United States v. Alisal Water Corporation , 431 F.3d 643 ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.
ALISAL WATER CORPORATION; TORO No. 02-15907
WATER SERVICE, INC.; NORTH  D.C. No.
MONTEREY COUNTY WATER CV-97-2009-JF
SERVICE, INC.; MOSS LANDING
WATER SERVICE, INC.; NATHOLYN P.
ADCOCK; ROBERT T. ADCOCK,
Defendants-Appellants.

UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.
ALISAL WATER CORPORATION; TORO
WATER SERVICE, INC.; ROBERT T.
ADCOCK; NORTH MONTEREY
COUNTY WATER SERVICE, INC.;
No. 04-16210
MOSS LANDING WATER SERVICE,
INC.; NATHOLYN P. ADCOCK,
Defendants-Appellants,
 D.C. No.
CV-97-20099-JF
and OPINION
PATRICIA ADCOCK; BRUCE PIERSON;
DAVID M. SIMCHO,
Defendants,
JOHN W. RICHARDSON,
Receiver.

14045
14046 UNITED STATES v. ALISAL WATER CORP.
Appeal from the United States District Court
for the Northern District of California
Jeremy Fogel, District Judge, Presiding
Argued and Submitted
June 13, 2005—San Francisco, California
Filed October 13, 2005
Before: Richard C. Tallman, Jay S. Bybee, and
Carlos T. Bea, Circuit Judges.
Opinion by Judge Tallman
14050 UNITED STATES v. ALISAL WATER CORP.
COUNSEL
Marc P. Fairman, San Francisco, California, for the
defendants-appellants.
Lori Jonas, Department of Justice, Washington, D.C., for the
plaintiff-appellee.
OPINION
TALLMAN, Circuit Judge:
Appellants Robert and Natholyn Adcock and various pri-
vate water systems they owned and operated in Monterey
County, California, violated various public health and safety
regulations under the federal Safe Drinking Water Act
(“SDWA”), 42 U.S.C. §§ 300f-300j. They appeal the district
court’s orders requiring divestiture of all except the largest
water system and imposing financial penalties. We have juris-
diction under 28 U.S.C. §§ 1291 and 1292(a)(2) and affirm.
I
Prior to this litigation, the Adcock family water system
business was organized into four corporations. The largest,
Alisal Water Corporation (“Alisal”), owned and operated sev-
eral public water systems, some of which are named as defen-
dants: Alco Water Service (“Alco”), Salinas Division, Blackie
Road Water System # 18, Pine Canyon Division of Alco
Water Service, Buena Vista Water System, Wildwood Water
System, San Jerardo Water System, Vierra Canyon Water
System, Vierra Estates Water System, and Langley/Valle
Pacifico Water System. Alisal also wholly owned two subsid-
iary corporations: Moss Landing Harbor District, which oper-
ated the Moss Landing public water system, and North
Monterey County Water Service, Inc. (“NORMCO”), which
UNITED STATES v. ALISAL WATER CORP. 14051
operated NORMCO public water system. The Adcocks held
82.5 percent ownership in Alisal. The fourth corporation was
Toro Water Service (“Toro”), which owned and operated a
public water system of the same name and was wholly owned
by the Adcocks.1
The United States commenced this civil enforcement action
in January 1997 on behalf of the United States Environmental
Protection Agency (“EPA”) against the Appellants. Numerous
violations of SDWA regulations were asserted, including
exceeding total coliform Maximum Contaminant Levels
(“MCL”), failing to monitor for lead and copper, failing to
take required monitoring samples, failing to give required
agency and public notices, failing to report and falsifying
monitoring reports, and failing to keep proper records. The
action was initiated in response to an August 1996 written
request from Dr. David Spath, Chief of the Division of Drink-
ing Water and Environmental Management, California
Department of Health Services (“DHS”). Twelve counts of
multiple regulatory violations (totaling 232 violations) and
one count of fraudulent conveyance were alleged.
The district court granted summary judgment to the govern-
ment on the first nine counts in August 2000. See United
States v. Alisal Water Corp., 114 F. Supp. 2d 927, 939 (N.D.
Cal. 2000) (“Alisal I”). After trial, the district court again
ruled for the government on the tenth count (fraudulent con-
veyance). In November 2002, the district court granted sum-
mary judgment against the corporate defendants, but not
1
Appellants represent that, as of 2001, these water systems collectively
served approximately 28,000 people, of which Alco served the majority,
approximately 25,000 people. The other systems served significantly
fewer people: Blackie Road Water System (66), San Jerardo Water Sys-
tem (194), Vierra Canyon Water System (150), Langley/Valle Pacifico
Water System (95), Buena Vista Water System (528), Moss Landing Har-
bor District (550), NORMCO (682), and Toro (1100). Alisal has restruc-
tured since the onset of this civil action and Wildwood Water System and
the Pine Canyon Division were reorganized into the other divisions.
14052 UNITED STATES v. ALISAL WATER CORP.
against Robert and Patricia Adcock individually, on the
remaining three counts, eleven to thirteen. As to the regula-
tory violations, the Appellants challenge on appeal only the
partial summary judgment on counts eleven and twelve
against Moss Landing and Vierra Canyon.
The district court found that the proliferation of small water
systems had stretched the Adcocks beyond their ability to
manage effectively and remedy the continuing health viola-
tions, endangering their customers. To remedy the underlying
violations the district court initially ordered that all of the
smaller water systems, including NORMCO and Toro (collec-
tively the “Small Utilities”), be placed in receivership and
directed the receiver to investigate and make recommenda-
tions about selling the Small Utilities. See United States v.
Alisal Water Corp., 326 F. Supp. 2d 1010, 1028-32 (N.D. Cal.
