waterbody’s status as a “water of the United States” is an element affecting Clean Water Act coverage and liability, not federal subject-matter jurisdiction.
- An intervening change in controlling law may justify a new trial on a previously unlitigated issue when binding precedent had made the issue futile and the party raises it at the earliest opportunity.
- Corona’s prior legal admission that Temescal Creek was covered by the Act did not bind it under Sackett because Corona had not admitted the underlying facts necessary to satisfy Sackett’s new standard.
Why It Matters
The decision gives regulated entities a path to seek Rule 59 relief when an intervening Supreme Court ruling revives a defense that binding circuit law had effectively foreclosed. It also distinguishes sharply between statutory coverage and judicial power in Clean Water Act citizen suits.
On remand, the district court must determine whether Temescal Creek is sufficiently permanent and otherwise satisfies Sackett’s definition of waters of the United States. That determination may affect the jury’s liability findings and the more than $1.8 million penalty imposed on Corona.