Friends of Milwaukee's Rivers v. Milwaukee Metropolitan Sewerag

In the

United States Court of Appeals

For the Seventh Circuit

No. 08-1103

F RIENDS OF M ILWAUKEE’S R IVERS AND

A LLIANCE FOR THE G REAT L AKES,

Plaintiffs-Appellants,

v.

M ILWAUKEE M ETROPOLITAN S EWERAGE D ISTRICT,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 02-C-0270—Charles N. Clevert, Jr., Judge.

A RGUED S EPTEMBER 9, 2008—D ECIDED F EBRUARY 13, 2009

Before B AUER, C UDAHY, and W OOD , Circuit Judges.

C UDAHY, Circuit Judge.

I. Background

This case has a long and stormy history. Its full back-

ground was set out in this court’s previous opinion,

2 No. 08-1103

Friends of Milwaukee’s Rivers and Lake Michigan Fed’n v.

Milwaukee Metro. Sewerage Dist., 382 F.3d 743 (7th Cir. 2004)

(FMR I). After over six years of litigation and two trips

back and forth between the district court and this court,

we are hopeful that the sun is breaking through.

For the ease of the reader, a brief review of the facts

and procedural history is provided below.

A. The Initial Proceedings in the District Court

Friends of Milwaukee’s Rivers and Lake Michigan

Federation, n/k/a Alliance for the Great Lakes (collectively,

Friends), filed this citizens’ suit against the Milwaukee

Metropolitan Sewerage District (MMSD) under the

Federal Water Pollution Control Act (the Clean Water Act

or the Act), 33 U.S.C. §§ 1251 et seq., in the United States

District Court for the Eastern District of Wisconsin on

March 15, 2002. Friends alleged that certain sanitary

sewer overflows that occurred between January 1, 1995

and September 25, 2001 were violations of MMSD’s

Clean Water Act permit and of the Act itself. They sought

a declaratory judgment, injunctive relief, civil penalties

and costs and fees under the citizens’ suit provision of the

Act. FMR I, 382 F.3d at 751. Later that same day, the

State of Wisconsin (the State) also filed suit against MMSD.

Within a few months, the State and MMSD reached a

settlement (the 2002 Stipulation), which provided for

expenditures of more than $900 million on various pro-

jects. MMSD agreed to (1) build new Deep Tunnel projects

that increase wastewater storage capacity from 405 to 521

No. 08-1103 3

million gallons; (2) upgrade its information and control

technology, including the installation of a Real Time

Control system; (3) reduce infiltration and inflow of storm

water into the system by five per cent; and (4) complete a

number of other projects, including a Capacity Manage-

ment, Operation and Maintenance Program as well as

projects provided for in its long-term facilities plan.

MMSD then moved to dismiss Friends’ citizens’ suit. The

district court found that the State had commenced and

diligently prosecuted judicial and administrative en-

forcement actions against MMSD. Therefore, it dismissed

Friends’ suit as barred first by the Act and in the alter-

native by res judicata. Friends appealed.

B. FMR I

In FMR I, we undertook a comprehensive review of

MMSD’s background, systemic difficulties and ongoing

litigation with the State and with Friends. 382 F.3d at 748-

51. We also recognized the occurrence of a massive,

unprecedented dumping in May 2004 of 4.6 billion gallons

of rainwater laced with raw sewage—including a

sanitary sewer overflow (SSO) of about 500 million

gallons—directly into Lake Michigan and Milwaukee-area

rivers. Id. at 749 n.1.

We found, first, that the Clean Water Act did not bar

Friends’ suit. The Act strips the courts of subject matter

jurisdiction over citizens’ suits where the State has timely

commenced judicial or administrative enforcement

actions. See 33 U.S.C. §§ 1365(b)(1)(B), 1319(g). Because

4 No. 08-1103

the State’s actions in this case were not commenced

before Friends filed their citizens’ suit, we held that these

provisions did not apply. 382 F.3d at 757. That holding

is not at issue in this appeal.

Second, with respect to res judicata, we agreed that two

out of its three requirements had been satisfied: there

had been prior litigation resulting in a final judgment on

the merits by a court with jurisdiction, and there was

identity of the causes of action in the two suits. FMR I,

382 F.3d at 757-58. We found, however, that the record

was insufficient to determine whether Friends were in

privity with the State for purposes of the two actions.

We explained, “in order for the state agency to be in

privity with the public’s interests, the State’s subsequently-

filed government action must be a diligent prosecution.”

