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The James R. Browning U.S. Court of Appeals Building, home of the 9th U.S. Circuit Court of Appeals, in San Francisco. REUTERS/Noah Berger
(Reuters) - A federal appeals court on Monday invalidated a lower court judgment that partially agreed with environmentalists that a central California clay products company failed to abide by its stormwater discharge permit standards, but also partially exonerated the company of accusations it illegally discharged contaminated stormwater, resetting the case in light of two Supreme Court precedents.
A split panel of the 9th U.S. Circuit Court of Appeals vacated a judgment by a Santa Ana, California federal judge who found that Corona Clay Co failed to adopt best practices and was in violation of its Clean Water Act (CWA) permit for years when discharging contaminated stormwater. The judgment also absolved the company of other claims, tried by jurors, alleging discharges into CWA-protected waters.
The California-based company had admitted to "indirect" discharges of stormwater. But the majority reasoned that the lower court must consider anew whether they are illegal in light of the Supreme Court's ruling in County of Maui, Hawaii v. Hawaii Wildlife Fund, which devised a test that says permits are required under the CWA when indirect discharges are the "functional equivalent" of a discharge from a pipe or other "point source."
Brian Neach of Pacheco & Neach said that his client Corona Clay was reviewing the decision.
Sarah Spinuzzi, a lawyer with co-plaintiff Orange County Coastkeeper, said the group was "elated" because the majority "affirmed our standing and vacated the jury verdict."
The conservation groups sued in 2018, claiming that rain runoff carried unpermitted levels of metals into a creek.
U.S. District Judge David Carter ruled in a partial summary judgment in favor of the plaintiffs on some of their claims. At a subsequent jury trial for the remaining claims, jurors sided with Corona Clay. A final judgment Carter issued last year fined Corona Clay $3.7 million. Both sides appealed.
On Monday, U.S. Circuit Judge Andrew Hurwitz wrote that because the Supreme Court in its ruling in County of Maui threw out a 9th Circuit ruling, as well as its test to decide when an entity can be sued for indirect discharges, the change in law nullified the jury verdict and Carter's 2019 summary ruling.
"The parties deserve the ability to address whether the 'indirect' discharge admitted by Corona is the 'functional equivalent' of a direct discharge into the waters of the United States," he wrote.
The lower court, in its rulings, was operating under the 9th Circuit then-applicable test, which allowed a lawsuit to move forward when pollutants reaching navigable waters were "fairly traceable" to a point source.
The panel also ruled that the lower court had misinterpreted another Supreme Court ruling, the 1987 Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, when it asked whether some of the environmentalists' citizen claims were barred under the CWA unless there was an ongoing discharge in violation of the permit and one likely to recur. 9th Circuit precedent does not require the existence of a current discharge to launch a CWA citizen lawsuit, Hurwitz wrote.
The judge was joined by Senior U.S. Circuit Eugene Siler from the 6th U.S. Circuit Court of Appeals, sitting by designation.
U.S. Circuit Judge Daniel Collins dissented, saying he would have the lower court reexamine the environmentalists' standing.
The case is Inland Empire Waterkeeper, et al v. Corona Clay Co., 9th U.S. Circuit Court of Appeals, Nos. 20-55420, 20-55678.
For Inland Empire Waterkeeper, et al: Christopher Sproul of Environmental Advocates and Sarah Spinuzzi with Orange County Coastkeeper
For Corona Clay Co.: Brian Neach of Pacheco & Neach.
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