Petition for Writ of Certiorari — Milwaukee Metropolitan Sewerage District v. Friends of Milwaukee's Rivers

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04-889 DEC 2 8 2008

IN THE OFFICE OF THE CLERK

Supreme Court of the Anited States

MILWAUKEE METROPOLITAN SEWERAGE DISTRICT,

Petitioner,

Vv.

FRIENDS OF MILWAUKEE’S RIVERS AND

LAKE MICHIGAN FEDERATION,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

JAMES M. CARAGHER

LINDA E. BENFIELD

G. MICHAEL HALFENGER *

KATHERINE E. LAZARSKI

FOLEY & LARDNER LLP

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

(414) 271-2400

* Counsel of Record Attorneys for Petitioner

RE OY SERRE NERNEY TSF AON A As AOE UREN OR RRS SRG

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

Tiie Clean Water Act forbids citizen enforcement suits

when a “State has commenced and is diligently prosecuting a

civil . . . action in a court of . . . a State to require compliance

with the standard, limitation, or order” allegedly violated. 33

U.S.C. § 1365(b)(1)(B).

This case raises the following questions:

1. Whether a final state court order requiring a

publicly owned wastewater treatment works to comply

with a State’s remediation plan bars continuation of a

federal court citizen suit asserting the same violations,

either as a matter of res judicata or because of the State’s

“diligent[] prosecut[ion].”

2. When a state court order is entitled to preclusive

effect against citizen plaintiffs under state law (and,

therefore, under 28 U.S.C. § 1738 and Marrese v.

American Academy of Orthopaedic Surgeons, 470 U.S.

373 (1985)), whether a federal court may refuse to give

that order preclusive effect until it independently de-

cides, after a detailed examination of the order’s reme-

dial plan, that there is no “realistic prospect” of con-

tinued violations after the plan’s projects are completed.

(i)

PARTIES TO THE PROCEEDING BELOW AND

RULE 29.6 STATEMENT

Petitioner, defendant-appellee below, is Milwaukee Metro-

politan Sewerage District, a special purpose entity organized

under Chapter 200 of the Wisconsin Statutes. It has no parent

corporation, and no publicly held company owns 10% or

more of its stock.

Respondents, plaintiffs-appellants below, are Friends of

Milwaukee’s Rivers and Lake Michigan Federation.

TABLE OF CONTENTS

Page

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PARTIES TO THE PROCEEDING BELOW AND

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REASONS FOR GRANTING THE PETITION........... 1]

I. THE SEVENTH CIRCUIT'S CONSTRUC-

TION OF THE DILIGENT PROSECUTION

BAR TO AUTHORIZE COLLATERAL

ATTACKS ON THE FINAL STATE COURT

ORDERS VIOLATES 28 U.S.C. § 1738 AND

CONFLICTS WITH DECISIONS OF THE

| 14

A. The Seventh Circuit’s Misuse of the Act’s

Diligent Prosecution Provision to Limit

Application of Res Judicata Fails to Afford

the State Court’s Final Order the Full Faith

and Credit Required by 28 U.S.C. § 1738... 14

B. In Conflict with the Eighth Circuit, the

Seventh Circuit Concluded that the Act’s

Diligent Prosecution Provision Governs

Whether Citizens Are in Privity with the

PIII caiiiiccriisinaceansenbicnsnoiaemesepiveniainntens 16

(iii)

TABLE OF CONTENTS—Continued

Page

Il. THE SEVENTH AND SECOND CIRCUITS’

INTERPRETATION OF THE DILIGENT

PROSECUTION PROVISION CONFLICTS

WITH DECISIONS OF OTHER CIRCUITS... 20

NL FIEe cnssnncasncsnescconsnicinensenssnstnnneenssiiiuacnansascasones 26

TABLE OF AUTHORITIES

CASES Page

Alaska Sport Fishing Ass’n vy. Exxon Corp., 34

ie FO Ce CE, FN icsrsctnnsstssenotinssaetaiamces ae 17

Arkansas Wildlife Federation v. ICI Americas,

Inc., 29 F.3d 376 (8th Cir. 1994)............. 20, 23, 24, 25

Atlantic States Legal Foundation, Inc. v. East-

man Kodak Co., 933 F.2d 124 (2d Cir. 1991)... 20, 21

Baltimore Gas & Elec. Co. v. Natural Resources

Defense Council, Inc., 462 U.S. 87 (1983)........ 24

Citizens Legal Envtl. Network, Inc. v. Premium

Standard Farms, Inc., No. 97-6073-CV-SJ-6,

2000 WL 220464 (W.D. Mo. Feb. 23, 2000)... 16

Clean Air Council v. Sunoco, Inc., No. 02-1553

GMS, 2003 WL 1785879 (D. Del. Apr. 2,

GD Pssnsinvsstiansintiemaitiacvatiaieaaiiacadatiddiingmiatel 25

Community of Cambridge Envtl. Health & Cmty.

Dev. Group v. City of Cambridge, 115 F.

Supp. 2d 550 (D. Md. 2000)........... ce eeeeseeeeeee 25

Comfort Lake Ass’n v. Dresel Contracting, Inc.,

138 F.3d 351 (8th Cir. 1998)... acatgibenassiees 19

Connecticut Coastal Fishermen’s Ass'n v. Rem-

ington Arms Co., 777 F. Supp. 173 (D. Conn.

BPE) ccrncrincassncrssnssiisiostdligiugnisnibanattocadaanatta 25

Connecticut Fund for Env’t v. Contract Plating

Co., 631 F. Supp. 1291 (D. Conn. 1986), aff'd

in part, rev'd in part, 989 F.2d 1305, (2d Cir.

| SOF D sisaccnisesnnntcentinhctniciiigiinldiaisisaisisdbissaamasaaaiaaiasiaaa 25

EPA v. City of Green Forest, 921 F.2d 1394 (8th

Re, Ts caccttincsnnnsintichinincnshidttaaiiadaeicameaae 16, 17, 19

Ellis v. Gallatin Steel Co., No. 02-6421, _ F.3d

___, 2004 WL 2382166 (6th Cir. Oct. 26,

Friends of the -Earth, Inc. v. Laidlaw Envil.

Servs., Inc., 528 U.S. 167 (2000)..............00068 wee

TABLE OF AUTHORITIES—Continued |

Page

Fiiends of the Earth, Inc. v. Laidlaw Envil.

Servs., Inc., 890 F. Supp. 470 (D.S.C. 1995)..... 18

Georgia v. Tenn. Copper Co., 206 U.S. 230

(TIT Diceccecsensteniateisernintaniantetnnnitatiidiiemindinalis 18

Gerhardt v. Estate of Moore, 139 Wis. 2d 833,

407 N.W.2d 895 (1987), vacated on other

grounds, 486 U.S. 1050 (1988), rev'd on other

grounds, 150 Wis. 2d 563, 441 N.W. 2d 734

[3 Sei pccceschestebdantenassinteansndeeiaiiaiiinisuensinnauninnt 15

Gwaltney of Smithfield, Ltd. v. Chesapeake Bay

Found., Inc., 484 U.S. 49 (1987) ..........ccccccceeeees passim

Hawaii v. Standard Oil Co., 405 U.S. 251

CTD Fad cnessnsnsenestsisscietiinieinianimniianiaipanddiaaaaaidia 18

Hudson River Fishermen's Ass'n v. County of

Westchester, 686 F. Supp. 1044 (S.D.N.Y.

PEI cascoccnscssseunssenhénistantacibeniiiamsamieiaammannial 17

Illinois Cent. R.R. v. Illinois, 146 U.S. 387

ES UIIUE Di vnsvinecesnsescnnnstsisuenetisiinsainiadnniamsibiedieabesdeabmiiiaes 18

Marrese v. Am. Academy of Orthopaedic

Surgeons, 470 U.S. 373 (1985)..........ccccccceeeeeeees i, 14

North & S. Rivers Watershed Ass'n v. Town of

Scituate, 949 F.2d 552 (1st Cir. 1992)........... 22, 23, 25

Norton v. S. Utah Wilderness Alliance, 124 S. Ct.

BO 0 CN iinininsisinticstcicaiepiiaiaiiiablsniabateaniananiiai 13

R.W. Docks & Slips v. State, 2001 WI 73, 919,

244 Wis. 2d 497, 628 N.W.2d 781 «00.0.0... 17

Satsky v. Paramount Communications, Inc., 7

Fle EGGS CEBU Cae, Beeb cessnnccssszscsseninciicninindues 17

Sierra Club v. Colo. Refining Co., 852 F. Supp.

Sere GR Ce, Feet inicdiatsnicisientiadnnincn 25

Supporters to Oppose Pollution, Inc. v. Heritage

Group, 973 F.2d 1320 (7th Cir. 1992)............... 19

Vii

TABLE OF AUTHORITIES—Continued

Page

Williams Pipe Line Co. v. Bayer Corp., 964 F.

Supp. 1300 (S.D. Towa 1997) ..........ccccccseseeeeees 25

STATUTES

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ere 2

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UU Ss OF A A enscccntccsnscessiconsmunsisvsesnnvcoseunninnton , 2

WER, GRRE, © FP ececcesesessssnsseccencscccsevsoensonsesnneenente 2

MISCELLANEOUS

Jeffrey G. Miller, Theme and Variations in

Statutory Preclusion Against Successive Envitl.

Actions by EPA and Citizens, 28 Harv. Envtl.

nO 16

RESTATEMENT (SECOND) OF JUDGMENTS

OT Ce cseicesttintinntcivisnnsetasiiiabianieanititii 15

IN THE

Supreme Court of the Anited States

MILWAUKEE METROPOLITAN SEWERAGE DISTRICT,

Petitioner,

FRIENDS OF MILWAUKFEE’S RIVERS AND

LAKE MICHIGAN FEDERATION,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner, Milwaukee Metropolitan Sewerage District

(“MMSD”), respectfully petitions for a writ of certiorari to

review the judgment of the United States Court of Appeals

for the Seventh Circuit.

OPINIONS BELOW

The opinion of the court of appeals, see infra Appendix to

Petition (“Pet. App.”) at 1a-33a, is reported at 382 F.3d 743

(7th Cir. 2004). The opinion of the district court, Pet. App.

34a-57a, is reported at 2003 WL 23864869 (E.D. Wis.

Sept. 29, 2003).

JURISDICTION

The court of appeals entered judgment on September 2,

2004. Pet. App. la. The court denied a timely petition for

rehearing on October 1, 2004. Pet. App. 63a. The jurisdiction

of this Court is invoked under 28 U.S.C. § 1254(1).

STATUTES INVOLVED

This petition presents important questions involving the

statutory provision barring citizen suits under § 505 of the

Clean Water Act (the “Act” or “CWA”), 33 U.S.C. § 1365,

when a State diligently prosecutes the same alleged

violations. The CWA, 33 U.S.C. § 1251, et seg., makes it

unlawful to discharge any pollutant into navigable waters

except as specifically authorized. See 33 U.S.C. § 1311(a).

The Act allows the Administrator of the Environmental

Protection Agency (“EPA”) or a State that establishes and

administers a program meeting federal guidelines to issue

_permits authorizing the discharge of pollutants in accordance

with specified conditions. See 33 U.S.C. § 1342(a) & (b).

Violations of a state-issued permit are subject to both federal

and state enforcement actions. See 33 U.S.C. § 1319; see

also Wis. Stat. §§ 283.31, 283.89, 283.91, 299.95.

In the absence of federal or state enforcement, the Act

permits private citizens to commence a civil action against

any person alleged to be violating a permit. 33 U.S.C.

§ 1365(a)(1). “[T]he citizen suit is meant to supplement

rather than to supplant governmental action.” Gwaltney of

Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484

U.S. 49, 60 (1987). Congress specifically did not authorize

citizens to seek remedies that the government “chose to

forgo.” /d. at 61. :

To protect against citizen suit intrusions on government

enforcement, the Act requires private parties to give the EPA

and the State sixty days’ notice of their intent to commence

an action. 33 U.S.C. § 1365(b)(1)(A). If, before the

expiration of that period, the government has “commenced

and is diligently prosecuting, . . . [an] action . . . to require

compliance” with the permit, the citizen suit is barred. 33

————

U.S.C. § 1365(b)(1)(B). Whether this diligent prosecution

provision excepts citizen suits from 28 U.S.C. § 1738’s

requirement that state “judicial proceedings . . . shall have the

same full faith and credit in every court . . . as they have by

law... in the courts of such State . . . from which they are

taken,” 28 U.S.C. § 1738, is one of the important questions

this petition presents.

STATEMENT

The Seventh Circuit held that respondents, two citizen

groups claiming “a long history of involvement in clean water

activities” (C.A. S. App. 96-97), could continue prosecuting

MMSD for alleged CWA violations that the State of

Wisconsin resolved through a final state court order. That

order, which incorporates a stipulation between the State and

MMSD, requires MMSD to spend over $900 million on

corrective system improvements. Reversing the district court,

the Seventh Circuit held that neither the State’s prosecution

of MMSD nor the res judicata effect of the state court order

barred respondents’ action.

Although the district court concluded that the state court

order requires substantial remedial measures (Pet. App. 54a-

55a), the court of appeals took the view that those measures

were “a stalling tactic rather than a compliance strategy.”

Pet. App. 32a. Having announced this view, the Seventh

Circuit instructed the district court to allow respondents’

action to proceed, unless the court determines, after a

“detailed examination” of the state-ordered remedial projects

(id. at 33a), that the State met the Act’s diligent prosecution

standard. Jd. at 22a, 33a. This diligent prosecution standard,

the Seventh Circuit ruled, requires that the State’s remedies

leave “no realistic prospect that violations due to the same

underlying causes . . . will continue after the planned im-

provements are completed.” Jd. The court of appeals thus

interpreted the Act to permit federal courts exercising citizen

suit jurisdiction to interfere with a State’s choice of :emedies,

even when those remedies are mandated by a final state

court order.

This interpretation is inconsistent with the Act’s text,

which bars a citizen plaintiff from commencing an action

when the State is diligently prosecuting the same alleged

violations. It is also inconsistent with the exegesis of the

citizens’ enforcement role in Gwaltney, where this Court

ruled that Congress intended the citizen suit as a means

of supplementing, rather than supplanting, governmental

enforcement. 484 U.S. at 60. Adhering to that interpretation,

other courts of appeals, applying either res judicata or the

Act’s diligent prosecution bar, have held that when the

government has ordered remedial measures, citizens may not

maintain an action simply because, in their view, the

government “has not acted aggressively enough.” Ellis v.

Gallatin Steel Co., No. 02-6421, — F.3d __, 2004 WL

2382166, at *12 (6th Cir. Oct. 26, 2004).

1. Wisconsin’s Regulation of MMSD. MMSD provides

wastewater treatment services for twenty-eight municipalities

in southeast Wisconsin. MMSD collects the wastewater from

these municipalities through a system of interceptor sewers,

treats it at one of two facilities, and releases the treated water

into Lake Michigan. Wisconsin has authorized MMSD’s

release of water into Lake Michigan through a series of

permits issued by the Wisconsin Department of Natural

Resources (“WDNR”) and approved by the EPA.