FMR I, 382 F.3d at 759. Looking to the language of the

Act to define “diligent prosecution,” we said, “[o]ur

diligent prosecution analysis of the 2002 Stipulation

will examine whether it is capable of requiring com-

pliance with the Act and is in good faith calculated to

do so.” Id. at 760. We recognized “that diligence on the

part of the State is presumed,” id., and neither perfect

foresight nor success are required. Id. at 759. Notwith-

standing those points, however, “a diligent prosecution

analysis requires more than mere acceptance at face

value of the potentially self-serving statements of a state

agency and the violator with whom it settled regarding

their intent with respect to the effect of the settlement.”

Id. at 760. Therefore, we engaged in a substantive

analysis of whether the 2002 Stipulation was capable of

No. 08-1103 5

requiring compliance with the Act and was in good faith

calculated to do so.

Most of the concerns that Friends raised about the

diligence of the 2002 Stipulation were easily dispensed

with, but we shared their concern that “the planned

improvements to MMSD’s system under the 2002 Stip-

ulation may not in fact result in MMSD’s eventual com-

pliance with the Act and its permit.” Id. at 763. We did

not “feel confident that the 2002 Stipulation will indeed

result in elimination of the root causes underlying the

large-scale violations alleged by the plaintiffs, regardless

of the State’s and MMSD’s self-serving statements that it

is intended to do so.” Id. at 764. Therefore, we could not

say on the basis of the record as it existed before the

district court whether the 2002 Stipulation was cal-

culated to result in compliance with the Act and remanded

for determination of that issue. Id. at 765. Our specific

instructions were the following:

[T]he district court should determine whether the

systemic inadequacies of MMSD’s sewerage facilities

will be sufficiently ameliorated by the proposed

remedial projects to result in compliance. If the

district court concludes, after giving some deference

to the judgment of the State, that there is a realistic

prospect that violations due to the same underlying

causes purportedly addressed by the 2002 Stip-

ulation will continue after the planned improvements

are completed, the plaintiffs’ suit may proceed. If,

after a more detailed examination of the 2002 Stip-

ulation, the district court concludes that no such

prospect exists, it may so find, provide a thorough

6 No. 08-1103

explanation of its conclusion and consider reinvoca-

tion of the res judicata bar.

Id. at 765.

C. The District Court’s Opinion on Remand

The district court held a two-day evidentiary hearing

and ordered post-hearing briefing to address whether

the 2002 Stipulation was capable of achieving, and calcu-

lated to achieve, compliance with the Act and was there-

fore a diligent prosecution for privity purposes.

The court began by defining compliance with the Act

as compliance with the permit MMSD had with the State

at the time, citing 33 U.S.C. §§ 1311(a), 1346(a)-(b). That

was the 1997 Wisconsin Pollutant Discharge Elimina-

tion System (WPDES) permit, which prohibited SSOs

subject to certain “exceptions to enforcement,” including

unavoidable bypasses “necessary to prevent loss of life or

severe property damage.” Friends of Milwaukee’s Rivers

and Lake Michigan Fed’n v. Milwaukee Metro. Sewerage Dist.,

No. 02-C-0270, 2007 WL 4410402, at *4 (E.D. Wis. Dec. 14,

2007). The court then noted that the capacity and

physical infrastructure of the sewer system is in turn

determined by the State, including the Wisconsin Depart-

ment of Natural Resources (WDNR), in cooperation

with MMSD. Therefore, the court reasoned, if the capacity

of the system as determined by WDNR was insufficient

to handle the flow of a storm and an SSO was necessary

to prevent severe property damage, that would not neces-

sarily be a violation of the permit.

No. 08-1103 7

The court recognized the hard work that had been done

by the State and MMSD to determine what the capacity

and infrastructure of the system should be. That work

was incorporated into MMSD’s 2010 Facilities Plan and

the 2002 Stipulation. Additionally, the WDNR’s 2001

Report, Sewer Overflows in Wisconsin—A Report to the

Natural Resources Board, was considered in the negoti-

ations for the 2002 Stipulation. Ultimately, the court

said that the 2002 Stipulation “reflects the judgment of

the defendant and the WDNR that flows greater than

those expected on a five-year recurrence interval are so

infrequent that construction of additional infrastructure

is unwarranted from a cost-benefit perspective.” 2007

WL 4410402, at *6. It said, “the Stipulation, which refer-

ences the WPDES permit and the 2010 Plan design stan-

dard, provides the benchmark for compliance in this

case.” Id.

The court heard testimony from both parties’ experts

regarding whether the projects required by the 2010 Plan

and the 2002 Stipulation would bring MMSD into compli-

ance with its 1997 permit. MMSD’s expert, James T.