2002) (“Alisal II”). The Adcocks were permitted to remain in
control of only the largest individual water system, Alco, and
they were ordered to implement substantial improvements
that had been recommended in a previously compiled consul-
tant’s report and to allow monitoring by the receiver. Id. at
1030-31. The district court denied the Appellants’ motion to
stay the order, and a prior panel of our court affirmed the
denial of a stay. During this time, the district court held exten-
sive formal hearings regarding the Appellants’ stewardship
and their course of dealings with federal and state health offi-
cials. See id. at 1019-22 (summarizing findings). The district
court also held two public meetings (in August and December
2003), where utility customers were allowed to speak about
their concerns, and the judge invited the public to send written
suggestions.
In November 2003, the receiver filed his report and the dis-
trict court subsequently adopted the recommended sale of the
Small Utilities. The court ordered that most of the systems be
sold to the highest bidders, but ordered three of the systems
to be sold to a non-profit public entity, the Pajaro/Sunny Mesa
Community Services District (“PSMCSD”). See United States
UNITED STATES v. ALISAL WATER CORP. 14053
v. Alisal Water Corp., 326 F. Supp. 2d 1032, 1038-39 (N.D.
Cal. 2004) (“Alisal III”). PSMCSD did not have the highest
bid, but the district court found that sale to PSMCSD would
best serve the public interest. Id. at 1037 n.6. The district
court denied the Appellants’ motion to stay the sale order, and
we affirmed the denial of a stay.
The district court also imposed monetary penalties against
the Appellants. For purposes of determining the appropriate
penalty amount, the district court appointed accountant Rich-
ard Pierotti to assess the liquidation value of all of the water
utilities and the Adcocks’ personal assets. The Appellants
hired Dr. Joel Berk to review Pierotti’s valuation methodol-
ogy; Dr. Berk concluded that Alco was of substantially less
value than Pierotti had found. The district court struck Dr.
Berk’s report as cumulative to evidence previously introduced
by the Appellants. Id. at 1037-38. The district court imposed
a penalty of $500,000, but then credited the Appellants
$300,000 as an offset for the shortfall from not accepting all
of the high bids on the sale of the Small Utilities, leaving a
$200,000 total penalty due. Id. at 1038-39. The Appellants
challenge the order appointing a receiver (No. 02-15907) and
the order authorizing sale of the utilities and imposing penal-
ties (No. 04-16210).
II
The Appellants also challenge the district court’s jurisdic-
tion over this entire eight-year litigation. They assert for the
first time on appeal that the district court lacked subject mat-
ter jurisdiction because the controlling statute states that a
federal EPA enforcement action must be requested by “the
chief executive officer of the State” or “agency of [the] State
which has jurisdiction over compliance by public water sys-
tems.” 42 U.S.C. § 300g-3(b)(2). They challenge as legally
insufficient Dr. Spath’s request letter to demonstrate that the
proper state agency requested EPA enforcement because: (1)
Dr. Spath is not the head of the DHS, which they assert is the
14054 UNITED STATES v. ALISAL WATER CORP.
agency with primary jurisdiction over public water systems;
and (2) there is nothing in the record establishing that DHS
delegated such authority to him. See Cal. Health & Safety
Code § 116325 (granting DHS the authority to enforce state
drinking water regulations).
“The existence of subject matter jurisdiction is a question
of law reviewed de novo.” Opera Plaza Residential Parcel
Homeowners Ass’n v. Hoang, 376 F.3d 831, 833 (9th Cir.
2004). “[District courts] are courts of limited jurisdiction.
They possess only that power authorized by Constitution and
statute.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 125
S. Ct. 2611, 2616 (June 23, 2005) (internal quotation marks
and citation omitted). As a general matter, federal courts have
subject matter jurisdiction over civil actions “arising under the
Constitution, laws, or treaties of the United States.” See 28
U.S.C. § 1331. By this principle, suits seeking compliance
with, or remedies for, violations of federal water quality stat-
utes and regulations present federal questions. Cf. Chasse v.
Chasen, 595 F.2d 59, 61 (1st Cir. 1979) (citation omitted) (“It
is beyond dispute that validly issued administrative regula-
tions . . . may be treated as ‘laws of the United States’ under
§ 1331(a).”).
This general grant of federal question jurisdiction is not
limitless—Congress may negate district court jurisdiction
“[b]y virtue of . . . a specific reference or assignment.” Erie-
Net, Inc. v. Velocity Net, Inc., 156 F.3d 513, 519 (3d Cir.
1998); see, e.g., Staacke v. United States Sec’y of Labor, 841
F.2d 278, 280 (9th Cir. 1988) (“[F]ederal question jurisdiction
[is] subject . . . to preclusion-of-review statutes created or
retained by Congress.”) (internal quotation marks and citation
omitted); La Voz Radio de la Communidad v. FCC, 223 F.3d
313, 319 (6th Cir. 2000). However, absent statutory direction
to the contrary, a district court validly exercises its jurisdic-
tion over actions “arising under” federal laws.
In addition to general federal question jurisdiction, “district
courts shall have original jurisdiction of all civil actions, suits
UNITED STATES v. ALISAL WATER CORP. 14055
or proceedings commenced by the United States, or by any
agency or officer thereof expressly authorized to sue by Act
of Congress,” except as otherwise provided by Congress. 28
U.S.C. § 1345. Any exception to the general rule of § 1345
must be clear. See Colorado River Water Conservation Dist.
v. United States, 424 U.S. 800, 808-09 (1976) (“When there
are statutes clearly defining the jurisdiction of the courts the
force and effect of such provisions should not be disturbed by
a mere implication flowing from subsequent legislation.”)
(quoting Rosecrans v. United States, 165 U.S. 257, 262
(1897)).
[1] Therefore, under either 28 U.S.C. § 1331 or § 1345, the
inquiry here rests on whether the SDWA contains any special
limits or exceptions to the district court’s general statutory
subject matter jurisdiction. Various provisions reflect con-
gressional intent to confer subject matter jurisdiction over
SDWA actions to federal district courts. See, e.g., 42 U.S.C.