This case arises as a result of “overflows” into Lake

Michigan and Milwaukee-area rivers. In times of particularly

heavy rain, storm water enters MMSD’s system. On some

occasions, the storm water exceeded sewer capacity and

MMSD was required to release some water before treatment

in order to avoid sewer backups and the resulting property

damage. The WDNR regulates and closely monitors these

SS tears

overflows, which are permitted in some circumstances. See

Pet. App. 35a-36a. Extremely heavy rainstorms in 1998 and

1999 caused a number of overfle:vs.

Following these overflows, the WDNR, by January 2000,

had begun an in-depth investigation into MMSD’s operations.

In July 2001, WDNR formally notified MMSD of its

conclusion that several of the overflows were violations. Pet.

App. 40a. The WDNR informed MMSD that corrective

action was required, including significant capacity ex-

pansions, upgrades to MMSD’s monitoring and modeling

systems, and the adoption of rules to require municipalities to

reduce storm water infiitration into the system. Although

MMSD disputed the WDNR’s contention that the overflows

violated its permit (id. at 41a), MMSD entered into nego-

tiations with the WDNR concerning a potential corrective

plan. The WDNR insisted that the corrective plan be both

legally binding and approved by a court.

On July 11, 2001, respondents notified MMSD and the

State that they intended to sue MMSD for CWA violations

based on the overflows.

In August 2001, the WDNR and MMSD, after lengthy

negotiations, reached agreement on a long-term corrective

plan. Among other things, the resulting plan required MMSD

to complete by specified dates three major sewer capacity

expansion projects and several other facility improvements.

The estimated cost of the projects was over $900 million.

The WDNR formalized the plan in a written stipulation

(the “2001 Stipulation”) and referred the matter to the

Wisconsin Department of Justice (“WDOJ”’). The WDOJ,

seeking to have the 2001 Stipulation entered as an order, filed

it in the Wisconsin Circuit Court for Dane County in an

existing case between the State and MMSD.’ For procedural

reasons, the Dane County judge declined to enter the order.’

On the same day the State filed the 2001 Stipulation,

MMSD gave a copy of it to respondents. At respondents’

request, representatives of WDNR, EPA, and MMSD met

with them on December 20, 2001, to discuss the State’s

compliance plan. At the meeting, the State and respondents

agreed not to commence any new legal proceedings before

March 15, 2002. In the interim, respondents agreed to

provide written comments on the State’s compliance plan.

From January through early March 2002, respondents

commented on the compliance plan, largely suggesting modi-

fications in the timing of some projects, greater descriptive

details, and penalties. Respondents further contended that

MMSD should pay their attorneys’ fees and costs. During the

same period, the EPA also reviewed the compliance plan and

provided its comments to the State. Pet. App. 43a-46a

(describing EPA’s involvement).

2. Respondents and the State Sue MMSD on the Same

Day in Separate Courts. On March 15, 2002, both respon-

dents and the State filed new actions against MMSD. At 7:57

' In 1975, MMSD had commenced an action against the State in the

Dane County Circuit Court to challenge WDNR’s treatment standards for

municipal wastewater facilities. The WDNR counterclaimed, alleging

that MMSD had violated its permit because of, among other things,

overflows. The parties settled that case through a stipulation and order,

entered in 1977 by the Dane County Circuit Court, under which MMSD

agreed to spend over $2 billion during the subsequent 20 years to

construct major system improvements. On ten occasions during 1977-

1994, the Dane County Circuit Court entered orders adopting stipulations

that modified the original stipulation and order.

? On October 19, 2001, the Dane County judge notified the parties that

because of the existing case’s age, she did not view it as an appropriate

vehicle for entering the 2001 Stipulation as a court order. C.A. MMSD S.

App. 050-51.

a.m., respondents commenced this action invoking the district

court’s jurisdiction under the citizen suit provision of the

CWA, 33 U.S.C. § 1365(a), as well as under 28 U.S.C.

§ 1331. Respondents alleged that several overflows between

January 1995 and March 2002 were in violation of MMSD’s

permit and the Act. Respondents requested injunctive relief,

civil penalties, and an award of costs and fees.

Later that day, the State sued MMSD in the Wisconsin

Circuit Court for Milwaukee County. The State sought for-

feitures, penalties, assessments, costs, fees, and injunctive

relief for alleged violations during the same period as pleaded

in respondents’ action. Respondents never attempted to

intervene in that case or in the Dane County case.

On May 29, 2002, the State filed in the Milwaukee County

Circuit Court a revised stipulation (the “Final Stipulation”)

that incorporated the EPA’s comments on the compliance

plan. Pet. App. 44a-46a. This Stipulation resolved all claims

relating to alleged permit violations that preceded its date of ~

execution. /d. at 54a. Like the 2001 Stipulation filed in Dane

County, the Final Stipulation requires MMSD to spend over

$900 million to improve its system capacity and to redress

overflow violations. Jd. at 45a. It also provides that the

State, in order to obtain structural changes and eliminate

prohibited overflows, has chosen to forgo possible monetary

sanctions in favor of a binding corrective action program. /d.

PLAIOS AS ad it Pe ee tae aT “

The Milwaukee County Circuit Court entered a final order

‘approving the Final Stipulation that expressly requires

MMSD to “undertake the activities described in the...

stipulation” and to “comply in all respects with its obligations

as set forth in [the] stipulation.” Pet. App. 86a.

; 3. The District Court’s Dismissal of Respondents’ Suit.

After the Milwaukee County Circuit Court entered its order

j approving the Final Stipulation, MMSD moved to dismiss

this citizen action as barred by the State’s diligent prosecution

ie PEN. tml ON 8 sed ee es natin

under § 1365(b)(1)(B) and by res judicata. The district court

granted MMSD’s motion to dismiss on both grounds. Pet.

App. 34a-65a.

In assessing diligent prosecution, the district court held that

by filing the 2001 Stipulation in the Dane County case, the

State had “commenced” a civil enforcement action. /d. at

53a. The district court rejected on two grounds respondents’

contention that the State’s prosecution had not been diligent.

First, the district court applied the prevailing principle that

“diligence on the part of the enforcement agency is

presumed.” /d. at 49a. Second, the court concluded that the

State’s compliance plan sufficed to establish diligence. It

based this conclusion in part on. the fact that “the Final

Stipulation expresses the ‘intent of the parties’ to present ‘a

comprehensive solution‘to sanitary sewer overflows, regard-

less of their cause.’”” Jd. at 54a. The district court further

based its conclusion that the State had “diligently prose-

cut[ed]” on its finding that the Final Stipulation, which was

incorporated into the state court’s final order, requires

substantial modifications to MMSD’s systems:

The Final Stipulation requires significant changes to

MMSD’s current operating structure at considerable

expense. MMSD must complete construction of a 7.4

mile, 20 foot diameter relief sewer on the northwest side

of Milwaukee to add 89 million gallons of storage

capacity by December 31, 2006, construct two additional

sewers adding 27 million gallons of conveyance capacity

by December 31, 2009, and complete over 100 treatment

plant and interceptor sewer upgrade projects. In

addition, MMSD is obligated to finalize its sanitary

sewer evaluation study and to require satellite munic-

ipalities to achieve a 5% reduction of infiltration and

inflow by December 31, 2002.

Id. at 54a-55a.

The district court alternatively held that res judicata barred

respondents’ claims, which arose out of the same occurrences

as those alleged by the State. /d. at 55a. Although respon-

dents chose not to participate in the State’s enforcement

action, the district court concluded that they were necessarily

in privity with the State. /d. “[I]n situations such as this,” the

court wrote, “the citizens’ action provision of the CWA casts

the citizen in the role of a private attorney general, thereby

satisfying the privity requirement.” /d.

4. The Court of Appeals’ Decision. The Seventh Circuit

reversed, concluding that the State’s filing of the 2001

Stipulation in Dane County was a “non-diligent prosecution.”

Pet. App. 12a.

The Seventh Circuit also rejected the district court’s res

judicata holding. Although the court agreed that the citizens

were litigating the same causes of action, the court held that

whether the citizens were in privity with the State required a

“detailed examination” of the State’s enforcement of the Act.

Privity, the court stated, depends on whether the State

diligently prosecuted, as that term is used in § 1365(b)(1)(B):

[I]n order for the state agency to be in privity with the

public’s interests, the state’s subsequently-filed gov-

ernment action must be a diligent prosecution. ... We

look to the language of the Act to find out what is

meant by “diligent prosecution.” Citizens’ suits are

barred “if the Administrator or State has commenced and

is diligently prosecuting a civil or criminal action in a

court of the United States, or a State to require

compliance with the standard, limitation, or order.” 33

U.S.C. § 1365(b)(1)(B) (emphasis added).

Id. at 22a (italics in original, bold added).

Applying this diligent prosecution approach to the privity

inquiry, the Seventh Circuit rejected the district court’s

conclusion that the Final Stipulation’s remedial plan

demonstrated diligence by the State. Ad. at 24a, 29a-32a. The

court refused to credit the Stipulation’s provision that the

parties, including the State, viewed it as “present[ing] a

comprehensive solution to sanitary sewer overflows, regard-

less of their cause . . . [and] resolv[ing MMSD’s] potential

liability for all alleged sanitary sewer overflows . . .” (Pet.

App. at 70a-71la). See Pet. App. 24a, 3la. The court’s only

justification for ignoring these statements is its unexplained

aspersion that they are “self-serving.” /d. at 24a, 31a.

Additionally, the Seventh Circuit, while saying it recog-

nized that the Act requires deference to the State’s enforce-

ment decisions, see id. at 23a-24a, presumed the opposite—

that the state-mandated compliance measures are not calc-

ulated to ensure compliance. Despite the State’s assurance in

the Stipulation that the corrective actions it required presented

a “comprehensive solution,” the court adopted the view that

the Final Stipulation’s compliance plan is “a stalling tactic

rather than a compliance strategy.” /d. at 32a.

To reach this opinion, the panel relied on misinter-

pretations of MMSD’s statements that the state-ordered

projects would “reduce” (rather than “eliminate”) overflows

and on its perception of “recent events”—i.e., events occur-

ring after the district court dismissed respondents’ action. /d.

at 30a-33a. In forming this perception, the court appears to

have looked to irrelevant hearsay—newspaper articles

reporting alleged overflows that occurred after the Final

Stipulation was executed but before its compliance programs

could be completed. See id. at 3a n.1, 6a n.3, 27a n.12, 3la

n.14. (These articles, which were published after the court of

appeals heard oral argument, are not in the record, and the

court afforded MMSD neither notice nor an opportunity to

respond to their content.)

Concluding that it could not “state with certainty .. .

whether the [Final] Stipulation is calculated to result in

compliance with the Act” (id. at 32a (emphasis added)), the

Seventh Circuit instructed ‘he district court to determine, after

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making a “detailed examination” of the State’s compliance

program, whether the State met the diligent prosecution

standard the Seventh Circuit reads into the Act (id. at 33a).

The court instructed further that the citizens must be allowed

to continue their collateral attack on the State’s compliance

measures unless the district court concludes that “there is no

realistic prospect that violations due to the same underlying

causes . . . will continue after the planned improvements are

completed.” /d.

On petitioner’s request for rehearing and rehearing en

banc, the court of appeals modified its description of the facts

but denied rehearing. Pet. App. 63a-64a.

REASONS FOR GRANTING THE PETITION

The Seventh Circuit’s decision requires federal courts inde-

pendently to examine the efficacy of a State’s chosen com-

pliance measures, even when the State obtains a final state

court order commanding those measures. Under the court’s

application of the diligent prosecution provision, res judicata

can only preclude such a suit (alleging the same violations as

the government), if the district court makes an independent

determination that the government’s remedial measures en-

sure that there is no “realistic prospect” of future violations.

This construction invites citizens unhappy with a State’s

choice of remedies to ask a federal court for a second opinion

on the merits of the State’s relief. The decision thus fails to

afford final state orders the full faith and credit to which they

are entitled under 28 U.S.C. § 1738 and misapplies the

diligent prosecution bar on citizen suits in a manner that

conflicts with the decisions of other courts of appeals.

This conflict in the construction of the citizen suit pro-

vision—a provision common.in environmental statutes’ —is a

3 See 15 U.S.C. § 2619 (Toxic Substances Control Act); 42 U.S.C.

§ 6972 (Resource Conservation and Recovery Act); 42 U.S.C. § 7604

matter of substantial importance. The Seventh Circuit’s

interpretation significantly expands the enforcement role of

citizen plaintiffs and federal courts at the expense of

government regulatory agencies. In so doing, the Seventh

Circuit, unlike the three other courts of appeals discussed

below, has failed to heed this Court’s warning in Gwaltney

that allowing citizen plaintiffs to use the federal courts to

second-guess government enforcement decisions risks

“undermin{ing] the supplementary role envisioned for the

citizen suit.” 484 U.S. at 60. Indeed, the Seventh Circuit

creates the very danger about which Gwaltney warned:

If citizens could file suit, months or years later, in order

to seek the civil penalties that the Administrator chose to

forgo, then the Administrator’s discretion to enforce the

Act in the public interest would be curtailed con-

siderably. The same might be said of the discretion of

state enforcement authorities. Respondents’ interpre-

tation of the scope of the citizen suit would change the

nature of the citizens’ role from interstitial to potentially

intrusive. We cannot agree that Congress intended such

a result.

Id. at 61.

Under the Seventh Circuit’s approach, no government

enforcement is final and authoritative until a federal court

takes up the role of environmental protection super-agency

and concludes that alleged violations “will be sufficiently

ameliorated by the proposed remedial projects.” Pet. App.

32a. Besides being inconsistent with the role Congress

intended for citizen suits, this construction is inconsistent

with this Court’s teachings that, when Congress leaves

enforcement of broad statutory mandates to government

agencies, courts should defer to those agencies’ reasonable

(Clean Air Act); 42 U.S.C. § 11046 (Emergency Planning and Com-

munity Right-to-Know Act).

eae ee A we 8

decisions regarding the best manner of ensuring compliance.

As this Court stated last Term in an analogous context:

If courts were empowered to enter general orders

compelling compliance with broad statutory mandates,

they would necessarily be empowered, as well, to

determine whether compliance was achieved—which

would mean that it would ultimately become the task of

the supervising court, rather than the agency, to work out

compliance with the broad statutory mandate, injecting

the judge into day-to-day agency management.

Norton v. S. Utah Wilderness Alliance, 124 S. Ct. 2373, 2381

(2004).

Consistent with these teachings, other federal courts,

including the First, Sixth, and Eighth Circuits, have held that

when a government enforcement agency orders compliance

measures, citizen suits have no continuing enforcement role.

Had this case arisen in one of those circuits, the State’s

prosecution would have been presumed “diligent” and would

have been preclusive of this citizen action, either by appli-

cation of res judicata or by application of the Act’s diligent

prosecution bar.

This Court should grant the petition to resolve this conflict

and address these important issues concerning when citizen

plaintiffs can wage a collateral attack in federal court against

a State’s enforcement of the CWA.

I. THE SEVENTH CIRCUIT’S CONSTRUCTION

OF THE DILIGENT PROSECUTION BAR TO

AUTHORIZE COLLATERAL ATTACKS ON

FINAL STATE COURT ORDERS VIOLATES 28

U.S.C. § 1738 AND CONFLICTS WITH DECI-

SIONS OF THE EIGHTH CIRCUIT.