Smullen, had over thirty years of experience managing

large overflow reduction projects and using hydraulic

modeling. Id. at *7. He concluded that the improvements

would be “more than adequate to stop the sanitary sewer

overflows that have been targeted in the system.” Id. at *8.

That is, the capacity increases that would result from

the 2002 Stipulation’s projects would be more than

enough to capture SSOs for the five-year recurrence

interval and smaller. Id.

8 No. 08-1103

Plaintiffs’ expert, Dr. Bruce A. Bell, disagreed, and

opined that the added capacity would not be sufficient

to achieve compliance with the 1997 permit. The court

found, however, that Dr. Bell’s analysis did not address

several key facts, such as the 2002 Stipulation’s require-

ment for a Real Time Control System and the most

recent hydraulic modeling data. Id. at *8. It therefore

declined to rely on his opinions.

The court also had before it testimony from WDNR

employees, including Charles G. Burney, who admitted

that in 2002 WDNR believed that the Stipulation would

result in MMSD’s compliance with the WPDES permit. Id.

at *9. After the May 2004 overflows, however, Burney

changed his mind. At the district court’s evidentiary

hearing, Burney testified that he believed that some of

the overflows, including the 500 million gallon May 2004

SSO, would not have been prevented by the increased

capacity and other improvements required by the 2002

Stipulation. Id. at *10. He also did not feel that the

severity of the storms was a sufficient justification for

the overflows. Id.

The court did not find Burney’s testimony on this point

reliable or persuasive because Burney had not done

any mathematical modeling with respect to how the

system responded to the storms, accounted for the

impact of several of the 2002 Stipulation’s projects that

had not yet been completed in May 2004 or considered

the fact that not all of the deep tunnel’s pumps were

working at the time of the storms. Id.

The record before the district court showed that the May

2004 storms were in fact in excess of the five-year design

No. 08-1103 9

storm. Id. Nevertheless, the court said, “MMSD’s modeling

suggests that the SSOs would have been prevented by

the improvements required by the Stipulation.” Id.

Finally, the court did not find relevant the fact that the

WDNR and WDOJ had initiated an additional enforce-

ment action against MMSD (the 2005 enforcement action).

Id. at *11.

After the hearing, Friends supplemented the record

with evidence of two SSOs that occurred in the spring of

2006: a 570,000 gallon SSO on March 13, 2006, and a 346,000

gallon SSO on April 3, 2006. Friends also sought to intro-

duce a letter from Jo Lynn Traub of the United States

Environmental Protection Agency (EPA) to Amy Smith

of the WDNR. The court rejected this letter as hearsay

that did not qualify for the public records exception

under Fed. R. Evid. 803(8). Additionally, the court said,

“Even if [the letter] fell within Rule 803(8), it is not suffi-

ciently reliable or trustworthy to overcome the rule

against admission of hearsay evidence.” District Court

Order, Appellant’s Short Appendix at App. 022. The

plaintiffs also sought to introduce the summons and

complaint filed in the 2005 enforcement action by the

WDOJ for proof of the matters alleged in it. The court

rejected that as hearsay as well, but admitted the docu-

ments for the limited purpose of proving that the State

had filed suit. Id. at App. 023-24.

On May 19, 2008, the WDOJ and MMSD resolved the

WDOJ’s 2005 enforcement action with a new stipulation

(the 2008 Stipulation). The 2008 Stipulation said, among

other things, that

10 No. 08-1103

MMSD has accomplished much of the work required

under the terms of the 2002 Stipulation; has maintained

compliance with the terms of the 2002 Stipulation,

including completion of projects in accord with the

schedule; and has achieved reductions in the

frequency and volume of wet weather sanitary sewer

overflows (“SSOs”) and combined sewer overflows

(“CSOs”) from its system as a result of the improve-

ments made under the 2002 Stipulation;

...

The parties believe and acknowledge that implementa-

tion of the other requirements of the 2002 Stipulation

will result in the realistic prospect of an end to alleged

discharge permit violations due to the underlying

causes addressed by the 2002 Stipulation;

...

[O]n the basis of its review of MMSD’s progress under

the 2002 Stipulation as described below, the State

now believes that because of the steps taken and

planned by MMSD pursuant to the 2002 Stipulation

there is no realistic prospect that future permit viola-

tions due to the same underlying causes addressed by

the 2002 Stipulation will continue after the planned

improvements are completed. . . .

Stipulation and Order for Judgment at 1-3.