§ 300g-3(b) (granting the government authority to “bring a
civil action in the appropriate United States district court” to
enforce compliance with agency orders); § 300j-7(a)(2)
(requiring a petitioner to file a petition for review of agency
action “in the circuit in which the petitioner resides or trans-
acts business which is directly affected by the action”);
§ 300j-8(a) (granting district courts jurisdiction over qualified
citizen’s civil actions). Indeed, “[w]henever any civil penalty
sought by the [government] . . . for a violation of an applica-
ble requirement exceeds $25,000,” as in the case at bar, the
government is statutorily required to bring a civil action in
“the appropriate United States district court.” Id. § 300g-
3(g)(3)(C).
The SDWA statutory scheme also creates certain narrow
exceptions to the district court’s jurisdiction, see, e.g., id.
§§ 300g-1(b)(1)(B)(i)(III) & 300h-2(c)(7), but there is no
express statutory negation of the district court’s federal ques-
tion jurisdiction over enforcement of the SDWA under 42
U.S.C. § 300g-3(b), the provision at issue here. Congress’s
14056 UNITED STATES v. ALISAL WATER CORP.
express identification of particular aspects of SDWA litiga-
tion and agency action that are not subject to judicial review
demonstrates that Congress was well aware of its power to
limit the scope of the district court’s subject matter jurisdic-
tion over certain SDWA claims.
[2] The Appellants argue that 42 U.S.C. § 300g-3(b)(2)
divests the district court of jurisdiction, but we disagree.
Rather than creating a special exception to the district court’s
jurisdictional authority to hear this suit, the statute reflects
only the limitations on the government’s authority to bring
this suit. The statute states that the federal government “may
bring a civil action” in district court “if” so requested (or if
authorized under conditions not relevant here), 42 U.S.C.
§ 300g-3(b)(2); it says nothing to limit the district court’s
jurisdiction over such an action if the government was not act-
ing pursuant to an authorized request from the state.2 We will
not assume that Congress intended to deprive the court of sub-
ject matter jurisdiction over enforcement of federal laws
where Congress has refrained from doing so and where there
is no evidence of such intent. Because the SDWA includes no
special provision limiting jurisdiction over federal question
claims or suits brought by the United States, we conclude that
the district court had subject matter jurisdiction over this suit
and that federal jurisdiction to permit EPA enforcement under
the SDWA statutory scheme is concurrent with that of state
regulators.
2
The Appellants could certainly have raised the issue of whether Dr.
Spath’s request letter was sufficient to grant enforcement power to the fed-
eral government by moving to dismiss for the government’s “failure to
state a claim upon which relief can be granted” under Federal Rule of
Civil Procedure 12(b)(6), but they did not. Because the record is insuffi-
cient to answer that question on appeal and the Appellee’s would be sub-
stantially prejudiced if we reached this issue so late in the proceedings, we
must conclude that the claim has been waived. See United States v. Carl-
son, 900 F.2d 1346, 1349 (9th Cir. 1990).
UNITED STATES v. ALISAL WATER CORP. 14057
III
On appeal, the Appellants concede that they committed the
majority of the SDWA regulatory violations found by the dis-
trict court and challenge the adverse summary judgment only
on counts eleven and twelve against Moss Landing and Vierra
Canyon. The government demonstrated that Moss Landing
and Vierra Canyon committed eight violations of total coli-
form MCL regulations in 2000 and 2001. The Appellants
argue that judgment was impermissibly based on “special”
samples taken by the Appellants to investigate anomalous
results provided by the state. The district court found that the
samples were “routine” and that the only thing that made
these samples “special” was that the Appellants labeled them
as such.
[3] “We review the grant of summary judgment de novo.”
Buono v. Norton, 371 F.3d 543, 545 (9th Cir. 2004). The
question we must answer is whether the government demon-
strated through appropriate means that these water systems
violated total coliform MCLs. By regulation, a water system
which collects fewer than 40 samples per month in accor-
dance with its routine monitoring program is in compliance
with total coliform MCL if no more than five percent of sam-
ples in a given month are total coliform-positive. 40 C.F.R.
§ 141.63(a)(1). A total coliform MCL violation is based on
“routine” and “repeat” samples, id. § 141.21(a)(5)-(6), (b)(7),
and may not be based on samples that have been invalidated,
§ 141.21(c), or on “[s]pecial purpose samples,”
§ 141.21(a)(6).
[4] The regulation details the requirements for a “routine
monitoring plan,” which requires collection of “total coliform
samples at sites which are representative of water throughout
the distribution system according to a written sample siting
plan.” Id. § 141.21(a). But the regulation does not expressly
define “routine samples” for purposes of establishing a viola-
tion. The Appellants interpret 40 C.F.R. § 141.21 as requiring
14058 UNITED STATES v. ALISAL WATER CORP.
that only samples taken as part of a routine monitoring plan
be considered “routine.” The government acknowledges that
only “routine” and “repeat” samples may be relied upon, and
that the samples at issue here were not “repeat” samples or
taken as part of a routine monitoring plan. However, the gov-
ernment asserts, and the district court concluded, that “rou-
tine” samples are any samples which are not “special” under
the regulation and are representative of water throughout the
system. Therefore, the operative question is what constitutes
a “routine” sample.
An agency is entitled to interpret its own regulation and
“ordinarily its construction will be affirmed if it is not clearly
erroneous or inconsistent with the regulation.” Pac. Coast
Med. Enters. v. Harris, 633 F.2d 123, 131 (9th Cir. 1980)
(citations omitted). However, because neither party intro-
duced evidence of an official agency definition of a “routine”
sample for purposes of establishing a violation under the reg-
ulation, we do not necessarily defer to the government’s posi-
tion. See, e.g., Bowen v. Georgetown Univ. Hosp., 488 U.S.
204, 212 (1988) (noting that deference does not extend to
“agency litigating positions that are wholly unsupported by
regulations, rulings, or administrative practice”). Such defer-
ence may still be appropriate, however, when there is “no rea-
son to suspect” that an agency interpretation introduced only
through a legal brief “does not reflect the agency’s fair and
considered judgment on the matter.” Auer v. Robbins, 519
U.S. 452, 462 (1997).