A. The Seventh Circuit’s Misuse of the Act’s

Diligent Prosecution Provision to Limit

Application of Res Judicata Fails to Afford the

State Court’s Final Order the Full Faith and

Credit Required by 28 U.S.C. § 1738.

The Seventh Circuit held that the Milwaukee County

Circuit Court’s order enforcing the Final Stipulation could not

preclude respondents’ suit unless the stipulation’s compli-

ance measures constituted a diligent prosecution under

§ 1365(b)(1)(B). This holding erroneously extends federal

law to limit the effect of a state court order, in violation of the

full faith and credit statute. 28 U.S.C. § 1738.

Section 1365(b)(1)(B) does not free citizen suits from the

preclusive effects of state court orders. The Sixth Circuit

recently made this point: “The ‘diligent prosecution’

requirement . . . represents a limitation on a citizen’s ability to

file suit, not a limitation on the effect of subsequent

governmental action on a citizen’s right to maintain the suit.”

Ellis, 2004 WL 2382166, at *9.

The res judicata effect of final state court orders depends

instead on the preclusion law of that State. 28 U.S.C. § 1738

(judicial proceedings of any State “shall have the same full

faith and credit in every court within the United States .. . as

they have by law or usage in the courts of such State . . . from

which they are taken”). See Marrese v. Am. Academy of

Orthopaedic Surgeons, 470 U.S. 373, 380 (1985). The

Seventh Circuit recited this principle as if by rote, but it failed

to apply it. Instead, the court erroneously held that a state

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enforcement agency could only be in privity with citizens

suing to enforce the Act if the enforcement agency met the

Act’s diligent prosecution standard. See Pet. App. 22a.

By creating and importing a federal law privity principle,

the Seventh Circuit ignored Wisconsin law under which

persons with the same legal interests are held, as a matter of

law, to be in privity. See Gerhardt v. Estate of Moore, 139

Wis. 2d 833, 840-45, 407 N.W.2d 895, 898-900 (1987).*

Unlike the privity concept the Seventh Circuit created,

Wisconsin law holds that one in privity with a party to a final

order is bound by that order regardless of the party’s

diligence in litigating the claim. See id. at 843, 407 N.W.2d at

899 (res judicata applied to privy when settlement of prior

suit was “not unconscionable,” although, “in hindsight, [it

may] appear to be inadequate”).

Moreover, the Wisconsin Supreme Court has never applied

or adopted § 42(1)(e) of the RESTATEMENT (SECOND) OF

JUDGMENTS (1982), on which the Seventh Circuit relied for

its authorization to graft a federal diligent prosecution

analysis onto Wisconsin preclusion law. And, even if Wis-

consin would view that section of the Restatement as a

persuasive pronouncement of the common law, the Restate-

ment’s commentary makes clear that only a showing of

“collusion” or “grossly deficient” conduct is sufficient to

relieve citizens of judgments entered in actions prosecuted on

their behalf. /d., cmt. f. Application of that deferential stand-

ard would have required the court of appeals to affirm the

district court’s conclusion that respondents’ action is barred

by res judicata.

* Vacated on other grounds, 486 U.S. 1050 (1988), rev'd on other

grounds, 150 Wis. 2d 563, 441 N.W.2d 734 (1989).

B. In Conflict with the Eighth Circuit, the Seventh

Circuit Concluded that the Act’s Diligent Pros-

ecution Provision Governs Whether Citizens

Are in Privity with the Government.

In sharp contradiction to the Seventh Circuit’s decision, the

Eighth Circuit and other federal courts have concluded that

the Act itself puts citizens in privity with government

enforcement agencies. Reasoning from this Court’s premise

that the “central purpose” of the Act’s <*tizen suit provision is

to “permit[] citizens to abate pollution when the government

cannot or will not command compliance,” Gwaltney, 484

U.S. at 62, these courts conclude that the Act itself “casts the

citizen in the role of private attorney general,” EPA v. City of

Green Forest, 921 F.2d 1394, 1403 (8th Cir. 1990), a role that

entails privity with state and federal enforcers.”

Applying this principle and recognizing that Congress

made citizens only secondary enforcers of the Act, the Eighth

Circuit has reasoned that a government consent decree en-

tered in a later-filed enforcement action necessarily precludes

citizens from litigating the same alleged violations. In Green

Forest, the EPA commenced and settled CWA claims that

were the subject matter of a separate citizen action. /d. at

1400. The Eighth Circuit concluded that the CWA’s structure

required that it affirm the district court’s dismissal of the

earlier-filed citizen suit on res judicata grounds:

In view of the preeminent role that must be afforded the

EPA in enforcing CWA violations . . . we hold that it

> Cf. Citizens Legal Envt’l Network, Inc. v. Premium Standard Farms,

Inc., No. 97-6073-CV-SJ-6, 2000 WL 220464, at *11 (W.D. Mo. Feb. 23,

2000) (“Congress itself enumerated the circumstances under which

citizens and States are identical parties under the CWA.”); Jeffrey G.

Miller, Theme and Variations in Statutory Preclusion Against Successive

Environmental Actions by EPA and Citizens, 28 Harv. Envtl. L. Rev. 401,

423-24 (2004) (“The legislative history of the CWA [citizen suit] provi-

sion also anointed a citizen enforcer as a ‘private attorney general””).

was proper for the «istrict court to dismiss [the citizen’s]

CWA claims against Green Forest after the latter had

entered into a consent decree with the EPA. The EPA is

charged with enforcing the CWA on behalf of all

citizens. Since citizens suing under the CWA are cast in

the role of private attorneys general, as a practical matter

there was little left to be done after the EPA stepped in

and negotiated a consent decree.

Id. at 1404. Under the Eighth Circuit’s interpretation of the

CWA, citizens are free to sue only when federal and state

governments fail to act:

The Government, of course, as representative of society

as a whole, usually is in the best position to vindicate

societal rights and interests. In those instances where,

for whatever reasons, the Government fails or declines

to take action, the CWA allows citizens acting as private

attorneys general to fill the void.

i Id. at 1405 (quoting Hudson River Fishermen's Ass'n v.

County of Westchester, 686 F. Supp. 1044, 1052 (S.D.N.Y.

1988)).

In this case, respondents allege generalized harm to their

members’ enjoyment of Lake Michigan. C.A. S. App. 97-98.

Such alleged injuries to Wisconsin’s water resources assert

| violations of public rights—rights for which the State has

principal enforcement responsibility. See R.W. Docks & Slips

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‘ ® See also Ellis, 2004 WL 2382166, at *10 (“Congress has authorized

citizen suits only when environmental officials fail to exercise their

4 enforcement responsibility” (internal quote omitted) (emphasis in

H original)); Alaska Sport Fishing Ass’n v. Exxon Corp., 34 F.3d 769, 773

(9th Cir. 1994) (citizens’ CWA claim barred by State’s settlement of “suit

to recover damages for injury to a sovereign interest”); cf Satsky v.

Paramount Communications, Inc., 7 F.3d 1464, 1470 (10th Cir. 1993)

(“When a state litigates common public rights, the citizens of that state

are represented in such litigation by the state and are bound by the

judgment.”).

v. State, 2001 WI 73, 419, 244 Wis. 2d 497, 509, 628 N.W.2d

781, 788 (recognizing that State’s title to navigable waters

under the public trust doctrine “has been expansively

interpreted to safeguard the public’s use of navigable waters

for purely recreational purposes”); see also Hawaii v.

Standard Oil Co., 405 U.S. 251, 258 (1972) (recognizing the

“right of the State to sue as parens patriae to prevent or repair

harm to its ‘quasi-sovereign’ interests”); Georgia v. Tenn.

Copper Co., 206 U.S. 230, 237 (1907) (describing State’s

“quasi-sovereign” interest “in all the earth and-air within its

domain” (italics in original)); ///. Cent. R.R. v. Illinois, 146

U.S. 387, 452 (1892) (State holds title to the navigable waters

of Lake Michigan “‘in trust for the people of the State’’).

There is, moreover, no question whether the State took

action to enforce the Act in order to protect these public

rights. The State investigated the overflows and negotiated a

resolution that expressly provides for compliance with

MMSD’s permit. Indeed, even the Seventh Circuit acknowl-

edged that the State’s court-ordered Final Stipulation required

MMSD to undertake significant remedial actions.’ See Pet.

App. 5a-6a, 23a. Given the primacy accorded government

enforcement by the Act, that should be the end of the matter.

’ Therefore, this is not a case like Friends of the Earth, Inc. v. Laidlaw

Environmental Services, Inc., 528 U.S. 167 (2000), in which the State was

apparently complicit in the defendant’s effort to preclude a citizen suit.

See id. at 178 n.1. Moreover, the defendant in Laidlaw forfeited its res

judicata defense in the district court, see Friends of the Earth, Inc. v.

Laidlaw Envt'l Servs., Inc., 890 F. Supp. 470, 486 n.7 (D.S.C. 1995), and

this Court’s review was limited to whether the citizens had standing and a

justiciable claim; it did not address the potential preclusive effect of the

state court order. See 528 U.S. at 180-95. Laidlaw thus leaves open the

questions presented here on which the circuits are in conflict—whether a

State’s good faith efforts to obtain compliance through court-ordered

remedial projects is preclusive, as a result either of res judicata or the

Act’s diligent prosecution bar, of citizens’ efforts to obtain supplanting

federal court relief.

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Although it would be the end of the matter in the Eighth

Circuit, the Seventh Circuit remanded for a “detailed

examination” of the court-ordered Final Stipulation. While

paying lip service to the need to “giv[e] some deference to the

judgment of the State” (Pet. App. 33a), the court instructed

the district court to permit the citizens to proceed with

litigation designed to second-guess whether over $900

million in capacity expansion and operational upgrades will

“sufficiently ameliorate[]” “the systemic inadequacies of

MMSD’s sewerage facilities.” Pet. App. 32a-33a. In so

doing, the Seventh Circuit gives respondents free rein to

convince the district court to substitute its views (or the

Seventh Circuit’s fairly clear intimation of what those views

should be) for those of government regulators. Thus, on the

important issue of whether final orders in government

enforcement actions preclude citizen suit litigation of the

same alleged violations, the Seventh Circuit’s decision is

squarely at odds with the Eighth Circuit’s Green Forest

decision. See also Comfort Lake Ass’n, v. Dresel Con-

tracting, Inc., 138 F.3d 351, 356 (8th Cir. 1998) (“Even when

an agency enforcement action is not commenced until after

the citizen suit, final judgment in the agency’s court action

will be a res judicata or collateral estoppel bar to the earlier

citizen suit.”); Ellis, 2004 WL 2382166, at *8 (“The

touchstone of res judicata effect, however, is the consent

decree itself, which resolves all claims ‘through the date of

entry’ of the decree”). Cf Supporters to Oppose Pollution,

Inc. v. Heritage Group, 973 F.2d 1320, 1324 (7th Cir. 1992)

(Easterbrook, J.) (analogous citizen suit provision of the

Resource Conservation and Recovery Act “does not authorize

a collateral attack on the agency’s strategy or tactics’’).

Il. THE SEVENTH AND SECOND CIRCUITS’

INTERPRETATION OF THE DILIGENT PROS-

ECUTION PROVISION CONFLICTS WITH

DECISIONS OF OTHER CIRCUITS.

In adopting an interpretation of § 1365(b)(1)(B)’s diligent

prosecution provision that requires the district court to

second-guess the State’s choice of remedy, the Seventh

Circuit followed the Second Circuit’s decision in Atlantic

States Legal Foundation, Inc. v. Eastman Kodak Co., 933

F.2d 124 (2d Cir. 1991). There, after citizens sued Kodak for

violating the CWA, Kodak settled with the State, agreeing to

pay penalties and plead guilty to a state criminal violation in

exchange for d4 release from further criminal liability and

penalties. Jd. at 126. The district court granted Kodak

summary judgment in the citizen suit action, but the Second

Circuit reversed, reasoning that private enforcement could

proceed if there remained “a realistic prospect ‘that the

violations alleged . . . will continue.” /d. at 127.

Both the Second Circuit’s Kodak decision and the Seventh

Circuit’s decision below misinterpret the diligent prosecution

provision’s limitation on citizen suits. The purpose of the

diligent prosecution provision is to allow the State to

decide—without citizen suit interference—what remedies are

in the public’s best interest. See Gwaltney, 484 U.S. at 60;

Arkansas Wildlife Fed’n v. ICI Americas, Inc., 29 F.3d 376,

380 (8th Cir. 1994). The provision thus preserves the

Congressional preference for enforcement by experienced

government agencies by authorizing citizens to litigate only

after they give notice of their intent to sue and the State fails

to act, not when the State acts and some citizens believe it

should do more.

Recognizing this Congressional preference, other courts of

appeals presume that whenever the State procures affirmative

relief through litigation its prosecution is “diligent.” The

most recent example of this conflicting statutory interpre-

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tation is the Sixth Circuit’s decision in Ellis. There, citizens

commenced an action against a steel manufacturer and a slag

processor under the citizen suit provision of the Clean Air Act

(“CAA”) (a provision that in all material respects is the same

as § 1365). 2004 WL 2382166, at *3. Over a year after the

citizens commenced their suit, the EPA, which had earlier

begun an action to enforce the CAA against the same parties,

amended its complaint to add claims overlapping the citizens’

claims and filed proposed consent decrees resolving those

claims. /d. Like the Final Stipulation here, the consent

decrees in Ellis required the defendants to undertake a variety

of compliance measures to reduce the emission of pollutants.

Id. at *11. Also like the Final Stipulation here, the consent

decrees in Ellis “specifically contemplated some time for

implementing their terms.” Jd.

The district court in Ellis both approved the government’s

consent decrees and granted the citizens’ request for injunc-

tive relief, which, among other things, required increased

emission monitoring beyond that called for by the gov-

ernment. /d. at *10. In defending this award of relief on

appeal, the Ellis citizens, like the Seventh Circuit below,

relied on the Second Circuit’s holding in Kodak that “citizen

plaintiffs may maintain their lawsuits after the Government

has resolved claims regarding earlier violations when there is

a ‘realistic prospect’ of the alleged violations continuing.” Jd.

at *13. The Sixth Circuit disagreed.

Rejecting the principle that citizen suits may continue after

government enforcement, the Sixth Circuit stated, “[g]jener-

ally speaking, when the contours of a private plaintiffs suit

and the Government’s suit coincide . . . the former must be

dismissed.” Jd.at *11. The court also rejected the Second

(and now the Seventh) Circuit’s approach of requiring an

inquiry into the effectiveness of the government’s remedy.

Fidelity to the Act’s distribution of enforcement authority, the

court reasoned, requires that government decrees affording

prospective relief be “allowed to work” before being sub-

jected to challenge by citizens. See id. at *13. |

As the Sixth Circuit explained, once a government agency

enforces environmental laws against an alleged violator, the

structure and purposes of those laws require a moratorium on

further citizen litigation of the same violations in order to

allow time for the alleged violator to carry out the govern-

ment’s remedial directives. See id. at *11-12. If a citizen

then reasonably believes that the government’s remedies are

proving inadequate, it must give a new notice of intent to sue

based on the post-consent decree violations. /d. This con-

struction is consistent with the Act’s structure and purposes

because it affords the defendant an opportunity to address any

claimed inadequacies before having to defend additional

litigation. /d.