The district court found that the 2002 Stipulation was a

diligent prosecution for privity purposes, and therefore

dismissed plaintiffs’ suit on res judicata grounds. Plaintiffs

No. 08-1103 11

appealed the dismissal as well as the denial of their

motions to supplement the record.

II. Discussion

The questions presented in this successive appeal are

relatively narrow. Friends do not challenge the suf-

ficiency of the evidence supporting the district court’s

decision. Instead, they contend that the district court

violated our mandate by not “considering and giving due

weight to: post-stipulation violations of the Act; a post-

stipulation determination by WDNR, with which the

United States EPA concurred, that the 2002 Stipulation

would not bring MMSD into compliance with the Act;

and a post-stipulation enforcement action initiated by

the [WDOJ] against MMSD[.]” Appellant’s Br. at 2. They

argue that “had the district court considered these post-

stipulation events, it would have had no choice but to

find that the 2002 Stipulation did not and does not consti-

tute diligent prosecution by WDNR.” Id. at 12. Addition-

ally, Friends contend that the district court erred by

refusing to admit and consider the letter from the EPA to

the WDNR. For the following reasons, we find that

Friends’ arguments, although entitled to weight, are not

a sufficient basis for reversing the district court.1

1

The district court had federal question jurisdiction pursuant

to 33 U.S.C. § 1365(a) and 28 U.S.C. § 1331. We have jurisdic-

tion pursuant to 28 U.S.C. § 1291 because the district court

entered a final judgment dismissing this case due to res judicata.

12 No. 08-1103

A. Standard of Review

Typically, a district court’s dismissal of a case on res

judicata grounds is reviewed de novo, Cole v. Board of

Trustees of University of Illinois, 497 F.3d 770, 772 (7th Cir.

2007); but this is not a typical case. We instructed the

district court to make findings of fact regarding whether

the State’s prosecution of MMSD’s violations of the

Act was diligent and to apply the law as we defined it to

those facts. To do so, the court held an evidentiary

hearing, in which it was necessary, among other things,

to assess the credibility of witnesses. Therefore, the clear

error standard of review is appropriate here. Trustees of

Chicago Painters and Decorators Funds v. Royal Int’l

Drywall and Decorating, Inc., 493 F.3d 782, 785 (7th Cir.

2007) (“In an appeal from a bench trial, ‘[w]e review a

district court’s conclusions of law de novo, and we

review its findings of fact, as well as applications of law

to those findings of fact, for clear error.’ ”) (quoting Keach

v. United States Trust Co., 419 F.3d 626, 634 (7th Cir.

2005)); accord Economy Folding Box Corp. v. Anchor Frozen

Foods Corp., 515 F.3d 718, 720 (7th Cir. 2008); Levenstein v.

Salafsky, 414 F.3d 767, 773 (7th Cir. 2005).

B. Relevance of Post-stipulation Evidence

This case finds itself in a unique procedural posture

after our remand in FMR I, the district court’s decision

re-invoking res judicata and now this successive appeal.

Precedent is correspondingly sparse; neither the parties

nor the court have discovered any cases specifically

No. 08-1103 13

addressing the question presented by Friends regarding

the admissibility and weight of post-stipulation evi-

dence to the question of privity and diligent prosecution.

Some lower courts have considered such evidence. See,

e.g., St. Bernard Citizens for Envtl. Quality, Inc. v. Chalmette

Refining, L.L.C., 500 F. Supp. 2d 592, 605-08 (E.D. La. 2007)

(considering post-consent decree events as additional

support for the court’s finding that the consent decree

was the result of diligent prosecution); Gardeski v. Colonial

Sand & Stone Co., Inc., 501 F. Supp. 1159, 1166 (S.D.N.Y.

1980). Those cases did so, however, without squarely

addressing the question whether their consideration of

that evidence was proper. Our general comments in

Supporters to Oppose Pollution, Inc. v. Heritage Group, 973

F.2d 1320, 1324 (7th Cir. 1992), regarding the propriety

of follow-up inquiries into diligence are not controlling

because of the distinct procedural posture of the present

case.2

Putting the question of post-stipulation evidence aside

for a moment, we note first that the central evidence

bearing on the diligence of a representative’s prosecution

in a case like this one is presumably pre-stipulation

evidence. “[T]he focus of the diligent prosecution

inquiry should be on whether the actions are calculated to

eliminate the cause(s) of the violations.” FMR I, 382 F.3d

at 760. Whether an agreement or judgment is capable of

and in good faith calculated to achieve compliance with

2

As noted by the EPA, it is only due to the unique procedural

posture of this case that enough time has passed for significant

post-stipulation events to occur.