[5] We need not decide precisely how much deference the
EPA is due here because we conclude that the only reasonable
interpretation of 40 C.F.R. § 141.21(a) is the one espoused by
the government; we therefore agree that any sample that is
representative of water throughout the system and not a “spe-
cial purpose sample” or otherwise invalidated is “routine” and
may suffice to establish a regulatory violation. The Appel-
lants’ interpretation of the regulation is untenable. Precluding
reliance on accurate water quality samples simply because
UNITED STATES v. ALISAL WATER CORP. 14059
they were not taken according to a preset plan would prevent
the government from identifying and remedying total coli-
form MCL violations in a variety of contexts, such as where
the water utility itself submitted only negative samples under
its routine monitoring schedule. This effectively could insu-
late a violator from judgment in cases where the water utility
purposefully conceals excessive coliform test results in its
routine monitoring plan reporting or fails to keep accurate
records of testing, as the Appellants did here. See Alisal I, 114
F. Supp. 2d at 934. Interpreting the regulation to allow reli-
ance on only samples submitted under a routine monitoring
plan would clearly undermine the effectiveness of the report-
ing requirements and threaten public health and safety, and so
we reject this unreasonable interpretation of the statute. Cf.
SEC v. Edwards, 540 U.S. 389, 395 (2004) (addressing secur-
ities law and declaring that the “[Supreme] Court will not read
into the . . . laws a limitation not compelled by the language
that would so undermine the laws’ purposes.”).
Moreover, our interpretation is consistent with the overall
regulatory scheme. When interpreting a regulation, we must
avoid an interpretation that would render another regulation
superfluous. See, e.g., Dodd v. United States, 125 S. Ct. 2478,
2490 (2005) (Stevens, J., dissenting). As noted, the regulation
expressly requires reliance on routine and repeat samples, see
40 C.F.R. § 141.21(a)(5)-(6), (b)(7), and expressly precludes
reliance on “special purpose samples,” § 141.21(a)(6), and
samples that have been invalidated, § 141.21(c). If an MCL
violation could be established only on the basis of routine
monitoring samples, then there would be no need for regula-
tors to identify specific types of samples, unrelated to routine
monitoring, that are not the proper basis for such violations.
We therefore conclude that reliance on “routine” samples nec-
essarily includes reliance on any samples that are not “special
purpose samples” or otherwise invalidated.
[6] The next question is whether the samples here were
“special purpose samples;” otherwise, they are properly con-
14060 UNITED STATES v. ALISAL WATER CORP.
sidered “routine” and the district court could therefore rely on
them.3 See id. § 141.21(a)(6). “Special purpose samples” are
defined by example as “those taken to determine whether dis-
infection practices are sufficient following pipe placement,
replacement, or repair.” Id. This definition clarifies that “spe-
cial purpose” samples are those taken at a time when the sys-
tem has been altered in some way, or there are unusual
circumstances, such that the sample taken may not be indica-
tive of the water quality in general unaltered use. This is also
consistent with the regulatory approach to routine monitoring
samples which must be taken “at sites which are representa-
tive of water throughout the distribution system.” Id.
§ 141.21(a)(1).
[7] The samples on which the district court relied in counts
eleven and twelve are not “special purpose samples” under
this definition. There is no suggestion here that the samples
were tainted by recent changes to the system, and, as the dis-
trict court found, “[n]othing in the record suggests that the
subject samples were less accurate or probative than other
‘routine’ or ‘repeat’ samples.” There is also no suggestion
here that the samples were otherwise invalid or unreliable, so
it was reasonable and consistent with the regulation to rely
upon them. We therefore conclude that the samples in ques-
tion were “routine” and we affirm summary judgment on
counts eleven and twelve.
IV
A
The remainder of the Appellants’ claims on appeal center
on the district court’s choice of remedy and the process by
which the remedy was determined. The Appellants argue that
the district court abused its discretion in ordering divestiture
3
Neither party suggests that these samples were invalid under the regu-
lation or compliant with total coliform MCL requirements.
UNITED STATES v. ALISAL WATER CORP. 14061
because the court did not closely tailor injunctive relief to
address the threat of future harm or exercise the least possible
power adequate to achieve the proposed end. Their argument
in summary is that the district court: (1) erred in reacting to
past violations and not considering the current status because
the facts show a “sharp reduction in violations after 1994” in
the Small Utilities; and (2) erred in not considering each util-
ity separately, specifically referring to Toro, which has been
in regulatory compliance since 1994.
[8] The Appellants assert that the district court exceeded its
statutory authority in ordering divestiture of the Small Utili-
ties. The Appellants base their claim on the argument that the
court may not order such a remedy because Congress failed
to list divestiture expressly as a possible remedy under the
SDWA.4 However, the court will not generally infer restric-
tions on inherent judicial authority from congressional
silence: “[U]nless a statute in so many words, or by a neces-
sary and inescapable inference, restricts the court’s jurisdic-
tion in equity, the full scope of that jurisdiction is to be
recognized and applied.” Owner Operator Indep. Drivers
Ass’n v. Swift Transp. Co., 367 F.3d 1108, 1112 (9th Cir.
2004) (quoting Porter v. Warner Holding Co., 328 U.S. 395,
398 (1946)). Where the public interest is involved, “equitable
powers assume an even broader and more flexible character
than when only a private controversy is at stake.” Porter, 328
U.S. at 398 (citation omitted).
4
The Appellants raise this issue for the first time on appeal and so we
could consider it waived. See Carlson, 900 F.2d at 1349. The Appellants
were well aware that the government was seeking complete divestiture and
that the district court had proposed partial divestiture, see Alisal II, 326 F.
Supp. 2d at 1027, and they fail to explain why they did not or could not
challenge the district court’s authority at that time. However, this is a pure
question of law and the record is sufficient to review the issue on appeal.