The Seventh Circuit’s decision, in contrast, provides

MMSD no similar opportunity. Instead, MMSD must litigate

immediately whether the compliance measures the State has

directed it to implement will “sufficiently ameliorate[]” “the

systemic inadequacies of MMSD’s sewerage facilities.” Pet.

App. 32a-33a.

The Sixth Circuit is not alone in prohibiting what the

Seventh Circuit here allows. The First Circuit similarly

prohibited citizens from collaterally attacking the effective-

ness of government remedies in North & South Rivers

Watershed Association v. Town of Scituate, 949 F.2d 552,

557 (1st Cir. 1992). There, to resolve a claim that the town of

Scituate was violating the CWA by releasing unpermitted

wastewater, the Massachusetts Department of Environmental

Protection issued an order requiring the town to “(1)

immediately prohibit any new connections to its sewer

system; (2) take all steps necessary to plan, develop and

construct new wastewater treatment facilities; and (3) begin

extensive upgrading of the facility subject to [the

Department’s] review and approval at interim stages... .”

Id. at 553-54. Two years later, citizens sued the town,

alleging violations of the Act based on the same discharges

that formed the basis for the State’s order. /d. at 554. The

citizens argued that they were entitled to demonstrate that the

State had not done enough to enforce the order and that its

action constituted “diligent non-prosecution.”® Jd. at 557

(emphasis added) (internal quotation omitted).

In affirming the district court’s dismissal, the First Circuit

reasoned that, because government enforcement enjoyed

statutory primacy, the State’s order, which addressed the very

violations at issue, was entitled to great deference: “Where

an agency has specifically addressed the concerns of an

analogous citizen’s suit, deference to the agency’s plan of

attack should be particularly favored.” /d. Given this

deferential treatment, the First Circuit had little difficulty

concluding that the order “represents a substantial, considered

and ongoing response to the violation, and that the

[Department’s] enforcement action does in fact represent

diligent prosecution.” Jd.

Following the First Circuit, the Eighth Circuit in Arkansas

Wildlife Federation, 29 F.3d 376, also held that a consent

order issued by a government enforcement agency bars a

citizen suit based on the same alleged CWA violations.’ The

citizens in Arkansas Wildlife attempted a collateral attack on

the State’s choice of remedies, contending that the State’s

prosecution was not diligent because it had “failed to address

[defendant] ICI’s violations, gave ICI repeated extensions for

compliance, and assessed insignificant amounts of civil

® Like state civil or criminal actions, state administrative actions are

preclusive of citizen suits if they are “diligently prosecuted.” See 33

U.S.C. § 1319(g)(6)(A).

° Like North & South Rivers, Arkansas Wildlife addressed whether

a State’s administrative action was diligently prosecuted under

§ 1319(g)(6)(A).

penalties. ...” /d. at 380. In affirming the district court’s

dismissal of the citizens’ suit, the Eighth Circuit (like the

First and Sixth Circuits) recognized that citizen suits “are

proper only when the federal, state, or local agencies fail to

exercise their enforcement responsibility, and that such suits

should not considerably curtail the governing agency’s

discretion to act in the public interest.” /d. “It would be

unreasonable and inappropriate,” the court concluded, “to

find failure to diligently prosecute simply because ICI

prevailed in some fashion or because a compromise was

reached.” /d.

The conflict among these circuits’ construction of the

citizen suit provision is plain. The First, Sixth, and Eighth

Circuits hold that citizen suits must stop once a government

enforcement agency prosecutes the alleged violations and

requires a defendant to perform remedial measures. The

Second and Seventh Circuits, on the other hand, allow citizen

suits to proceed under those circumstances unless a district

court independently determines that the relief obtained by the

government wili ensure that there will be no continuing

violations. This latter approach affords far less deference to

enforcement agencies, instead requiring the district court to

function as a sewerage engineer and predict the probable

effect of billion dollar sewer construction projects. District

courts are ill equipped to make these types of predictions. Cf

Baltimore Gas & Electric Co. v. Natural Resources Defense

Council, Inc., 462 U.S. 87, 103 (1983) (“When reviewing this

kind of scientific determination . . . a reviewing court must

generally be at its most deferential’).

Moreover, under the Seventh Circuit’s interpretation of the

Act, citizen plaintiffs, like respondents, may choose to

eschew intervention in the government’s enforcement

proceedings in favor of asking a federal court to make an

after-the-fact review of the government’s choice of remedial

measures. The Seventh Circuit has thus construed the Act to

provide citizen plaintiffs exactly the intrusive role in

government enforcement that this Court has held inconsistent

with Congress’s intent and the Act’s structure and purpose.

See Gwaltney, 484 U.S. at 60-61.

One thing is clear. Had the court below applied the

deferential approach taken by Ellis, North & South Rivers and

Arkansas Wildlife to determine whether the State’s

prosecution was diligent, it would have affirmed. As in those

cases, the record leaves no doubt that the order incorporating

the Final Stipulation requires MMSD to adopt a substantial

compliance program. It cannot be said, and the Seventh

Circuit did not say, that the State “failed to take action.”

Thus, under the First, Sixth, and Eighth Circuits’ construction

of the Act, the State’s final court order would bar respondents

from continuing to litigate claims the State resolved.’

'° Many lower federal courts have also reasoned that the Act requires

deference to government agencies’ efforts to enforce the Act and presume

the diligence of those agencies in prosecuting violations. See, e.g., Clean

Air Council v. Sunoco, Inc., No. 02-1553 GMS, 2003 WL 1785879, at *5-

6 (D. Del. Apr. 2, 2003) (a citizen suit is barred unless the government’s

action is “totally unsatisfactory”); Cmty. of Cambridge Envt’l Health &

Cmty. Dev. Group v. City of Cambridge, 115 F. Supp. 2d 550, 554 (D.

Md. 2000) (“Most courts considering the diligence of a state or federal -

prosecution have exhibited substantial deference for the agency’s

process.”); Williams Pipe Line Co. v. Bayer Corp., 964 F. Supp. 1300,

1324 (S.D. Iowa 1997) (the CWA calls for a deferential approach that

does not “circumscribe” the enforcement agency’s ability to impiement its

expert judgment on corrective measures); Sierra Club v. Colo. Ref. Co.,

852 F. Supp. 1476, 1483 (D. Colo. 1994) (affording deference to the

State’s plan of attack); Connecticut Coastal Fishermen's Ass'n v. Rem-

ington Arms Co., 777 F. Supp. 173, 183 (D. Conn. 1991) (“The court must

presume the diligence of the state’s prosecution absent persuasive

testimony that the state has engaged in a pattern of conduct in its

prosecution that could otherwise be considered dilatory, collusive or

otherwise in bad faith.”) (internal quotation marks omitted) (quoting

Connecticut Fund for Env’t v. Contract Plating Co., 631 F. Supp. 1291,

* * *

The Seventh Circuit has allowed respondents to wage a

collateral attack on state-ordered remedial projects based on

nothing more than “concerns” that those “remedial projects

[might] . . . turn out to be too little, too late” (Pet. App. 32a

n.15). The decision thereby leaves practically all state-

mandated remedial orders open to annulment by federal

courts acting at the request of citizen plaintiffs who choose to

sit out state court proceedings. This expansion of the citizens’

role interferes with government enforcement of the Act,

improperly assigns to federal courts the task of environmental

policymaking, and conflicts with decisions of the First, Sixth,

and Eighth Circuits.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

JAMES M. CARAGHER

LINDA E. BENFIELD

G. MICHAEL HALFENGER *

KATHERINE E. LAZARSKI

FOLEY & LARDNER LLP

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

(414) 271-2400

* Counsel of Record Attorneys for Petitioner

1293 (D. Conn. 1986), aff'd in part, rev'd in part, 989 F.2d 1305 (2d Cir.

1993)). |

APPENDICES

TABLE OF CONTENTS

Page

APPENDIX A

Opinion, U.S. Court of Appeals for the Seventh

Circuit, Friends of Milwaukee's Rivers vs. MMSD,

No. 03-3809 (September 2, 2004) ........ssessesessereeeeees la

APPENDIX B

Decision and Order, U.S. District Court for the

Eastern District of Wisconsin, Friends of

Milwaukee’s Rivers v. MMSD, No. 02-C-0270

(September 29, 2003) .......ccsesesessesesereseeetenenenereneeseens 34a

APPENDIX C

Oral Disposition (Transcript) before The Hon. Charles

N. Clevert, U.S. District Court For the Eastern

District of Wisconsin, Friends of Milwaukee's

Rivers v. MMSD, No. 02-C-0270 (September 29,

2003).....c.sscsccssscsssecssesscessesssencscsserscssssseenecscssensasscsensoes 58a

APPENDIX D

Opinion and Order denying Petition for Rehearing,

U.S. Court of Appeals for the Seventh Circuit,

Friends of Milwaukee’s Rivers v. MMSD, No. 03-

3809 (October 1, 2004)........sscseseeseeerereeeenensneretenenes 63a

APPENDIX E

28 United States Code § 1738—State and Territorial

States and Judicial Proceedings, Full Faith and

CIEE oa iciticcasenssestaninrainnsornnsdienassnviisseoinaniaseenensanainanins 65a

APPENDIX F

33 United States Code § 1365—Citizen Suits............... 66a

APPENDIX G

Stipulation and Order, State of Wisconsin Circuit

Court, Milwaukee County, State of Wisconsin v.

MMSD, No. 02-CV-2701 (May 29, 2002).....:+:++++0+++ 70a

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

No. 03-3809

FRIENDS OF MILWAUKEE’S RIVERS and

LAKE MICHIGAN FEDERATION,

Plaintiffs-Appellants,

MILWAUKEE METROPOLITAN SEWERAGE DISTRICT,

Defendant-Appellee.

March 29, 2004, Argued

September 2, 2004, Decided

OPINION

Before CUDAHY, ROVNER and DIANE P. WOOD,

Circuit Judges.

CUDAHY, Circuit Judge. For decades, the defendant Mil-

waukee Metropolitan Sewerage District (MMSD) and its

predecessor organization have, for various reasons, occa-

sionally discharged untreated sewage directly into Lake

Michigan and Milwaukee’s rivers. The discharges were

reduced in number and volume after MMSD’s system’s

capacity was expanded by the Deep Tunnel, which was com-

pleted in 1994. However, discharges from sanitary sewers

(which violate the Clean Water Act and MMSD’s discharge

permit) have persisted despite expectations that the Deep

Tunnel would virtually eliminate them.

The plaintiffs, Friends of Milwaukee’s Rivers and the Lake

Michigan Federation (collectively, the plaintiffs), perceived a

lack of action by the State of Wisconsin and MMSD to

eliminate these persistent sanitary sewer discharges. In 2001,

the plaintiffs filed a notice of intent to bring a citizens’ suit

under the Federal Water Pollution Control Act (the Clean

Water Act or the Act), 33 U.S.C. §§ 1251 et seg., and in the

early hours of March 15, 2002, they brought suit in federal

court. The State of Wisconsin also filed suit later on the same

day in Milwaukee County court, and within a few months, it

reached a settlement with MMSD. The centerpiece of the

consent agreement resulting from the Milwaukee County

action provided, for additional expenditures of more than $

900 million on several projects to further increase the

capacity of MMSD’s sewer system.

MMSD subsequently moved to dismiss the plaintiffs’ fed-

eral suit as barred because the State of Wisconsin had taken

judicial and administrative enforcement actions to diligently

prosecute its violations of the Act. The district court, finding

that the State of Wisconsin had indeed diligently prosecuted

the violations alleged by the plaintiffs, dismissed for lack of

subject matter jurisdiction because the suit was barred by the

terms of the Clean Water Act. In the alternative, the district

court found that the plaintiffs’ suit would be barred by res

judicata. The plaintiffs appeal both of these findings, and for

the reasons that follow, we reverse.

I. Background

MMSD is a state-chartered government agency providing

wastewater services to 28 municipalities in southeast Wis-

consin. MMSD’s 420-square-mile service area includes all

cities and villages within Milwaukee County (except the City

of South Milwaukee), and all or part of 10 municipalities or

sanitary districts in the surrounding counties of Ozaukee,

Washington, Waukesha and Racine. Two types of munici-

pality-owned sewer systems feed into MMSD’s interceptor

sewers: separate sewers and combined sewers. Separate

sewers have separate pipes for storm water (which empties

directly into area waterways) and sanitary waste (which

empties into MMSD’s system where it can be treated).

Combined sewers, which are mostly older sewer systems, are

designed to carry both storm water and sanitary waste in the

same pipes.’ MMSD’s discharge permit prohibits over-

flows from separate sanitary sewers except in very limited

situations, though up to six discharge events are allowed

annually from combined sewers as long as Lake Michigan’s

water quality does not suffer. (MMSD’s Supp. Appx. at 142.)

' There are advantages and disadvantages to combined sewer systems.

The disadvantages were dramatically illustrated during the month of May

2004, when heavy rainfall resulted in the dumping of “an unprecedented

4.6 billion gallons of raw sewage” directly into Lake Michigan and

Milwaukee area streams and rivers. Marie Rohde and Steve Schultze,

Sewage Dumped in May: 4.6 Billion Gallons, MILWAUKEE J. SEN-

TINEL, May 29, 2004, at IA (emphasis added). The State accused MMSD

of multiple violations for the portion of the 4.6 billion gallons attributable

to separated sewers carrying only sanitary waste, which accounted for 500

million gallons. See Steve Schultze and Marie Rohde, Sewerage District

Denies Blame, MILWAUKEE J. SENTINEL, July 3, 2004, at IB. The remain-

ing 4.1 billion gallons were attributable to discharges from combined

sewer systems. Wisconsin’s Department of Natural Resources has

recently referred MMSD (along with 29 southeastern Wisconsin

communities) to Wisconsin’s Department of Justice for possible civil

litigation. See Larry Sandier, DNR Calls for Legal Action in MMSD

Dumps, MILWAUKEE J. SENTINEL, August 3, 2004, at IB.

The advantages of combined sewer systems may be less obvious but

should still be mentioned. In MMSD’s combined sewer system, the often

highly-contaminated runoff from most rainstorms and snowstorms is

captured in the system and treated before being discharged. This allows

Lake Michigan to be spared from “vast amounts of road salt, heavy

metals, oil and grease” in all but the heaviest storms. George Meyer,

Separating Sewers Won’t Do the Job, MILWAUKEE J. SENTINEL, June 20,

2004, at 3J. Discharges from combined sewers are also diluted with storm

water, which is estimated by WisDNR to make up 90% of overflows,

while discharges from separated sewers involve undiluted sewage. See id. ;

Lee Bergquist, Lake Can Take Some Pollution, But Experts Still Worry

About Overflows, Runoff, MILWAUKEE J. SENTINEL, July 12, 2004, at 1A.

a as i es ey 7

Nearly thirty years ago, the State of Wisconsin (State)’

entered into a stipulation (1977 Stipulation) with the

predecessor organization of the defendant, MMSD. This

stipulation resolved litigation that had commenced in 1976

in the Dane County Circuit Court over violations of

MMSD’s Wisconsin Pollutant Discharge Elimination System

(WPDES) permit. The 1977 Stipulation acknowledged more

than 60 historic violations of MMSD’s WPDES permit and

the Federal Water Pollution Control Act (the Clean Water Act

or the Act), 33 U.S.C. §§ 1251 et seq., but it did not require

MMSD to pay any penalties or fines. Instead, MMSD was

required to spend nearly $2 billion over the following 20

years on improvements to several woefully substandard

aspects of MMSD’s sewage treatment system. The main

improvement was a “Deep Tunnel,” which came on line in

1994. The Deep Tunnel increased the system’s capacity by

allowing up to 405 million gallons of untreated sewage to be

temporarily stored during periods of heavy rain and then

pumped back into MMSD’s treatment facilities and treated

before being discharged. Heavy rainfall taxes the system’s

capacity due to Milwaukee’s combined sewers as well as

improperly connected downspouts/drainage and leaks in the

system that allow runoff and ground water to infiltrate.