14 No. 08-1103

the law can usually be (and in most cases should be)

determined as of the time it is executed, based on the

facts then available to the parties. This approach makes

sense, because the question is essentially asking if the

state faithfully discharged its responsibilities to its con-

stituents and achieved what it reasonably believed to be

a solution to the problem. It is also supported by the

comments to the Restatement of Judgments:

The failure of a representative to invoke all possible

legal theories or to develop all possible resources of

proof does not make his representation legally inef-

fective, any more than such circumstances over-

come the binding effect of a judgment on a party

himself . . . . Whether the representation has been

inadequate is a question of fact to be decided in light

of the issues presented in the case and the factual

and legal contentions that might reasonably have

been expected to be presented.

Restatement (Second) of Judgments § 42 cmt. f (1982).

Moreover, as we noted in FMR I, “diligence does not

require a state agency to have perfect foresight,” and the

State is not required to succeed; it is required only to try,

diligently. 382 F.3d at 759 (citing Supporters, 973 F.3d at

1324). We recognized the possibility that additional

problems, even ones existing before the 2002 Stipulation

was entered, might manifest themselves after the Stipula-

tion without instantly becoming proof of a lack of dili-

gence. Id. at 762. In sum, when the evidence in a case

like this one demonstrates that a citizens’ representative

acted in good faith and obtained relief adequate to

address all known problems in the system and to pre-

No. 08-1103 15

vent all foreseeable violations, that constitutes diligent

prosecution, no matter what happens later. Therefore,

Friends’ suggestion that pre-2002 Stipulation evidence is

irrelevant to the determination of diligent prosecution is

misguided. Appellant’s Br. at 16 (“Speculating as to what

the parties intended or thought the 2002 Stipulation

would do was pointless.”).

As a general matter, consideration of post-stipulation

evidence raises a number of practical objections. For

example, res judicata is an issue that should be immedi-

ately and finally determinable by the courts. If post-

stipulation evidence is relevant to the determination,

citizens’ suits might go on indefinitely as long as any

problems remain in the system or the government con-

tinues with its oversight and enforcement responsibilities.

As noted by the EPA, “[b]ecause there is always the

possibility of new . . . evidence, that approach would

make it extremely difficult to achieve finality as to a [FMR

I] ‘diligent prosecution’ determination.” EPA Br. as

Amicus Curiae at 17 n.4. Friends responds to this argu-

ment by arguing that in this case, the res judicata issue

has not yet been authoritatively decided, and once it is, it

will become “unassailable and not vulnerable to subse-

quent challenges by a plaintiff who has become subject

to the res judicata bar.” Reply at 11. As pointed out by

the EPA, however, this argument may ignore the poten-

tial applicability of procedural mechanisms such as

Federal Rule of Civil Procedure 60(b).3

3

We do not hereby suggest that it would be appropriate to

(continued...)

16 No. 08-1103

Second, as is becoming increasingly clear in this case, it

may be difficult for the district courts to determine the

relevance and impact of post-stipulation evidence. The

courts may have to determine whether the new evidence

is proof that the stipulation is not diligent or instead

merely proof that the changes called for by the stipula-

tion have not yet been implemented, or that there are

new problems. Additionally, it may be a difficult task for

the district court to attempt to focus only on the appro-

priate remedy for the violations as they existed years

ago, instead of fashioning a remedy to address the situa-

tion as it is currently developing.

A third point, related to the second, is the possible

interference with other government enforcement actions

that consideration of post-stipulation evidence might

cause. This point was argued forcefully by the EPA in its

amicus brief. It applies particularly to examination of

pleadings made in other actions or current opinions of

government officials. Similarly, allowing reopening of

previously barred actions based on recently developed

evidence could potentially thwart the ability of the state

to settle cases by undermining the confidence of opposing

parties in the binding nature of a settlement. Finally, it is

arguable that allowing consideration of post-stipulation

evidence in earlier-filed actions could create a kind of

loophole in the Act’s procedural requirements for

3

(...continued)

apply Rule 60(b) in these circumstances, or that district courts

should exercise their discretion to do so, but only note that it

is possible that plaintiffs would attempt to invoke it.

No. 08-1103 17

citizen suits by allowing consideration of later viola-

tions that are not the subject of a properly filed citizens’

suit.