We therefore conclude that the government will not be prejudiced if we
reach the issue here. See Carlson, 900 F.2d at 1349.
14062 UNITED STATES v. ALISAL WATER CORP.
[9] Here, the SDWA gives the district court authority to
enter “such judgment as protection of public health may
require.” 42 U.S.C. § 300g-3(b). There is no limiting lan-
guage, so the statute incorporates the full panoply of the
court’s equitable powers. Cf. United States v. Mass. Water
Res. Auth., 48 F. Supp. 2d 65, 71-72 (D. Mass. 1999) (con-
cluding that the SDWA enforcement provision does not “strip
the courts of their equitable powers”). We therefore conclude
that ordering partial divestiture was not outside of the district
court’s authority.5
“We review a district court’s decision to issue a permanent
injunction for abuse of discretion, but we review any determi-
nation underlying the court’s decision by the standard that
applies to that determination.” United States v. Hovsepian,
359 F.3d 1144, 1156 (9th Cir. 2004) (en banc) (citing Silver
Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d
814, 826 (9th Cir. 2001)). The district court’s choice of reme-
dies is reviewed for an abuse of discretion. See Stone v. City
& County of San Francisco, 968 F.2d 850, 861 (9th Cir.
1992). Review of the scope of injunctive relief is also for an
abuse of discretion. Idaho Watersheds Project v. Hahn, 307
F.3d 815, 823 (9th Cir. 2002). The Appellants do not allege
that there were any clearly erroneous findings of fact,6 so we
5
In a related argument, the Appellants assert that the district court
impermissibly encroached on the power of the California Public Utility
Commission (“CPUC”), which has some jurisdiction over public drinking
water. See Hartwell Corp. v. Superior Court, 38 P.3d 1098, 1108-12 (Cal.
2002) (discussing the complex overlap in authority over drinking water
regulation between DHS and the CPUC). They advance no legal basis to
explain how the fact that CPUC has some authority over water systems
negates the district court’s broad authority to enforce federal laws through
exercise of its equitable powers. Moreover, as the government points out,
the sales are necessarily subject to approval by the CPUC. See Alisal II,
326 F. Supp. 2d at 1029. The Appellants’ argument is without merit.
6
The Appellants do assert in a footnote of their brief to this Court that
their son, Thomas Adcock, was qualified to manage the water systems.
This could be construed as challenging the district court’s finding that the
UNITED STATES v. ALISAL WATER CORP. 14063
may only reverse if we find that the district court misapplied
the law or “rule[d] in an irrational manner.” Chang v. United
States, 327 F.3d 911, 925 (9th Cir. 2003) (quoting United
States v. Sherburne, 249 F.3d 1121, 1125-26 (9th Cir. 2001)).
In arguing that the district court was reacting only to past
conduct and not considering recent improvements, the Appel-
lants mischaracterize the record. The district court expressly
considered the Appellants’ overall improvements in compli-
ance subsequent to initiation of this enforcement suit, but
found (and it is not challenged) that Appellants continued to
violate reporting requirements, and produce “inaccurate test
results and unreasonable delay in addressing incidences of
contamination . . . through and including the time of trial.”
Alisal II, 326 F. Supp. 2d at 1018; see id. at 1026. There are
extensive factual findings demonstrating Appellants’ contin-
ued noncompliance, which did not cease after initiation of this
litigation. Id. at 1018-21. Moreover, the district court found
and recounted the Appellants’ continued unwillingness to
work with the government, which suggests that ongoing com-
pliance would continue to be problematic. See Alisal III, 326
F. Supp. 2d at 1036-37; Alisal II, 326 F. Supp. 2d at 1022-23.
Given the Appellants’ unwillingness or inability to comply in
an accurate and timely manner while under the close supervi-
sion of the EPA and the district court, it was rational to con-
clude that the Appellants’ behavior would not improve once
this litigation ends.
Similarly, Appellants’ argument that Toro should not have
been sold because it has been compliant since 1994 is not per-
suasive. The district court based its partial divestiture order on
Appellants lacked sufficient managerial competence to comply with the
SDWA. See Alisal II, 326 F. Supp. 2d at 1014, 1023-25. However, the
issue is not squarely presented, and regardless is without merit. The dis-
trict court specifically outlined Thomas Adcock’s shortcomings with
respect to managing the family business. See id. at 1023-25. We conclude
that these findings are not clearly erroneous.
14064 UNITED STATES v. ALISAL WATER CORP.
the rationale that Appellants could not meet their regulatory
obligations given the number of water systems they controlled
and the pervasive scope of the problems involved with the
various systems. See Alisal II, 326 F. Supp. 2d at 1024, 1026
(noting that evidence showed lack of “managerial resources
and expertise to manage effectively the numerous water sys-
tems . . . , especially the smaller ones”). The district court’s
decision reflects its well-supported belief that the Appellants’
efforts were spread too thinly, both financially and admin-
istratively, across the various systems and that they were not
capable of handling more than one system in a manner com-
pliant with all regulatory requirements. See id. at 1028. This
is not an irrational conclusion given the Appellants’ poor
overall performance history, and is a valid concern in fashion-
ing an appropriate remedy.
“In issuing an injunction, the court must balance the equi-
ties between the parties and give due regard to the public
interest.” Idaho Watersheds Project, 307 F.3d at 833 (citing
Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 542
(1987)). Clearly, the Adcocks have an understandable per-
sonal interest in maintaining their family business and a prop-
erty interest in their ownership of the various systems. On the
other hand, there is no question that the public interest at stake
here, the quality of public drinking water and the health and
safety of the consumers, is fundamental.
The record reflects that the district court adopted a reason-
able compromise in fashioning appropriate relief and tailored
a remedy that took into consideration both the substantial
public interest and the Adcocks’ personal interest. The gov-
ernment originally asked for a complete divestiture; the
Appellants asked only to have to implement recommended
system upgrades (which the record shows they could not
afford to finance). The district court did not order sale of the
largest water system, Alco. There, the district court only
ordered implementation of the recommended improvements.