> Wisconsin has a “stepped” enforcement process that begins with

meetings between the Department of Natural Resources (WisDNR) and

the violator or with the issuance of a warning letter (Notice of Non-

Compliance). (Plaintiffs’ Supp. Appx. at 278.) If the conditions causing

the violation are not resolved, WisDNR can issue a formal notice of

violation. /d. If the violator does not take corrective action, WisDNR

refers the matter to the Wisconsin Department of Justice (WisDOJ) to

initiate judicial action with which WisDNR remains involved. (MMSD’s

Br. at 39.) For ease of reference, when discussing judicial and admin-

istrative actions taken by Wisconsin state agencies against entities that

violate the Act, we will refer to the Wisconsin Department of Natural

Resources (WisDNR), the Wisconsin Attorney General and the Wisconsin

Department of Justice (WisDOJ) generically as “the State.” In other con-

texts and as necessary, the agencies will be referred to individually.

Although the Deep Tunnel undeniably has reduced the

number and volume of both sanitary sewer overflows (SSOs)

and combined sewer overflows (CSOs), it has not fulfilled its

intended goal of virtually eliminating SSOs. (Plaintiffs’ Sep.

Appx. at 211.) Contrary to expectations, there have been an

average of 4.9 SSOs and 3.0 CSOs annually since the Deep

Tunnel went into effect (some of which were not related to

the Deep Tunnel), resulting in discharges by MMSD totaling

936.7 million gallons and 12.3 billion gallons respectively

since 1994 (as of a 2002 audit). /d. at 212.

The plaintiffs grew concerned about these continuing

discharges and the State’s apparent lack of enforcement

action. On July 11, 2001, they sent to MMSD the required

notice of intent to bring a citizens’ suit under the Clean Water

Act for violations of MMSD’s discharge permit that had

occurred after the Deep Tunnel came on line, with copies to

all necessary state and federal agencies. (Plaintiffs’ Sep.

Appx. at 105-09.) Five days later, the State notified MMSD

that several of the SSOs identified in the plaintiffs’ letter were

violations of MMSD’s WPDES permit and the Act. One day

prior to the expiration of the 60-day notice period prescribed

by the Act, the State and MMSD filed a stipulation (2001

Stipulation) with the Dane County Circuit Court as part of the

1976 litigation. Neither the plaintiffs nor the public were

provided any opportunity to comment on the 2001 Stipulation

prior to its filing. The 2001 Stipulation required MMSD, at an

estimated total cost of $ 907 million, to complete three new

deep tunnel projects (increasing storage capacity by an

additional 116 million gallons, or 30%), to complete all

activities contemplated by the approved 2010 Facilities Plan

by various fixed dates, to complete planning for the 2020

Facilities Plan by a fixed date and to complete and imple-

ment a Capacity, Management, Operation and Maintenance

(CMOM) self-auditing program.’ (MMSD’s Br. at 13.) How-

ever, the Dane County judge refused to approve the 2001

Stipulation, saying, “It does seem to me that at some point a

court’s involvement in a case must end. It also seems to me

that this case has gone well beyond that point.” (Plaintiffs’

Short Appx. at 9,*)

Subsequently, the State and MMSD agreed to meet with

the plaintiffs to discuss their concerns about the proposed

2001 Stipulation. The State agreed, at the plaintiffs’ request,

to hold off filing suit against MMSD until March 15, 2002,

while settlement negotiations took place. (MMSD’s Br. at

14.) However, the agreement failed to include a provision that

the State be allowed to file first on that date. After the

negotiations failed, the plaintiffs filed their suit at 7:57 a.m.

on March 15, 2002 in the Eastern District of Wisconsin,

alleging 165 SSOs from various locations during the period

from January 1, 1995 to September 25, 2001. Later that same

day, the State filed suit in Milwaukee County Circuit Court,

counting the same 165 SSOs as 13 SSO events in accordance

with the terms of MMSD’s permit and finding eight of the 13

to be violations of MMSD’s permit and three to require

additional investigation. (MMSD’s Br. at 15 n.6; PSA at

7.) The plaintiffs, under Wisconsin law, could have re-

quested to intervene in the State’s suit but did not do so. Wis.

Stat. § 803.09.

> MMSD notes that the Environmental Protection Agency acknowl-

edges that “even municipal collection systems operated in an exemplary

fashion may experience unauthorized discharges under exceptional cir-

cumstances.” (MMSD’s Br. at 10 n.4.) Also, the EPA recently advocated

reduction or elimination of penalties for municipalities that adopted the

CMOM program. /d. However, the Milwaukee Journal Sentinel recently

reported that a top EPA official characterized MMSD as “the worst

dumper on Lake Michigan and among the worst on the Great Lakes.”

Schultze and Rohde, supra note 2, at IB.

* For ease of reference, citations to the Plaintiffs’ Short Appendix will

be designated by “PSA at__.”

On May 29, 2002, while the plaintiffs’ suit was pending,

the Milwaukee County Circuit Court, at the request of the

State and MMSD, entered a stipulation (2002 Stipulation)

that settled the State’s lawsuit. The 2002 Stipulation was

“substantially the same” as the 2001 Stipulation: although the

compliance schedule had been compressed, the scope of the

work remained the same. (MMSD’s Br. at 16.) The plaintiffs

have several problems with the 2002 Stipulation, the main

problem apparently being the lack of any penalties for past

violations or provisions for penalties in the event of future

violations, though other flaws are mentioned. (See, e.g.,

Plaintiffs’ Br. at 13-14, 32; MMSD’s Supp. Appx. at 87-95.)

The 2002 Stipulation, like the 2001 Stipulation, requires

MMSD to undertake various improvement projects which

will cost taxpayers $ 907,000 through 2010. It also rescinded

the 2001 Stipulation that the State and MMSD had pre-

viously filed.

Shortly thereafter, MMSD moved to dismiss the plaintiffs’

complaint. An Audit Report subsequently released by the

Wisconsin Legislative Audit Bureau (2002 Audit Report)

(Plaintiffs’ Sep. Appx. at 205-301) highlighted several factors

contributing to MMSD’s continuing CSOs and SSOs, in-

cluding large storms in recent years; capacity issues in the

Deep Tunnel and MMSD’s sewers and treatment facilities;

and operational policies that have exacerbated overflows. Jd.

at 231. But the district court nonetheless found that the State

had commenced and diligently prosecuted judicial and

administrative actions against MMSD, resulting in a lack of

subject matter jurisdiction that barred the plaintiffs’ citizens

suit from proceeding. In the alternative, the district court

found that res judicata would bar the litigation. The plaintiffs

now appeal both of these findings.

II. Discussion

The plaintiffs brought this suit seeking a declaratory judg-

ment, injunctive relief, civil penalties and costs and fees

under the citizens’ suit provision of the Clean Water Act. The

district court had federal question jurisdiction pursuant to §

505(a) of the Act. 33 U.S.C. § 1365(a); 28 U.S.C. § 1331. We

have jurisdiction pursuant to 28 U.S.C. § 1291 because the

district court entered a final judgment dismissing this case

due to a lack of subject matter jurisdiction.

We review de novo the district court’s dismissal of the

plaintiffs’ suit for lack of subject matter jurisdiction. Transit

Express, Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir.

2001). In considering a motion to dismiss for lack of subject

matter jurisdiction, we must accept the complaint’s well-

pleaded factual allegations as true and must draw all rea-

sonable inferences from those allegations in plaintiffs’ favor

as the non-moving party. /d. We also employ the de novo

standard in reviewing the dismissal of an action on res

judicata grounds. 490] Corp. v. Town of Cicero, 220 F.3d

522, 527 (7th Cir. 1999).

The Clean Water Act provides that “any citizen may

commence a civil action on his own behalf-(1) against any

person .. . who is alleged to be in violation of (A) an effluent

standard or limitation under this [Act].” 33 U.S.C. § 1365(a).

Pursuant to the Act, no action may be brought “prior to sixty

days after the plaintiff has given notice of the alleged

violation (i) to the Administrator, (ii) to the State in which the

alleged violation occurs, ad (iii) to any alleged violator of

the standard, limitation, or order.” /d. at § 1365(b)(1)(A).

Citizens are also barred from bringing suit “if the Admin-

istrator or State has commenced and is diligently prosecuting

a civil or criminal action in a court of the United States, or a

State to require compliance with the standard, limitation, or

order.” /d. at § 1365(b)(1)(B). In addition, any violation “with

respect to which a State has commenced and is diligently

prosecuting an action under a State law comparable to” the

subsection of the Act addressing administrative actions “shall

not be the subject of a civil penalty action.” 33 U.S.C.

§ 1319(g}(6)(A). However, this limitation is inapplicable to a

citizens’ suit that is filed before the State commences

administrative action. /d. at § 1319(g)(6)(B).

Here, the plaintiffs gave the required written notice to

MMSD, to the United States Environmental Protection

Agency (United States EPA) and to the State of its intent to

sue, and the plaintiffs’ complaint was filed more than 60 days

after notice was given. Whether the State had “commenced

and [was] diligently prosecuting a civil...action” or admin-

istrative action at the time the plaintiffs filed suit, and if not,

whether res judicata nonetheless bars the plaintiffs’ suit, are

the issues we must resolve.

A. Did WisDNR timely commence and diligently prose-

cute a civil or administrative action?

In determining whether the plaintiffs’ suit was barred under

§ 1365(b)(1)(B), the district court discussed three of the

State’s judicial actions: the 1977 Stipulation (which arose out

of the 1976 litigation and addressed earlier violations); the

2001 Stipulation (which was filed as an attempted contin-

uation of the 1976 litigation to address the violations alleged

by the plaintiffs but was not accepted by the Dane County

court and was later rescinded by the 2002 Stipulation); and

the 2002 Stipulation (which ended litigation that had been

filed in Milwaukee County court later on the same day that

the plaintiffs filed suit in district court). The district court also

examined whether administrative actions undertaken by the

State barred the plaintiffs’ suit for civil penalties under §

1319(g). We will consider in turn each of these four hurdles

facing the plaintiffs.

1. The 1976 litigation and 1977 Stipulation

No one disputes (or could dispute) that the 1976 litigation

in Dane County and the resulting 1977 Stipulation occurred

or were commenced before the plaintiffs’ suit was filed

10a

nearly 25 years later. However, whether these actions also

qualify as a diligent prosecution of violations that occurred

after all work contemplated under the 1977 Stipulation had

been completed is another matter. The plaintiffs argue that the

1977 Stipulation was over and done with by 1996 at the

latest. But even if we assume that the 1976 action were still

“open” to receive the filing of the 2001 Stipulation, the 1977

Stipulation could not qualify as a diligent prosecution of the

violations alleged by the plaintiffs since the projects

mandated by the 1977 Stipulation obviously did not prevent

those violations from occurring. ;

Whether the 1976 litigation and 1977 Stipulation con-

stituted a diligent prosecution of the historical violations that

had occurred prior to the 1976 litigation and the contemplated

violations that were going to continue to occur until work was

completed under the 1977 Stipulation is not at issue here.

Logically, however, the 1976 litigation and 1977 Stipulation

cannot constitute diligent prosecution of violations that have

occurred (or continued to occur) after all work under the 1977

Stipulation had been completed. If the violations alleged by

the plaintiffs occurred because of lingering problems that the

1977 Stipulation failed to resolve, the 1977 Stipulation cannot

have been a diligent prosecution of the circumstances causing

those violations. If, on the other hand, the violations alleged

by the plaintiffs occurred because of circumstances unrelated

to those that the !977 Stipulation was intended to compre-

hensively address, then the 1976 action cannot possibly have

been a diligent prosecution of violations due to circumstances

unknown and unlitigated at that time. Either way, the 1976

litigation and 1977 Stipulation do not amount te diligent

prosecution of the violations alleged by the plaintiffs.

2. The 2001 Stipulation

The 2001 Stipulation was filed as part of the 1976 litigation

in Dane County Circuit Court before the 60-day notice period

had expired and before the plaintiffs filed their suit. But the

PRON A Sars? ARP Y ALL VIE CIM Oe Te

lla

Dane County judge refused to enter the 2001 Stipulation, and

the parties later rescinded it by the: 2002 Stipulation, which

was entered as part of a separate action instituted in Mil-

waukee County Circuit Court. The district court concluded

that the Dane County court had retained jurisdiction over the

1977 Stipulation and that the 2001 Stipulation was a dili-

gently prosecuted continuation of the same action. The

plaintiffs argue that the Dane County court lacked continuing

jurisdiction because all work contemplated under the 1977

Stipulation was long completed and that the flaws in the 2001

Stipulation render it non-diligent.

With respect to the timeliness of the action, if the State had

chosen to file a brand new /awsuit rather than a new consent

order in a very old lawsuit, that lawsuit would have been

timely commenced. And if the Dane County judge had

approved the 2001 Stipulation after it was filed, the 2001

Stipulation would also have been a timely commenced

judicial enforcement action. The fact that the 2001 Stipulation

was never approved by the court and was later rescinded does

not affect its timeliness, which is determined by the date of

filing. Connecticut Fund for the Environment, Inc. v.

° For the purposes of deciding whether the 2001 Stipulation was a

timely commenced action, under circumstances such as these, we are

reluctant to use the initiation of an older judicial action to back-date the

commencement of an action under the Clean Water Act as suggested by

MMSD. (MMSD’s Br. at 27-28.) If a state agency were allowed to

indefinitely continue an enforcement action so as to ensure that it always

has on the back burner a court action that has been “commenced” before

any later citizens’ suit could be filed, that arrangement would eviscerate

the timely commencement requirement because the agency could wait as

long as it liked before responding to any citizens’ suit. Using the earlier

commencement date might also indicate a lack of diligence in resolving

problems known about for years. See New York Coastal Fishermen's

Ass'n v. New York City Dep’t of Sanitation, 772 F. Supp. 162, 168

(S.D.N.Y. 1991) (finding that prosecution was not diligent where orders

were amended to extend deadlines and a target completion date of 1995

was “simply too long to rectify a problem that has been known about

12a

Upjohn Co., 660 F. Supp. 1397, 1404 (D. Conn. 1987) (“The

court must apply an inflexible rule which deteimines

jurisdiction from the time of filing the complaint.”). But the

court’s non-approval does render the 2001 action a non-

diligent prosecution.° Even though the 2001 Stipulation may

have been intended to address “dry and wet weather

overflows, and mandate[] three extensions to the Deep

Tunnel” (PSA at 19), the fact that the Dane County judge

refused to enter the 2001 Stipulation (whether on a

jurisdictional basis or otherwise) robbed that Stipulation of

any legally binding effect. Even if the 2001 Stipulation had

bound the parties, it was rescinded a few months later by the

2002 Stipulation, which resolved a separate judicial action

filed in a different court. The fact that the 2002 Stipulation

was very similar to the 2001 Stipulation does not equip the

2001 Stipulation with the teeth required to qualify on its own

as a diligent prosecution. A judicial action that never resulted

in any legally binding agreement to resolve the violations

alleged by the plaintiffs (and was rescinded before MMSD

took any actions toward complying with it) is not a diligent

prosecution.