Despite these pitfalls, we reject the position that post-

stipulation evidence is wholly irrelevant or should gener-

ally be found to be such. The concept of relevance is

broad and excluding all post-stipulation evidence would

be inconsistent with its reach. After all, the proof of the

pudding is in the eating. Post-stipulation evidence is

sometimes directly probative of the adequacy of a stipula-

tion and the diligence of a prosecution. It may provide

a valuable epilogue: objective evidence of what actually

happened. This is supported by some of the language

we used in FMR I: for example, we instructed the

district court to consider whether the 2002 Stipulation

was “capable” of ending violations and whether it had a

“realistic” prospect of doing so. 382 F.3d at 760, 765.

It would be difficult to provide guidance regarding all

conceivable types of post-stipulation evidence and we

will not attempt to do so. Its probative weight and, in

clear cases, even its admissibility, will depend on the

particular circumstances of each case and the district

courts should have broad discretion to determine what

weight to afford it, or, if clearly appropriate, to exclude

it. In general, the difficulties that attend it must be dealt

with as best they can in the interest of full evidentiary

disclosure. We do not encourage the district courts to

shut their eyes to the obvious, or even to the plausible.

With all of that background, we now turn to Friends’

arguments that the district court in this case erred by

18 No. 08-1103

refusing to give their post-stipulation evidence con-

clusive deference.

1. Post-stipulation SSOs

Friends’ main argument is that the district court failed to

consider or give enough weight to the post-stipulation

evidence they offered. First, they point to the SSOs in

2004 and 2006 and say, “[t]he best evidence of whether

the 2002 Stipulation would result in compliance with the

Act are the SSOs that continued to occur . . . .” Appellant’s

Br. at 16. The May 2004 SSO was indeed a massive event,

as we noted in FMR I. 382 F.3d at 749 n.1. But there are

many reasons why the occurrence of a post-stipulation

SSO, without more, is not necessarily conclusive proof

of a lack of diligence.

First, the improvements called for in the 2002 Stipula-

tion should be understood by all parties to take time to

implement. Many projects will take years to complete. It

is to be expected that SSOs due to the same causes ad-

dressed by the 2002 Stipulation would continue to occur

for a time before the Stipulation’s projects are complete.

Second, as discussed above, the district court found that

under the 1997 WPDES permit, an SSO caused by a storm

that was bigger than the system was designed to handle

would not necessarily put MMSD in violation of the

permit. An SSO resulting from an exceptionally large

storm would therefore not conclusively prove that the

2002 Stipulation was not capable of complying, and

No. 08-1103 19

calculated to comply, with the permit.4 Finally, an SSO

resulting from independent causes, such as, for example,

a broken pump, would also not lead to the conclusion

that the 2002 Stipulation was not a diligent prosecution.

For these reasons, as well as the practical difficulties of

considering post-stipulation evidence in general, the

burden to lay a proper foundation for evidence of

post-stipulation SSOs, and to establish that significant

weight should be accorded such evidence, must be

placed on the proponent of the evidence. To demonstrate

a significant evidentiary weight, that party must show

that the SSO (1) resulted from the same underlying

causes as were addressed by the 2002 Stipulation; (2) was

a violation of the applicable permit; (3) would not have

been prevented by the stipulation’s projects, if those

projects had been completed; and (4) that the proffered

evidence satisfies all other generally applicable evidentiary

requirements. This approach is consistent with FMR I,

where we said, “[i]f the district court concludes, after

giving some deference to the judgment of the State, that

there is a realistic prospect that violations due to the same

underlying causes purportedly addressed by the 2002

4

The parties disagree regarding whether the 2003 permit treats

such SSOs similarly to the way the 1997 permit treated them.

Because drafting had not even begun for the 2003 permit by

the time the 2002 Stipulation was entered, see Transcript of

Hearing of August 24, 2005, at 227, it is irrelevant to this

appeal. Additionally, any argument that the district court

improperly interpreted the 1997 permit has been forfeited.

20 No. 08-1103

Stipulation will continue after the planned improvements

are completed, the plaintiffs’ suit may proceed.” 382 F.3d

at 765. Further, MMSD conceded at oral argument that

if Friends were able to make this required showing, its

position on the relevance of post-stipulation SSOs might

be different—and the evidence might be relevant. As to

admissibility, in contrast to weight, as we have

indicated, we think a clear showing should be required

to support exclusion.