UNITED STATES v. ALISAL WATER CORP. 14065
The district court’s remedy allows the Appellants to control
operations and service for approximately 90 percent of their
original customer base in a very streamlined fashion, thereby
“giving [Appellants] a clear opportunity to demonstrate that
they can operate at least one water system in compliance with
the law.” Alisal II, 326 F. Supp. 2d at 1028. The Appellants
themselves admit that most of the compliance problems
occurred in the Small Utilities (other than Toro). The Appel-
lants have proven through their service history and throughout
this litigation that they were unable to manage effectively the
several water systems in order to serve the public health. Sim-
ply put, they now have the opportunity to prove that they can
safely manage just one.
The Appellants argue that letting them continue to own and
operate Alco shows that the court was acting inconsistently,
but we think that it demonstrates that the district court was
balancing the competing interests of the public and the Appel-
lants, despite the egregious nature of their prior course of con-
duct. Alisal II, 326 F. Supp. 2d at 1028-29 (concluding that
while full divestiture was fully justified, partial divestiture
was a “less drastic remedy” and required under principles of
equity). While other appropriate remedies are conceivable,
our review is limited to whether the district court erroneously
applied the law or acted irrationally in imposing the remedy
it did.
[10] We conclude that the Appellants’ personal interests in
maintaining ownership over the Small Utilities is substantially
outweighed by the profound public interest at stake here. The
regulatory violations that the Appellants committed were
numerous and significant. They were entrusted with safe-
guarding the health and welfare of the thousands of individu-
als who rely on these water systems, and they have not
effectively responded to the water quality problems. Further-
more, the record supports the district court’s conclusions that
the Appellants have acted in a manner inconsistent with an
appreciation for the importance of their obligation to the pub-
14066 UNITED STATES v. ALISAL WATER CORP.
lic. We conclude the district court fashioned a rational remedy
that fairly took into consideration the competing interests.
There was no abuse of discretion in the means employed.
B
The Appellants assert next that the district court violated
their due process rights by: (1) conducting the receivership
bidding process in secret; and (2) improperly considering and
giving weight to public comments and letters not part of the
record, not taken under oath, and not subject to cross-
examination. However, the Appellants waived their due pro-
cess claim regarding the receivership bidding process by fail-
ing to raise it in the district court. They state that they
“repeatedly complained” that they were not being informed
about the bidding and sales process. However, their only sup-
port in the record is that they once told the district judge that
they did not know the status of the sales and requested addi-
tional information, and the court immediately ordered that the
receiver make sales-related documents available as part of his
duties.
This single evidentiary proffer is hardly evidence of
repeated complaints. It does not demonstrate that the receiver
willfully withheld information (or even that the Appellants
had ever requested the information before or after that day).
Additionally, it does not rise to the stature of a “due process”
violation. Thus, the Appellants do not demonstrate through
the record how their participation was unjustly limited, and
we therefore will not consider the claim. See, e.g., Los Ange-
les News Serv. v. Reuters Television Int’l, Ltd., 149 F.3d 987,
996 (9th Cir. 1998) (“We will not take up an issue not prop-
erly raised below unless necessary to prevent manifest injus-
tice.”) (citation omitted).
As to the public hearings, the Appellants argue that they
were not allowed to “question” the process, but they did not
object to the process as it occurred. On appeal, the Appellants
UNITED STATES v. ALISAL WATER CORP. 14067
admit they did not object to the district court’s holding the
public hearings, so this issue is waived. Nor did the Appel-
lants object to the lack of evidentiary formality in conducting
the hearings. No objections were timely raised that the speak-
ers were not sworn and were not subject to cross-examination.
However, they did object to the district court’s considering
the statements and letters gathered through the hearing pro-
cess in the divestiture proceedings, so this aspect of the claim
is properly before us.
[11] As the Supreme Court acknowledges, “due process” is
difficult to define. See Lassiter v. Dep’t of Soc. Servs., 452
U.S. 18, 24-25 (1981). The process that is due varies accord-
ing to the nature of the right and the type of proceedings.
Mathews v. Eldridge, 424 U.S. 319, 334 (1976) (“[D]ue pro-
cess is flexible and calls for such procedural protections as the
particular situation demands.”) (quoting Morrissey v. Brewer,
408 U.S. 471, 481 (1972)) (alteration in original). At its core,
due process requires that a party have adequate notice and
opportunity to be heard. See Dusenbery v. United States, 534
U.S. 161, 167 (2002); LaChance v. Erickson, 522 U.S. 262,
266 (1998). In considering whether a district court accorded
adequate due process, appellate courts “must look at the
actual substance, not the name or form, of the procedure to
see if the claimants’ interests were adequately safeguarded.”
SEC v. Elliott, 953 F.2d 1560, 1567 (11th Cir. 1992) (discuss-
ing summary receivership proceedings and citing SEC v.
Wencke, 783 F.2d 829, 836 (9th Cir. 1986)).
We conclude that there was no due process violation in the
district court considering the information obtained through the
public hearings. Importantly, there is no suggestion that the
Appellants were denied the basic elements of due process—
adequate notice and opportunity to be heard. This is not a situ-
ation where a party was unaware of an adverse proceeding or
the district court denied a party forms of process to which
they had expressly asserted a right. The Appellants were well
aware of the contemplated hearing process and their counsel
14068 UNITED STATES v. ALISAL WATER CORP.
attended the hearings. There is no showing that they were in
any way limited in their ability to participate in the hearings
or to refute any testimony presented, or that their interests
were prejudiced or marginalized in this process. Accordingly,
we do not see how the Appellants’ due process rights were
denied. See Guenther v. Comm’r, 939 F.2d 758, 760 (9th Cir.
1991) (explaining that a party’s due process rights would be
infringed if they were “unfairly prejudiced” by ex parte com-
munication).