3. The 2002 litigation and 2002 Stipulation

The plaintiffs argue that a timely commenced action must

be filed prior to a citizens’ suit in order for it to have

potentially preclusive effect under the Act. Since the

plaintiffs filed their suit several hours before the state’s suit

was filed, they argue that the State’s 2002 litigation was not

timely commenced. MMSD counters that the State agreed to

postpone filing its complaint until March 15, 2002 at the

plaintiffs’ request, in order to give the parties a chance to

since 1983”). Here, the 2001 Stipulation was filed before the 60-day

window expired or a citizens’ suit was filed and was therefore timely.

° It is also troubling that the 2001 Stipulation was filed without oppor-

tunity for notice and comment by the public, including the plaintiffs.

13a

negotiate a satisfactory resolution. The parties did not in-

corporate into their agreement to postpone filing their

lawsuits any provision governing which party would be

considered to have filed first. The district court did not weigh

in on this issue, finding that the State’s 2002 suit was filed

several hours after the plaintiffs’ suit, and apparently

concluding that it could not qualify as a timely commenced

judicial action. (PSA at 21.)

We are relieved to note that races to the courthouse to file

Clean Water Act complaints, such as the one which took

place here, are rare, though the caselaw relating to such

situations is correspondingly sparse. When there has been an

agreement between the parties that the citizens would file

first, the citizens’ suit has been held not to be barred by a suit

filed by the state agency later the same day. Chesapeake Bay

Found. v. Am. Recovery Co., 769 F.2d 207, 207-08 (4th Cir.

1985). Similarly, where the state agency had asked the

citizens to postpone filing their suit, the earlier-filed citizens’

suit was not barred. Long Island Soundkeeper Fund, Inc. v.

New York City Dep’t of Envtl. Prot., 27 F. Supp. 2d 380, 382-

83 (E.D.N.Y. 1998). MMSD argues that these cases are

inapposite here because the State postponed filing its suit at

the plaintiffs’ request and not the other way around. How-

ever, these decisions (and others) arrived at their holdings by

employing a literal, inflexible interpretation compelled by the

clear and unambiguous language of the Act. See Chesapeake

Bay Found., 769 F.2d at 208 (‘This latter statutory bar is an

exception to the jurisdiction granted in subsection (a) of

§ 1365 and jurisdiction is normally determined as of the time

of the filing of a complaint. Moreover, the verb tenses used in

subsection (b)(1)\(B) and the scheme of the statute demon-

strate that the bar was not intended to apply unless the

government files suit first (and is diligently prosecuting such

suit).”); Long Island Soundkeeper Fund, 27 F. Supp. 2d at

383 (“The language of this statute ‘clearly contemplates

action prior to the filing of a citizen suit.””) (internal citation

14a

omitted); Connecticut Fund for the Env’t, 660 F. Supp. at

1404 (“The court must apply an inflexible rule which deter-

mines jurisdiction from the time of filing the complaint.”).

We are not inclined to add our encouragement to a race to the

courthouse. Nor do we wish to discourage state agencies from

attempting to resolve disputes through negotiation with

citizens’ groups. But the clear and unambiguous language of

§ 1365(b)(1)(B) and its uniform interpretation by the courts

on a jurisdictional point dictate a conclusion that the State’s

2002 litigation (and resulting 2002 Stipulation) cannot qualify

as a timely commenced action barring the plaintiffs’ suit.’

Any similarity of the 2002 Stipulation to an ineffective

stipulation that was timely filed in a different suit in a

different court (i.e., the 2001 Stipulation) does not alter the

outcome. Thus, we find that the State’s judicial action

resulting in the 2002 Stipulation was commenced when the

Milwaukee County suit was filed after the plaintiffs’ suit was

filed on March 15, 2002, not when the 2001 Stipulation was

filed (or earlier). Any other conclusion would allow state

agencies to file “placeholder” lawsuits or consent decrees to

ensure timely commencement and then to grapple with the

problem at their (relative) leisure, subject only to the diligent

prosecution requirement (which, as the district court noted, is

a deferential standard). Since the Milwaukee County action

does not meet the timely commencement requirement, it

cannot bar the plaintiffs’ citizens’ suit under § 1365(b)(1)(B),

whether it is diligent or not. We will address the question

whether the 2002 Stipulation represents a diligent prosecution

of the violations alleged by the plaintiffs later, in our

discussion of res judicata.

” We note that the State could have avoided this outcome by incor-

porating a “first to file” provision into its agreement with the plaintiffs to

postpone filing any suit until March 15, 2002.

15a

4. WisDNR’s administrative actions

As the Eleventh Circuit has recently noted,

[cjourts that have addressed § 1319(g)(6)(A)(ii)—the

“diligent-prosecution bar”—have intérpreted the statute

to bar citizen suits when three requirements are satisfied.

First, the state must have “commenced” an enforcement

procedure against the polluter. Second, the state must be

“diligently prosecuting” the enforcement proceedings.

Finally, the state’s statutory enforcement scheme must

be “comparable” to the federal scheme promulgated in

33 U.S.C. § 1319(g).

McAbee v. City of Fort Payne, 318 F.3d 1248, 1251 (11th Cir.

2003). In finding that the State’s administrative enforcement

actions barred the plaintiffs’ suit under § 1319(g), the district

court here referred to such actions as meetings between the

EPA and WisDNR, between WisDNR and MMSD and

between all three entities (PSA at 5, 6); information requests

by WisDNR that MMSD had to comply with (PSA at 6);

projects outlined by WisDNR for MMSD to “focus on

initially’ (PSA at 7); investigation of overflow events

between February and July 2001 (id.); the issuance of an

informal notice of non-compliance to MMSD shortly after the

plaintiffs’ notice of intent to sue was received (id.; see also

Plaintiffs’ Br. at 33-34 (noting that until the State filed its suit

on March 15, 2002, it had never escalated its “stepped”

enforcement policy beyond the first level, which is the

issuance of an informal notice of non-compliance)); meetings

between MMSD and WisDNR in August 2001 “to negotiate a

corrective action plan” (PSA at 8); and the “formal referral of

the matter” to WisDOJ, which subsequently filed the 2001

Stipulation in Dane County court (PSA at 8-9). Although

these actions undeniably resulted in the eventual filing of the

Milwaukee County action and the 2002 Stipulation, they

l6a

do not themselves qualify as the commencement of an

administrative enforcement action that would serve to bar the

plaintiffs’ suit.

“Commencement” with respect to an administrative action

is not defined by the Act, and we have not previously had the

opportunity to weigh in on this issue. Other courts have found

that the filing of an administrative consent order prior to the

filing of a citizens’ suit would in most cases qualify as the

sort of administrative action that would bar a citizens’ suit for

civil penalties.* But if the consent order comes after the

citizens’ suit is filed, the citizens’ suit may proceed. See

Altamaha Riverkeepers v. City of Cochran 162 F. Supp. 2d

1368, 1373 (M.D. Ga. 2001) (finding that proposed consent

order and fines that came after citizens’ suit was filed did not

bar suit). The Eighth Circuit has implied that issuance of a

formal Notice of Violation could also qualify as the

commencement of an administrative enforcement action if it

triggers notice and hearing procedures designed to protect and

give access to the public and interested parties. Cf Arkansas

Wildlife Fed’n v. ICI Ams., 29 F.3d 376, 379-80. Letters and

conferences where no public notice was given and that did

not result in hearings have been found not to bar a citizens’

suit. See Tobyhanna Conservation Ass’n v. Country Place

Waste Treatment Co., 734 F. Supp. 667, 669-70 (M.D. Pa.

1989) (finding state environmental department’s unsigned

® See McAbee, 318 F.3d at 1251 n.6 (“{MJost courts that have ad-

dressed the issue have concluded that issuance of an administrative consent

order . . . would satisfy the ‘commencement’ requirement.”); Arkansas

Wildlife Fed’n v. ICI Ams., 29 F.3d 376, 380 (8th Cir. 1994) (concluding

that filing administrative consent order counted as “commencement?

because interested third parties had right to intervene and certain notice and

hearing procedures became available); Public Interest Research Group, Inc.

v. Elf Atochem N. Am., Inc., 817 F. Supp. 1164, 1173 (D.N.J. 1993) (“Order

and Notice, issued pursuant to state regulations specifically providing for

due process protections in the initiation of enforcement proceedings, was

the actual initiation or ‘commencement’ of an enforcement proceeding”).

17a

letter to alleged water discharge permit violator setting

administrative conference for which no public notice was

provided and at which no hearing was held did not bar

citizens’ suit); cf PMC, Inc. v. Sherwin-Williams Co., 151

F.3d 610, 618-19 (7th Cir. 1998) (noting in context of the bar

Resource Conservation and Recovery Act (RCRA) places on

citizens’ suits when judicial action has been commenced, that

“writing a letter would hardly be described as ‘commencing’

or ‘prosecuting’ an ‘action’. . . , especially when we consider

the interminable character of much administrative process

and the difficulty of deciding on a threshold below which the

process is too tentative to justify barring a citizen’s suit’’)

(citations omitted).

Discerning from these various decisions the contours of the

law, we conclude that with respect to administrative enforce-

ment actions, the “commencement” of the action is tied in

with the “comparability” of the state statute to the federal

provisions. Specifically, we hold that for the purposes of

§ 1319(g), an administrative action “commences” at the point

when notice and public participation protections become

available to the public and interested parties. Because Wis-

consin law does not authorize administrative penalty proceed-

ings or fines, there are no administrative enforcement

provisions “comparable” to those of the Clean Water Act.

Rather, when WisDNR decides that a violation requires

enforcement, Wisconsin law provides that WisDNR “shall

refer the matter to [WisDOJ] for enforcement,” and WisDOJ

“shall initiate the legal action requested by” WisDNR. Wis.

Stat. § 283.89(1)-(2). MMSD admits that Wisconsin’s per-

missive intervention statute is triggered only when the

administrative enforcement advances to the stage at which a

legal action is filed. (MMSD’s Br. at 39.) Thus, in Wis-

consin, the “formal moment” at which an action is

commenced is when WisDOJ files a complaint with state or

federal court because “from this formal moment enforcement

18a —

becomes public.” Wisconsin Envtl. Law Advocates v. Wiscon-

sin Power & Light Co., 03-C-0739-S, at 17 (W.D. Wis.

May 3, 2004).

We conclude that the non-judicial actions taken by the

State did not commence an administrative action barring the

plaintiffs’ suit under § 1319(g), because at no point prior to

the filing of the Milwaukee County suit did the state’s

administrative enforcement procedures contemplate public

notice and participation. Although the filing of the 2001

Stipulation was a judicial action, there was no opportunity

provided for public notice or participation. Moreover, as we

noted earlier, the 2001 Stipulation was not a diligently

prosecuted action because it was not legally binding and was

withdrawn by the 2002 Stipulation. And the Milwaukee

County action was filed too late. Because the State did not

timely “commence” and diligently prosecute an administra-

tive enforcement action, the plaintiffs’ suit for civil penalties

is not barred by § 1319(g). And, as we have already con-

cluded, the plaintiffs’ suit is not barred under § 1365(b)(1)(B)

by any of the State’s judicial enforcement actions.

B. Res judicata

The district court found that the 2002 Stipulation “is

drafted to resolve all potential liability for the alleged sanitary

sewer overflows occurring after 1994 and bring MMSD into

compliance with the WPDES permit.” (PSA at 24.) It went on

to conclude that, in addition to being barred under the Act by

prior actions taken by the State, the plaintiffs’ suit would also

be barred under res judicata. According to Wisconsin law,

[uJnder the doctrine of claim preclusion, a subsequent

action is barred when the following three factors are

present: (1) identity between the parties or their privies

in the prior and present suits; (2) prior litigation resulted

in a final judgment on the merits by a court with

19a

jurisdiction; and (3) identity of the causes of action in

the two suits.

Sopha v. Owens-Corning Fiberglas Corp., 230 Wis. 2d 212,

233-34, 601 N.W.2d 627 (Wis. 1999).

The plaintiffs do not challenge that the second element has

been established. They do, however, challenge whether the

plaintiffs’ causes of action were the same as those brought by

the State in the Milwaukee County action and whether

MMSD has demonstrated that the State was in privity with

the plaintiffs.

1. Identity of causes of action

Wisconsin takes a “transactional” approach to determining

whether there is an identity of causes of action. N. States

Power Co. v. Bugher, 189 Wis. 2d 541, 550, 525 N.W.2d 723

(1995). “What factual grouping constitutes a ‘transaction,’

and what groupings constitute a ‘series,’ are to be determined

pragmatically, giving weight to such considerations as

whether the facts are related in time, space, origin, or moti-

vation, [and] whether they form a convenient trial unit... .”

Id. at 554.

The plaintiffs argue that their suit is broader and different

in scope than the State’s 2002 suit in Milwaukee County. The

plaintiffs point to specific differences, including their

allegations of viciations from 165 locations (as opposed to on

8 occasions); a higher volume of unpermitted discharges (900

million gallons as opposed to 471 million gallons); dry

weather discharges from sanitary sewers; MMSD’s “consis-

tent operational and management problems that have sig-

nificantly contributed to the exceedingly high number and

volume of unpermitted discharges” (Plaintiffs’ Br. at 44); and

additional violations, including one in August 2002 involving

412 million gallons of sewage that was not covered by the

2002 Stipulation (which resolved MMSD’s liability for all

20a

SSOs “to the latest date upon which either of the parties

executes this agreement” (id. at 45)).

All of the plaintiffs’ purported pre-Stipulation differences

are swallowed up by the 2002 Stipulation’s broad scope. The

2002 Stipulation was intended to “present[] a comprehensive

solution to sanitary sewer overflows, regardless of their

cause, including but not limited to wet weather events,

equipment malfunctions, and operator error.” (Plaintiffs’ Sep.

Appx. at 178-79.) It purported to relieve MMSD from

liability for a// violations up to the date the 2002 Stipulation

was executed, including those that were not specifically

alleged in the State’s complaint. Thus, there is an undeniable

identity of causes of action with respect to the pre-Stipulation

violations.

As for post-Stipulation violations, there are two reasons

why the unspecified ongoing or continuing violations alleged

in the plaintiffs’ complaint do not constitute a separate and

distinct cause of action. First, the Act itself bars the bringing

of any action “prior to sixty days after the plaintiff has given

notice of the alleged violation” to various parties. 33 U.S.C.