Contrary to Friends’ contention, the district court did

consider the post-stipulation SSOs. It found, in reliance

on evidence from the Southeast Wisconsin Regional

Planning Commission (SEWRPC), that the May 2004

storms were in excess of the five-year design storm (and

therefore that the SSOs would not have constituted viola-

tions of the permit). 2007 WL 4410402, at *10. Additionally,

the court recognized that MMSD’s modeling showed

that the May 2004 SSO would have been prevented by

the improvements required by the 2002 Stipulation. Id. This

modeling is explained in detail in MMSD’s briefing. See

Appellee’s Br. at 21-24 (also citing to an audit report

prepared for Milwaukee Mayor Tom Barrett that sup-

ports MMSD’s conclusion). The district court appears to

have found MMSD’s evidence persuasive, and it is not

our function to re-weigh the evidence.

In contrast, Friends offered no evidence, other than the

opinion of Mr. Burney (discussed below),5 much less any

hydraulic modeling or other quantitative evidence, in

5

Burney characterized the conclusions of the SEWRPC report

as “fairly bogus.” Reply at 9.

No. 08-1103 21

support of their argument that the post-stipulation SSOs

were proof that the 2002 Stipulation was not diligent. They

also did not attempt to rebut MMSD’s showing that the

May 2004 SSO would have been contained had the 2002

Stipulation projects been completed. Therefore, Friends

did not fulfill their burden to show that those SSOs were

of decisive weight, even if properly admissible. In the

case before us, the district court did not abuse its discre-

tion by considering the post-stipulation SSOs, and having

considered them, it was not clearly erroneous for the

court to decline to give them decisive weight. As we

have indicated, it is not our role to perform this

analysis again.

2. The State’s post-stipulation opinions

Friends’ second main point is that the district court

should have disregarded MMSD’s modeling evidence, the

SEWPRC report and the fact that one of the pumps was

not working, and instead deferred to Burney’s opinion

and the fact of the initiation of the 2005 enforcement action.

Burney said that the overflows that occurred in late

May of 2004 “were beyond what would have been con-

trolled by the projects contained in the 2002 Stipulation.”

Transcript of Hearing of August 24, 2005, at 205. The

district court declined to give conclusive weight to

Burney’s testimony because, it said,

Burney admitted that he did not do any mathematical

modeling to determine how the system responded to

the storm. He further admitted that the capacity

expansions had not been built as of May 2004; that

22 No. 08-1103

many other provisions of the Stipulation had dead-

lines beyond May of 2004; that he had not analyzed

the amount of flow that would have been reduced

by the [inflow and infiltration] projects included in

the Stipulation; that he had not analyzed the impact

of the CMOM program called for in the Stipulation;

and that he had not analyzed how the inoperability of

one deep tunnel pump affected flow at the time of

the 2004 storm.

2007 WL 4410402, at *10.

We did instruct the district court to “give some deference

to the judgment of the State.” FMR I, 382 F.3d at 765. We

did not, however, instruct it to give conclusive deference

to the judgment of one state official without regard to

other evidence. In fact, we instructed the court to engage

in a detailed analysis of the 2002 Stipulation and not to

take the parties’ statements at face value. Id. at 760, 765.

The district court’s assessment of the reliability of Mr.

Burney’s testimony was therefore not clearly erroneous.

It was also not clearly erroneous for the district court to

hold that the fact that the State initiated a new enforce-

ment action did not prove a lack of diligence with respect

to the 2002 Stipulation. The district court noted our state-

ment in FMR I that “[i]f any additional operational or

management problems have become evident since the

2002 Stipulation, the State and MMSD are entitled by the

Act to an opportunity to resolve them before the plain-

tiffs may jump into the fray.” 382 F.3d at 762. The fact

that a new enforcement action has been initiated does

not logically compel the conclusion that the 2002 Stipula-

No. 08-1103 23

tion was not diligent, or even that the State held the

belief that it was not.6

Moreover, Friends’ argument that we should give

conclusive deference to the opinion of the State would

now require that we defer to its recent statements in the

2008 Stipulation, which resolved the 2005 enforcement

action. Those statements include the following: “the State

now believes that because of the steps taken and planned

by MMSD pursuant to the 2002 Stipulation there is no

realistic prospect that future permit violations due to

the same underlying causes addressed by the 2002 Stip-

ulation will continue after the planned improvements

are completed.” Stipulation and Order for Judgment at 3.

This formulation appears to deliberately track our lan-

guage in FMR I. 382 F.3d at 765.

When asked at oral argument why the 2008 Stipulation

does not eviscerate their argument, Friends cited to

Board of Trustees of Knox County Hosp. v. Shalala, 135 F.3d

493 (7th Cir. 1998), for the proposition that “[a]s a general

matter, the case for judicial deference is less compelling

with respect to agency positions that are inconsistent with

previously held views.” Id. at 502 (quoting Pauley v.