Although the form of this process was not typical for the
courts, and we do not endorse such a practice in routine civil
enforcement actions, the substance of the evidence adduced at
the hearings is similar to that which could have been intro-
duced by the government through affidavits or testimony. See,
e.g., FTC v. Amy Travel Serv., Inc., 875 F.2d 564, 576 (7th
Cir. 1989) (holding that, where defendants were found to have
committed deceptive trade practices in a nationwide telemar-
keting operation, the trial court did not abuse its discretion in
admitting affidavits from consumers who had purchased
travel vouchers from the defendants). In a case of this magni-
tude, directly affecting public health, evidence of the views of
the individuals affected by the outcome was relevant to the
district court’s choice of remedy. The Appellants have
pointed to no legal authority that would bar the district court
from proceeding in a public-hearing forum and they did not
timely object to proceeding in such a fashion. We recognize
that “a district court’s power to supervise an equity receiver-
ship and to determine the appropriate action to be taken in the
administration of the receivership is extremely broad,” SEC v.
Hardy, 803 F.2d 1034, 1037 (9th Cir. 1986), and the hearing
process was an efficient and direct way for the district court
to consider the views of the interested public, which had a
manifest and significant stake in the proceedings.
Nor do the Appellants point to authority that would require
the district court to conduct a remedy-phase hearing in the
same manner or under the same evidentiary standards that it
UNITED STATES v. ALISAL WATER CORP. 14069
conducts a trial. In the context of a civil suit “cross-
examination is not, in every instance, a sine qua non of due
process. It all depends on the situation.” David v. City of Los
Angeles, 307 F.3d 1143, 1147 (9th Cir. 2002), rev’d on other
grounds, 538 U.S. 715 (2003); see U.S. Steel, LLC v. Tieco,
Inc., 261 F.3d 1275, 1287 n.13 (11th Cir. 2001) (noting that
“[o]f course, the Confrontation Clause is not applicable to
civil cases”). In Federal Trade Commission v. Figgie Interna-
tional, Inc., 994 F.2d 595 (9th Cir. 1993), for example, we
allowed the district court to base its calculation of the maxi-
mum amount of redress for which the defendant might be lia-
ble on the agency’s summation of 127 letters of complaint
that it had received from private citizens. Id. at 608-09 (deter-
mining that admission of the letters fell into the residual hear-
say exception).7 Similarly, the district court here considered
evidence of unsworn public comment not to demonstrate the
violations that the Appellants committed, but for the limited
purpose of fashioning a remedy for the violations.
In concluding that there was no due process violation in
this case, we also rely substantially on the fact that the Appel-
lants’ primary complaints against the evidence adduced at the
public hearings—the lack of sworn testimony and cross-
examination—are the direct result of their own failure to
object to the district court holding such hearings and their fail-
ure to timely object to the manner in which the hearings were
held and in which the evidence was introduced. They assert
that they were “never allowed” to address the public letters
and comments, but they fail to point out where in the record
they ever asked to do so, despite the fact that counsel was
present at the hearings. Had the Appellants timely objected to
7
The Figgie International court relied on its analysis of whether the
complaint letters were admissible under the Federal Rules of Evidence.
See 994 F.2d at 608-09. The Appellants have not raised such an argument
here on appeal, although their “due process” claim could properly be char-
acterized as an unpreserved challenge to the district court’s admission of
such evidence. Because the Appellants did not raise an evidentiary objec-
tion to the district court or on appeal, we consider it waived.
14070 UNITED STATES v. ALISAL WATER CORP.
the proceedings or requested that the hearings be conducted
in a more formal way, the district court could have modified
the process and cured any potential defect. See United States
v. Odom, 736 F.2d 104, 114 (4th Cir. 1984) (noting that “[i]t
is well settled” that a party waives a challenge to failure to
swear in a witness by failing to raise the point during the wit-
ness’s testimony, when it could have been corrected).
[12] We hold that the Appellants’ due process rights were
not violated by the district court’s fashioning a remedy for
regulatory violations by relying in part on evidence intro-
duced through public hearings where: (1) the Appellants
failed to object to the district court’s conducting such hear-
ings; (2) the Appellants failed to object to the witnesses’ not
being sworn or subject to cross-examination; and (3) the
Appellants failed on appeal to show how they were prejudiced
by admission of the evidence.8
V
The Appellants argue next that the court-ordered sale of the
Small Utilities was confiscatory because the sale prices real-
ized were not indicative of their true value, and they seek just
compensation under the Fifth Amendment’s takings clause.
The government points out that the takings clause issue was
not raised below and should therefore be waived. In response,
the Appellants contend that they raised a takings claim below
in their comments to the Pierotti report. They cite to two
places in the record. First, in the context of disputing the
method of valuation, they argued before the district court only
that “[w]here [they are] forced to sell the utility for less than
its rate base, as the [r]eceiver recommends here, there is a tak-
ing that violates the Constitution.” And second, they prefaced
a feasibility argument with: “in light of the constitutional
8
We emphasize that our holding is extremely narrow. Had the Appel-
lants made timely objections to this unusual procedure or demonstrated
prejudice, our analysis might be different.
UNITED STATES v. ALISAL WATER CORP. 14071
issues about confiscation . . . .” These are the only references
to a takings claim in the record covering years of litigation.
These references were brief, conclusory statements made
with no supporting legal argument and so are insufficient to
preserve a takings claim for appeal. See, e.g., Broad v.
Sealaska Corp., 85 F.3d 422, 430 (9th Cir. 1996) (“To have
been properly raised below, the argument must be raised suf-
ficiently for the trial court to rule on it.”) (internal quotation
marks and citation omitted); Banks v. Rockwell Int’l N. Am.
Aircraft Operations, 855 F.2d 324, 326 (6th Cir. 1988) (hold-
ing that a “vague reference” to an issue before the district
court was insufficient to preserve that issue on appeal). We
therefore consider the Appellants’ takings claim waived.