§ 1365(b)(1)(A) (emphasis added). This notice must contain

“sufficient information to permit the recipient to identify the

specific standard, limitation, or order alleged to have been

violated, the activity alleged to constitute a violation, the

person or persons responsible for the alleged violation, the

location of the alleged violation, [and] the date or dates of

such violation.” 40 C.F.R. § 135.3(a). As the Supreme Court

has noted, the purpose of this notice is twofold: it “allows

Government agencies to take responsibility for enforcing

environmental regulations, thus obviating the need for citizen

suits,” and it “gives the alleged violator ‘an opportunity to

bring itself into complete compliance with the Act and thus

likewise render unnecessary a citizen suit.’” Hallstrom v.

Tillamook County, 493 U.S. 20, 29, 107 L. Ed. 2d 237, 110S.

Ct. 304 (1989) (internal citation omitted). Even if the

2la

unspecified violations, such as the August 2002 violation,

were sufficiently well-pleaded by references to “ongoing or

continuing” violations, they were not mentioned in the

required notice and would therefore be barred by the Act, at

least as part of this particular suit.

The second reason why the unspecified post-Stipulation

violations are not separate and distinct causes of action is that

the 2002 Stipulation was intended to address the underlying

causes of the continuing violations by implementing remedial

measures some of which, due to their large scale, will take

several years to complete. The State was unquestionably

aware that violations would continue while the projects

mandated by the 2002 Stipulation are being implemented.

Even though the 2002 Stipulation does not release MMSD

from liability for post-Stipulation violations, those post-

Stipulation violations are clearly related in origin to the pre-

Stipulation violations and have the same factual basis. Thus,

the August 2002 violation (and other post-Stipulation viola-

tions) not specifically mentioned in the 2002 Stipulation are

not separate and distinct causes of action, and the element

of res judicata requiring an identity of causes of action is

met here.

2. Privity of the parties

We agree with the district court that a person not a party to

a previous action can be said to be in privity with an “official

or agency invested by law with authority to represent the

person’s interests.” Restatement (Second) of Judgments

§ 41(1)(d). Thus, “even when an agency enforcement action

is not commenced until after the citizen suit, final judgment

in the agency’s court action will be a res judicata or collateral

estoppel bar to the earlier citizen suit.” Comfort Lake Ass'n v.

Dresel Contracting, 138 F.3d 351, 356 (8th Cir. 1998). This,

however, presumes that the agency was acting in its parens

patriae role as a representative of the public. As a repre-

sentative of the public’s interests, the State is subject to the

22a

exceptions enumerated in section 42 of the Restatement

(Second) of Judgments, including the following: “A person is

not bound by a judgment for or against a party who purports

to represent him if...the representative failed to prosecute or

defend the action with due diligence and reasonable

prudence, and the opposing party was on notice of facts

making that failure apparent.” Restatement (Second) of

Judgments § 42(1)(e). Thus, in order for the state agency to

be in privity with the public’s interests, the state’s subse-

quently-filed government action must be a diligent prose-

cution. And if the subsequently-filed government action is a

diligent prosecution, “the fact that... any . . . private attorney

general is barred from duplicating that effort should hardly

seem surprising or harsh.”” Hudson River Fishermen’s Ass’n

v. County of Westchester, 686 F. Supp. 1044, 1052 (S.D.N.Y.

1988), quoted in United States EPA v. Green Forest, 921 F.2d

1394, 1405 (8th Cir. 1990). So the question becomes whether

the State’s action was diligent.

We look to the language of the Act to find out what is

meant by “diligent prosecution.” Citizens’ suits are barred “if

the Administrator or State has commenced and is diligently

prosecuting a civil or criminal action in a court of the United

States, or a State to require compliance with the standard,

limitation, or order.” 33 U.S.C. § 1365(b)(1)(B) (emphasis

added). Thus, if the judicial action is “capable of requiring

compliance” with the Act and is “calculated to do so,” the -

* We decline to adopt the plaintiffs’ argument that “in a situation where

a citizen suit has been filed prior to the State’s commencement of an

enforcement action, the privity element of res judicata can never be

satisfied.” (Plaintiffs’ Br. at 40.) See Atlantic States Legal Found., Inc. v.

Eastman Kodak Co., 933 F.2d 124, 127 (2d Cir. 1991) (“However, we do

not believe the Clean Water Act can or should be read to discourage a

governmental enforcement action once a citizen suit has been commenced

nor to prevent state or local authorities from achieving a settlement as to

conduct that is the subject of a citizen complaint. To hold otherwise would

likely lead to underenforcement of the Clean Water Act.”).

23a

citizens’ suit will be barred. Jeffrey G. Miller, “Overlooked

Issues in the ‘Diligent Prosecution’ Citizen Suit Preclusion,”

10 Wid. L. Symp. J. 63, 84, 85 (2003). Notwithstanding these

considerations, diligence does not require a state agency to

have perfect foresight. As we have previously held in the

context of the RCRA, which has a materially similar diligent

prosecution requirement, “[t]he statute does not require that

the [State] succeed; it requires only that the [State] try, dili-

gently.” Supporters to Oppose Pollution v. Heritage Group,

973 F.2d 1320, 1324 (7th Cir. 1992).

The district court found that the 2002 litigation and

Stipulation represented a diligent prosecution because the

2002 Stipulation was intended by the parties to present “a

comprehensive solution to sanitary sewer overflows, regard-

less of their cause, including but not limited to wet weather

events, equipment malfunctions, and operator error” (PSA at

22) and to “bring MMSD into compliance with the WPDES

permit” (id. at 24). The 2002 Stipulation requires significant

changes to MMSD’s operating structure at considerable ex-

pense, including storage and conveyance capacity expansions

and treatment plant and interceptor sewer upgrades. MMSD

was obligated to complete its sanitary sewer evaluation study

and to require satellite municipalities to reduce inflow

and infiltration by 5% by the end of 2002. MMSD was

additionally required to implement a CMOM plan by June 30,

2007, which is intended to help reduce (with the goal of

eliminating) all non-permitted SSOs. (Plaintiffs’ Sep. Appx.

at 184.)

We recognize that diligence on the part of the State is

presumed. See, e.g., Connecticut Fund for the Env't v. Con-

tract Plating Co., 631 F. Supp. 1291, 1293 (D. Conn. 1986)

(“{T]he court must presume the diligence of the state’s

prosecution of a defendant absent persuasive evidence that

the state has engaged in a pattern of conduct that could be

considered dilatory, collusive, or otherwise in bad faith.”).

24a

We surmise that this presumption is due not only to the

intended role of the State as the primary enforcer of the Clean

Water Act, see Gwaltney of Smithfield, Inc. v. Chesapeake

Bay Found., Inc., 484 U.S. 49, 60, 98 L. Ed. 2d 306, 108 S.

Ct. 376 (1987), but also to the fact that courts are not in the

business of designing, constructing or maintaining sewage

treatment systems. See North & S. Rivers Watershed Ass’n v.

Scituate, 949 F.2d 552, 557 (ist Cir. 1991). Yet, we think 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. Our diligent prosecution analysis of the 2002

Stipulation will examine whether it is capable of requiring

compliance with the Act and is in good faith calculated to do

so. See Miller, supra, 10 Wid. L. Symp. J. at 84, 85.

The plaintiffs raise several concerns about the diligence of

the 2002 Stipulation that can be easily dispensed with, and

one which we think has merit. All are nonetheless worth

discussing. First, the plaintiffs argue the 2002 Stipulation is

not a diligent prosecution because it does not include a

provision expressly requiring compliance with MMSD’s

WPDES permit and the Act. MMSD rejoins that, it is not

necessary to include language requiring compliance because

the Act and Wisconsin’s permitting statute themselves require

compliance, and the 2002 Stipulation does not relieve MMSD

from its obligation to comply. The State is not prevented from

bringing enforcement actions if post-Stipulation violations

occur. Moreover, MMSD points out that adding compliance

language would not bring about compliance absent treatment

of the underlying causes of the violations. See Clean Air

Council v. Sunoco, Inc., 2003 U.S. Dist. LEXIS 5346, at *15-

*16 (D. Del. 2003) (rejecting a plaintiff's contention that the

state’s consent order should have included language requiring

compliance and focusing the diligent prosecution inquiry on

the actions required to eliminate the cause of the violations).

25a

We agree that the focus of the diligent prosecution inquiry

should be on whether the actions are calculated to eliminate

the cause(s) of the violations. Since MMSD was not relieved

from complying with the Act and its permit, the addition of

compliance language in the present circumstances is

unnecessary and would not bring about compliance any faster

or more efficiently.

The plaintiffs also argue that the 2002 Stipulation gives

MMSD until 2010 to complete construction of certain sewer

improvements which are not guaranteed to result in

compliance with the Act. MMSD points out that the deadlines

are necessary “because of the actual amount of time it takes

to plan, solicit bids, and construct public works of this

magnitude.” (MMSD’s Br. at 25.) The deference we owe to

the State’s actions comes into play in determining whether

these deadlines are too lengthy to be diligent: as we have said,

we are not in the business of constructing sewage facilities.

We conclude that the construction deadlines incorporated in

the 2002 Stipulation are not so lengthy as to indicate a lack of

diligence. “Merely because the State may not be taking the

precise action Appellant wants it to or moving with the

alacrity Appellant desires does not entitle Appellant to

injunctive relief.” Scituate, 949 F.2d at 558, quoted in

Supporters to Oppose Pollution, 973 F.2d at 1324.

The plaintiffs also allege that the 2002 Stipulation does not

address the violations that are due to operational failures and

mismanagement, though the only specific MMSD policy the

plaintiffs have pointed out as mismanagement is the policy of

reserving a certain amount of Deep Tunnel capacity to handle

wet-weather SSOs, resulting in larger-than-necessary CSOs.’

'° This policy was first mentioned by the plaintiffs at oral argument

when discussing MMSD’s “mismanagement.” Prior to that, the plaintiffs

had never specified which operational or management problems were

causing violations.

26a

Specifically, after a July 1999 storm that resulted in a 62.2

million gallon SSO, MMSD increased the volume of capacity

it reserves in the Deep Tunnel to accommodate sanitary

sewage, from 40 million gallons to 200 million gallons. (PSA

at 241.) Although this policy has reduced the volume of

SSOs, it did so by allowing CSOs instead, even at times when

the Deep Tunnel was not filled to capacity. (/d.) The 2002

Audit Report estimated that the volume of CSOs between

1994 and July 2002 would have been reduced by 656 million

gallons if unused capacity had not been kept in reserve. (PSA

at 242.) But the solution to this problem requires accurate

prediction of weather patterns and storm intensity. MMSD’s

current automated system lacks the sophistication to permit

precise predictions of sewage flow, and this, combined with

the well-known inaccuracies of weather forecasts, means that

discharge decisions are frequently made with incomplete

information. (PSA at 243.) MMSD is, however, installing a $

3.3 million Real Time Control System that provides updated

information on system performance every 15 minutes or less,

which should help MMSD maximize existing system capacity

during heavy storms. (PSA at 298.) We also note that the

CSOs caused by MMSD’s reservation of Deep Tunnel

capacity to handle sanitary sewage were not violations of the

Act or of MMSD’s permit. Though we question the

permitting decision that has created the incentive for MMSD

to avoid violations by shifting its discharges from SSOs to

larger-than-necessary CSOs during heavy storms, we cannot

say that MMSD’s reserve capacity policy is not in

compliance with the Act or its permit.””'

'' “Mechanical failures have also caused some SSOs, but they repre-

sent less than half of one percent of the total volume discharged from

sanitary sewers from 1994-2002. /d. at 234. MMSD confirmed at oral

argument that its dry weather SSOs were caused by equipment

malfunction.

27a

Although the reasons contributing to MMSD’s recent

massive and distressing discharges of sewage indicate that

MMSD may not have put all of its operational and

) management difficulties behind it, the plaintiffs’ vague

) allegations that the 2002 Stipulation fails to address MMSD’s

operational and management difficulties are insufficient to

indicate that MMSD will thereby be prevented from

complying with the Act after work mandated by the 2002

Stipulation is completed. If 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 resoive them before the plaintiffs may jump

into the fray.

The last of the easily-disposed-of arguments is that the

2002 Stipulation imposes no penalties for past violations, nor

does it include stipulated penalties for future violations.

Basically, the plaintiffs seem to want us to announce a rule

that diligence requires penalties. With respect to the lack of

2 See, e.g., Resler, The Sound of Lame Excuses, MILWAUKEE Z.

SENTINEL, May 20, 2004, at 22A (“Officials of the Milwaukee Metro-

politan Sewerage District said this week that for an 18-hour period in the

middle of last weekend’s massive dumping of raw sewage, only one of the

three giant pumps critical to the operation of the district’s controversial

deep tunnel svstem was actually working. As storms drenched the area,

that left just one pump to transfer millions of gallons of sewage from the

deep tunnel, where it is stored, to the district’s two treatment plants.”); id.

(“[A] construction project—the replacement of two huge galvanized steel

holding tanks on Jones Island—effectively reduced capacity at the

district’s two treatment plants. Critics have wondered why the vanks are

being replaced now during the rainy season, a legitimate point.”); Steve

Schultze and Marie Rohde, Equipment Glitches Still Plague MMSD,

MILWAUKEE J. SENTINEL, June 17, 2004, at IA (“MMSD officials [agreed]

that yet another project—replacement of giant sewage holding tanks—

also probably contributed to the overflows, but only slightly. . .. Only one

or two of the three giant tunnel pumps were used during the May rains

and dumping because the holding tanks are under construction and several

months past their projected completion date.”).

28a

penalties for pre-Stipulation violations, MMSD argues that

under Gwaltney and the First Circuit’s interpretation of it in

North & South Rivers Watershed Ass’n v. Town of Scituate,

the government may choose to forego civil penalties in favor

of securing expensive capital improvements. Given that the

focus of our inquiry is on whether the State’s actions are

going to bring about compliance, the presence or absence (or,

for that matter, the size) of penalties does little, on its own, to

shed light on the diligent prosecution inquiry. It is true that

compliance may be coerced by penalties if they are-suf-

ficiently high to deter the violations. See Miller, supra, 10

Wid. L. Symp. J. at 86. In order to have a deterrent effect, the

penalty must be high enough that the violator would find it

less expensive to take whatever actions are necessary to

comply than to continue violating. This is why courts have

considered whether penalties are assessed and whether the

amount of the penalty has taken into account the economic

benefit the violator derived from non-compliance. See,

e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.

(TOC), 890 F. Supp. 470, 489-95 (D.S.C. 1995), vacated on

other grounds, 149 F.3d 303 (4th Cir. 1998), rev'd on

other grounds, 528 U.S. 167, 145 L. Ed. 2d 610, 120 S. €e.

693 (2000).