BethEnergy Mines, Inc., 501 U.S. 680, 698 (1991)). Curiously,

Friends fail to recognize that this proposition would also

apply to Burney’s earlier opinions, weakening them as

much as it might weaken the 2008 Stipulation. Regardless,

6

Friends do not appeal the district court’s decision admitting

the summons and complaint for the sole purpose of showing

that a new enforcement action had been initiated.

24 No. 08-1103

we see the 2008 Stipulation as further support for the

district court’s not unreasonable determination that

Burney’s opinions were unsupported and not due con-

clusive deference.7

C. Evidentiary Rulings

Friends have repeatedly faulted the district court for

failing to consider a purported conclusion by the EPA that

the 2002 Stipulation would not ensure compliance with

the Act. They do so again here. The statements at issue

are found in a November 3, 2004 letter from Jo Lynn

Traub of the United States EPA to Amy Smith of the

WDNR, in which Traub was following up on a meeting

between the two organizations on August 13, 2004. Friends

seize on the words used by Traub and argue that they

show that “EPA concluded that the 2002 Stipulation

would not result in compliance with the Act, [but] the

District Court . . . refused to allow that conclusion

into evidence.” Appellant’s Br. at 20. It seems that the

language that Friends are focusing on is the following,

taken from the last page of the letter:

The 2002 Stipulation with MMSD focused largely on

reducing impacts of SSOs through increasing storage

7

Friends also argue that the 2008 Stipulation is undermined

by statements made by the EPA in letters that Friends sub-

mitted to this court. This argument is not persuasive because

the EPA’s statements do not relate to the mandate of the

district court or to the questions presented to this court.

No. 08-1103 25

capacity in the tunnel system. At our meeting, you

indicated that had all the additional controls required

by the stipulation been completed, the May 2004

overflow events would still have occurred. We recom-

mend that MMSD be required both to take a more

active role in monitoring and controlling the volumes

of flow entering their system from the satellites, and

to implement CMOM in their separated collection

system earlier than scheduled in the stipulation. . . .

Appellant’s Separate Appendix at 117.

Friends moved to admit this letter into evidence twice

during the district court’s evidentiary hearing and the

district court denied the motions. They then moved the

court to reconsider that ruling, arguing that the letter is

admissible as a public record under Federal Rule of

Evidence 803(8)(A) as setting forth the “activities” of the

EPA.8 The district court denied that motion as well,

8

This hearsay exception provides,

The following are not excluded by the hearsay rule, even

though the declarant is available as a witness . . .

(8) Public records and reports. Records, reports, state-

ments, or data compilations, in any form, of public

offices or agencies, setting forth (A) the activities of the

office or agency, or (B) matters observed pursuant to

duty imposed by law as to which matters there was a

duty to report, excluding, however, in criminal cases

matters observed by police officers and other law

enforcement personnel, or (C) in civil actions and

(continued...)

26 No. 08-1103

holding that the letter did not qualify as a public record

under the hearsay exception in Rule 803(8), and that

“[e]ven if Exhibit 26 fell within Rule 803(8), it is not

sufficiently reliable or trustworthy to overcome the rule

against admission of hearsay evidence.” District Court

Order, Appellant’s Short Appendix at App. 020-22.

“We . . . review the district court’s evidentiary rulings

only for abuse of discretion, and we ‘will not reverse

unless the record contains no evidence upon which the

trial judge rationally could have based his decision.’ ”

Wasson v. Peabody Coal Co., 542 F.3d 1172, 1175-76 (7th

Cir. 2008) (quoting United States v. Savage, 505 F.3d 754,

760 (7th Cir. 2007)). The district court had a reasonable

basis for excluding this letter as failing to satisfy the

requirements of Rule 803(8). It does not appear to

support Friends’ assertion that it shows that EPA had

concluded that the 2002 Stipulation would not bring

MMSD into compliance with the Act or that EPA agreed

with WDNR’s conclusion. This was confirmed at oral

argument by counsel for the EPA, who said that the

Traub letter was only repeating the opinion of the WDNR

and not stating an opinion of the EPA. Therefore, the

8

(...continued)

proceedings and against the Government in criminal

cases, factual findings resulting from an investigation

made pursuant to authority granted by law, unless

the sources of information or other circumstances

indicate lack of trustworthiness.

Fed. R. Evid. 803(8).

No. 08-1103 27

district court was within its discretion when it found

that the letter did not set forth the activities of the EPA.

Moreover, even if any abuse of discretion had occurred,

it would have been harmless.

III. Conclusion

For the foregoing reasons, we A FFIRM the judgment of

the district court.

2-13-09