VI
The Appellants challenge the overall monetary penalty
imposed on the basis that the district court did not consider
the report of Dr. Berk that they submitted. The report chal-
lenged the valuation findings of the court-appointed accoun-
tant, Pierotti. The Appellants contend that Alco was
substantially overvalued and that the resulting penalty was
excessive. The substance of their argument is that the district
court initially suggested that they would be allowed to object
to the Pierotti report at the penalty hearing, but then had a
“change of heart” and refused to consider the information.
The district court’s decision to exclude expert testimony is
reviewed for an abuse of discretion. Kumho Tire Co. v. Car-
michael, 526 U.S. 137, 152 (1999). Prior to seeking to intro-
duce Dr. Berk’s report, the Appellants had already introduced
an expert witness, Carl Danner, who testified as to valuation
of the water systems. After reviewing the evidentiary proffer
of Dr. Berk’s report, the district court noted that when it said
it would consider further evidence, it had expected evidence
about “any changes in circumstances that might affect Mr.
Pierotti’s analysis.” The court concluded that Dr. Berk’s
14072 UNITED STATES v. ALISAL WATER CORP.
report was instead simply cumulative of the Danner testimony
and “[v]iewed as a whole, Dr. Berk’s opinions concern[ed]
facts known to and litigated by the parties at trial.” Alisal III,
326 F. Supp. 2d at 1037.
[13] The Appellants fail to show how Dr. Berk’s report was
new or different from the evidence they had introduced at
trial, and thus they fail to show how the district court abused
its discretion in dismissing the report as cumulative. We
affirm the exclusion of the proffered evidence. The Appel-
lants raise no other argument as to why the penalty was exces-
sive and so we also affirm the penalty as imposed.9
VII
In its receivership order, the district court enjoined not only
the named defendant individuals, Robert and Natholyn, but
also their children, Thomas and Lynette, from “acquir[ing]
any new interest, financial or otherwise, in any ‘public water
system’ . . . without the express permission of [the] Court.”
Alisal II, 326 F. Supp. 2d at 1032. The Appellants do not
9
The penalty imposed was well below the maximum penalty allowed by
statute, which states, in part, that:
[I]f the court determines that there has been a violation of the reg-
ulation or schedule or other requirement with respect to which the
action was brought, the court may, taking into account the seri-
ousness of the violation, the population at risk, and other appro-
priate factors, impose on the violator a civil penalty of not to
exceed $25,000 for each day in which such violation occurs.
42 U.S.C. § 300g-3(b); id. at § 300g-3(g)(3)(A). The Appellants commit-
ted 232 violations, many of which could be considered as extending over
multiple days, which the district court concluded would result in a maxi-
mum civil penalty range from $17 million to $400 million. Alisal III, 326
F. Supp. 2d at 1035. The government argued that a penalty of $3 million
to $5 million dollars was appropriate. As noted, the district court ulti-
mately imposed a penalty of $500,000 with a $300,000 offset for the
receiver’s acceptance of bids that were not the highest bids on three water
systems. Id. at 1038-39.
 UNITED STATES v. ALISAL WATER CORP. 14073
claim that the substantive injunctive limitation is overly broad
or otherwise challenge the scope of the injunction but argue
that the injunction is simply not valid against Thomas and
Lynette because they were not parties named in the lawsuit.
The Appellants specifically seek a ruling that would invali-
date the injunction under Federal Rule of Civil Procedure
65(d). However, we cannot reach this issue.
Although not specifically mentioned in Appellants’ briefs,10
Federal Rule of Appellate Procedure 3(c) requires the notice
of appeal to:
[S]pecify the party or parties taking the appeal by
naming each one in the caption or body of the
notice, but an attorney representing more than one
party may describe those parties with such terms as
“all plaintiffs,” “the defendants,” “the plaintiffs A,
B, et al.,” or “all defendants except X”. . . .
FED. R. APP. P. 3(c)(1)(A) (emphasis added). Non-parties to
the original action may appeal where they are “bound by the
order from which they were seeking to appeal.” Devlin v.
Scardelletti, 536 U.S. 1, 8 (2002). But non-parties must also
pass through the ordinary “jurisdictional threshold” of Rule
3(c), which requires that they be named in the notice of
appeal. Torres v. Oakland Scavenger Co., 487 U.S. 312, 315
(1988). Moreover, the Appellants are bound by the ordinary
time-constraints imposed upon parties and non-parties alike
by Federal Rule of Appellate Procedure 4(a)(1), which
requires that a notice of appeal be filed within 30 days after
judgment. See FED. R. APP. P. 4(a)(1).
[14] Here, Thomas and Lynette were not named as defen-
dants in the notice of appeal. The notice of appeal named the
following defendants: Alisal Water Corporation; Toro Water
10
“Jurisdictional issues must be raised by this court sua sponte.”
MacKay v. Pfeil, 827 F.2d 540, 542 (9th Cir. 1987).
14074 UNITED STATES v. ALISAL WATER CORP.
Service, Inc.; North Monterey County Water Service, Inc.;
Moss Landing Water Service, Inc.; Robert T. Adcock; and
Natholyn P. Adcock. Because Thomas and Lynette were not
included in the first notice of appeal, they were required to
file a separate appeal within 30 days of judgment. They failed
to do so. Moreover, it is not objectively clear from the notice
of appeal that they intended to appeal. Cf. Retail Flooring
Dealers of Am., Inc. v. Beaulieu of Am., LLC, 339 F.3d 1146,
1149 (9th Cir. 2003) (holding that when a party’s intent to
appeal is objectively clear, that party is not prevented from
going forward under Federal Rule of Appellate Procedure
3(c)); Simo v. Union of Needletrades, Indus. & Textile
Employees, 322 F.3d 602, 610 (9th Cir. 2003) (same). Conse-
quently, we do not have jurisdiction to consider their chal-
lenge to the injunction.
VIII
We conclude that the district court had subject matter juris-
diction over this SDWA civil enforcement action and did not
abuse its discretion or violate the Appellants’ due process
rights in fashioning the remedy imposed.
AFFIRMED.