But penalties are by no means a requirement for com-

pliance to be assured. Repeated violations due to the same

underlying systemic causes are likely to continue until a

large-scale remedial project addressing those underlying

causes is completed (assuming the large-scale project will

successfully and permanently abate the conditions causing the

violation). And large-scale remedial projects, as we have

earlier noted, can take years. We agree with the First Circuit

that “duplicative actions aimed at exacting financial penalties

in the name of environmental protection at a time when

remedial measures are well underway do not further [the

goals of the Clean Water Act]. They are, in fact, impediments

to environmental remedy efforts.” Scituate, 949 F.2d at 556;

29a

see also Peter A. Appel, “The Diligent Prosecution Bar to

Citizen Suits: The Search for Adequate Representation,” 10

Wid. L. Symp. J. 91, 101-02 (2003) (noting that allowing

citizens’ suits for penalties to proceed when expensive re-

medial action is required both hinders negotiated settlements

and is unlikely to help the environment). Levying additional

penalties on violators who are undertaking massive remedial

prujects will not bring about compliance any faster or cause

the result to be any more effective--it will just cause the result

to be more expensively arrived at.

As for the post-Stipulation violations, although it is true

that there are no provisions for stipulated penalties in the

2002 Stipulation, MMSD points out that neither does it

prevent the State from bringing subsequent enforcement

actions for subsequent violations. The concern with diligent

enforcement is whether violations are prosecuted, not how

they are prosecuted. See Clean Air Council, 2003 U.S. Dist.

LEXIS 5346, at *11-*12 (finding that stipulated penalties are

just as diligent as seeking the same penalty in a separate

enforcement action). If the State fails to diligently prosecute

post-Stipulation violations, the plaintiffs may prod it into

action, as they did here.

We do, however, share the plaintiffs’ concern that the

planned improvements to MMSD’s system under the 2002

Stipulation may not in fact result in MMSD’s eventual

compliance with the Act and its permit. (See Plaintiffs’ Br. at

30-31; Reply Br. at 6.) The 2002 Audit Report attributed

MMSD’s overflows to the magnitude of storms in recent

years, as well as capacity issues in the Deep Tunnel and

MMSD’s sewers and treatment facilities. (PEA at 231.)

During planning for the Deep Tunnel, the capacity

requirements were estimated based on the largest storm

previously recorded in the Milwaukee area, which occurred in

June 1940. (PSA at 234.) However, from the time the Deep

Tunnel came on line in 1994 through July 2002, there were

30a

five storms larger than the June 1940 storm of record,

resulting in discharges of 394.7 million gallons from sanitary

sewers and over 4 billion gallons from combined sewers.

(PSA at 235.) Not only has the Deep Tunnel been unable to

handle storms larger than it was designed for, but it has also

proved insufficient to capture wastewater from storms smaller

than the storm of record on nine occasions, resulting in SSOs

totaling approximately 528 million gallons. (PSA at 236.) The

Deep Tunnel was also planned based on assumptions that

infiltration and inflow from surrounding communities would

be reduced by 12.5%; they have instead increased by 17.4%.

(PSA at 237.) Sedimentation has further reduced available

capacity in the Deep Tunnel by a small amount (2.1 million

gallons). (PSA at 240.)'°

We do not deny that increasing the storage and conveyance

capacity in MMSD’s system should reduce the number and

volume of overflows. But MMSD itself admits that what the

2002 Stipulation accomplishes is the eventual reduction of

overflows, not elimination of them. As MMSD pointed out to

ine plaintiffs, “[t]he Northwest Side Sewer Relief Project is

intended to have sufficient capacity to capture most of the

volume of events comparable to those experienced since the

start up of the Inline Storage System....Reduction in number

of SSO events is contemplated; not a percent reduction in

total volume of SSO’s.” (MMSD’s Supp. Appx. at 98; see

also MMSD’s Br. at 46 (noting that the State accomplished

“guaranteed meaningful relief in the form of capital im-

provements and operational changes that will actually reduce

the number of overflow events”) (emphasis added).) Com-

pliance means an end to violations, not merely a reduction in

'? A problem related to siphons in the sewer system is causing a

significant amount of wastewater to be diverted into the Deep Tunnel

rather than being treated immediately by the treatment plant (PSA at 239),

but MMSD began a project in 2001 to improve the efficiency and capacity

of these siphons, which is expected to be completed in 2007 (PSA at 299).

3la

the number or size of them. That is why courts have

considered whether the alleged diligent prosecution achieves

a permanent solution or whether violations will continue

notwithstanding the polluter’s settlement with the govern-

ment. See Atl. States Legal Found., Inc. v. Eastman Kodak

Co., 933 F.2d 124, 127-28 (2d Cir. 1991); New York Coastal

Fishermen’s Ass’n v. New York City Dep’t of Sanitation, 772

F. Supp. 162, 168 (S.D.N.Y. 1991).

Contrary to the district court’s finding, we do 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. We note the persistence of violations due to the same

underlying causes even after the 1977 Stipulation was fully

implemented (and despite a similar intention that the

capacity-increasing projects would “eliminate dumping from

sanitary sewers” *). We also note the perhaps overly cautious

pace adopted by the State in evaluating the effectiveness of

the remedial projects required by the 1977 Stipulation—it

took eight years and a notice of intent to sue from the

plaintiffs before the State took any actions that went beyond

investigating and evaluating the violations that have persisted

even after the Deep Tunnel came on line. While the projects

mandated by the 1977 Stipulation may have been calculated

in good faith to ensure MMSD’s compliance, it should not

have taken the State so long to arrive at the conclusion that

the Deep Tunnel had been under-designed. These, along with

MMSD’s own admissions that the 2002 Stipulation is aimed

at reducing, not eliminating, violations, are insufficient to

indicate a diligent prosecution.’°

'4 Schultze and Rohde, supra note 2, at IB.

'S Of course, we are aware that here, as with other regulatory circum-

stances, “efforts to achieve ‘the last i0 percent”* would be very expen-

32a

Under the circumstances of this case, we cannot say that

simply throwing more money at the problems and taking an

inordinately long time to determine if enough money was

thrown at the problems to solve them this time around are

actions calculated in good faith to bring about compliance

with the Act. The record to date does not inspire confidence

that effective and timely action will be taken to address

problems of long standing. While the 2002 Stipulation will

hopefully result in fewer and smaller violations after the

mandated projects are completed, it is still, when all is said

and done, a stalling tactic rather than a compliance strategy.

As such, we cannot say that it is a diligent prosecution, and

we cannot uphold the district court’s determination that res

judicata bars the plaintiffs’ suit.'®

III. Conclusion

Because we cannot state with certainty on the basis of this

record whether the 2002 Stipulation is calculated to result in

compliance with the Act, we therefore remand for a deter-

mination of that issue. Specifically, the district court should

determine whether the systemic inadequacies of MMSD’s

sewerage facilities will be sufficiently ameliorated by the

sive. Stephen Breyer, BREAKING THE VICIOUS CIRCLE: TOWARD

EFFECTIVE RISK REGULATION 28 (Harvard Univ. Press 1993). But we are

not talking about whether the proposed remedial efforts will eliminate the

last gallon of sanitary sewerage discharges in a 500-year storm; rather, we

are concerned that the remedial projects may, after their completion,

nonetheless turn out to be too little, too late.

judicata inapplicable here. See Froebel v. Meyer, 217 F.3d 928, 935 (7th

Cir. 2000) (“Wisconsin law does not treat res judicata as an ironclad rule

which must be implacably applied whenever its literal requirements are

met, regardless of any countervailing considerations.”) (internal quota-

tions omitted); McCourt v. Algiers, 4 Wis. 2d 607, 91 N.W.2d 194, 196

(Wis. 1958) (indicating that res judicata may not apply where relitigation

is necessary to prevent unfairness).

i 33a

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 Stipulation will continue after the

planned improvements are completed, the plaintiffs’ suit may

proceed. If, after a more detailed examination of the 2002

Stipulation, the district court concludes that no such prospect

exists, it may so find, provide a thorough explanation of its

conclusion and consider reinvocation of the res judicata bar.

However, before reimposing a res judicata bar, the district

court should determine whether Wisconsin’s fairness excep-

tion to the res judicata doctrine should be applied here.'”

Although we have allowed the plaintiffs’ suit to continue

(at least for the time being), we hope that the State, together

with the parties in this matter, will take advantage of this

opportunity to review the efficacy of the 2002 Stipulation in

light of recent events and will be able to resolve their

differences as well as the problems affecting MMSD’s

system. For the reasons stated above, the district court is

REVERSED, and the suit is REMANDED for further

proceedings in keeping with this opinion.

'? As Wisconsin’s Supreme Court has noted, “claim preclusion may be

disregarded in appropriate circumstances when the policies favoring

preclusion of a second action are trumped by other significant policies.

Claim preclusion . . . is a principle of public policy applied to render

justice, not to deny it. Any exception to claim preclusion, however, must

be limited to special circumstances or the exceptions will weaken the

values of repose and reliance.” Sopha, 230 Wis. 2d at 236.

34a

APPENDIX B

UNITED STATES DISTRICT COURT,

E.D. WISCONSIN

No. 02-C-0270

FRIENDS OF MILWAUKEE’S RIVERS and

Lake Michigan Federation,

Plaintiffs,

MILWAUKEE METROPOLITAN SEWAGE DISTRICT,

Defendant.

Sept. 29, 2003.

Karen Mala _ Schapiro, Frazer Schapiro & Rich,

Milwaukee, WI, James A. Vroman, Katharine Saunders,

Stephen Safranski, Steven M. Siros, Jenner & Block, Laurel

O ‘Sullivan, Chicago, IL, for Plaintiffs.

James M. Caragher, Katherine E. Lazarski, Linda E.

Benfield, Foley & Lardner LLP, Milwaukee, WI, for

Defendant.

DECISION AND ORDER GRANTING DEFENDANT’S

MOTION TO DISMISS, DENYING AS MOOT

DEFENDANT’S MOTION FOR PROTECTIVE ORDER

STAYING DISCOVERY PENDING RESOLUTION OF

MOTION TO DISMISS, AND DISMISSING CASE

CLEVERT, J.

This case is before the court on defendant Milwaukee

Metropolitan Sewerage District’s Motion to Dismiss.

Plaintiffs, Friends of Milwaukee’s Rivers (“FMR”) and Lake

35a

Michigan Federation (“LMF”), brought a citizen-suit under

the Federal Water Pollution Control Act (the “Clean Water

Act” or “CWA”), 33 U.S.C. §§ 1251, et seq. According to

the Milwaukee Metropolitan Sewerage District (“MMSD”),

the suit is barred because the state, under the oversight

of the United States Environmental Protection Agency

(“U.S.EPA”), has utilized both judicial and administrative

enforcement mechanisms to diligently prosecute MMSD for

CWA violations. 33 U.S.C. § 1319(g)(6)(A)(ii). After hearing

oral argument and reviewing the submissions of the parties,

the court agrees that this suit is barred and will grant

defendant’s motion to dismiss.

FINDINGS OF FACT

MMSD is a state-chartered, special purpose government

agency providing wastewater services for all or part of 28

municipalities in Southeast Wisconsin. The District’s 420-

square-mile service area includes all cities and villages

(except the City of South Miiwaukee), within Milwaukee

County and all or part of 10 municipalities or sanitary

districts in the surrounding counties of Ozaukee, Washington,

Waukesha and Racine. (Aff. McCabe, § 3)

Two types of municipality-owned sewer systems feed into

MMSD’s interceptor sewers. Many older sewer systems are

considered “combined sewers” because the sewers are

designed to carry storm water and sanitary sewage. Combined

sewers are located in some parts of the City of Milwaukee

and in parts of Shorewood. The remainders are “separate

sewers” where storm water drains into a storm water sewer

system that empties directly into area waterways. Water from

sanitary sewers empties into the MMSD system and is carried

to treatment plants. (Aff. McCabe, {| 5)

The current MMSD Wisconsin Pollution Discharge

Elimination System (WPDES) Permit No. WI-0036820-1

allows six Combined Sewer Overflows (CSOs) each year.

36a

The permit prohibits Sanitary Sewer Overflows (SSOs),

except in limited situations, such as preventing loss of life or

severe property damage. (Aff. McCabe { 9, Ex. B)

To resolve the pending motion to dismiss, the relationship

between the WDNR, U.S. EPA, and the MMSD over the past

twenty-five years must be examined. In 1976, the Sewerage

Commission of the City of Milwaukee (MMSD’s predecessor

organization) brought an action against the WDNR

challenging treatment standards at municipal waste water

facilities. The Sewerage Commission of the City of Milwaukee

and Metropolitan Sewerage Commission of Milwaukee v.

State of Wisconsin Department of Natural Resources, Dane

County Circuit Court Case No. 152-342. The WDNR

responded by filing counterclaims against the Sewerage

Commission of the City of Milwaukee and the Metropolitan

Sewerage Commission of the County of Milwaukee, alleging

sanitary sewer overflows (SSOs), combined sewer overflows

(CSOs), and other practices in violation of the CWA and the

District’s Wisconsin Pollutant Discharge Elimination System

Permit.

The Dane County Circuit Court- action was resolved by a

Stipulation and Judgment on May 25, 1977. The 1977

Stipulation and Judgment included a construction compliance

schedule for projects to increase system capacity (including

minimum annual expenditures for the construction projects),

the requirement to eliminate dry weather bypassing from the

system by July 1, 1982, the requirement that flows from sepa-

rate sewer areas meet federal and state effluent requirements,

and the obligation to correct wet weather bypassing from the

combined sewer areas of the MMSD service area. In addition,

the Stipulation and Judgment imposed a “waste load

allocation system” which effected a moratorium on new

sewer construction in certain communities. (Pl. Ex. A)

To comply with the requirements of the Dane County

Supulation and Judgment, the MMSD developed the 2001

37a

Facility Plan. That Plan included projects for the construction

of several large interceptor sewers, construction of an Inline

Storage System (the “Deep Tunnel”), numerous improve-

ments to two treatment plants and rebuilding a biosolids

processing facility. Completion of these projects cost over

$2.3 billion. (Aff. McCabe, § 14) Ultimately, the Plan was

approved by the WDNR and the U.S. EPA after public input.

Compliance with the stipulated schedule for the required

capital improvements was monitored closely by the WDNR,

through a process called the “Annual Schedule Establish-

ment.” Under the ASE process, a construction schedule was

submitted each year by MMSD to the WDNR for its

approval. If the WDNR agreed with MMSD’s proposed

schedule, it was entered as a court order in the Dane County

Circuit Court. Each year, as required by the 1977 Stipulation,

the MMSD reported to the WDNR on compliance with its

construction schedule in a “Compliance Audit Report.” The

final ASE under the Stipulation governed construction during

1993, and the last significant project completed under the

Stipulation was the Deep Tunnel. (Aff. McCabe, § 15)

In September 1994, MMSD requested that the WDNR

agree to dismiss the Dane County Circuit Court action, as all

necessary construction was completed. The WDNR refused

citing its need to have sufficient time to evaluate MMSD’s

compliance with the Stipulation. MMSD made similar

requests for dismissal in 1995, 1996, and 1997. Nonetheless,

the WDNR reiterated opposition to dismissal due to its

ongoing assessment of MMSD’s compliance with the

stipulation and its desire to have access to the Dane County

Court in the pending case should further enforcement action

become necessary. (Aff. McCabe, § 18, Ex. D; Aff. Lazarski

q 5, Ex. 1)

In 1996, MMSD began development of the 2010 Facilities

Plan. The letters submitted by MMSD confirm that WDNR

was involved in the planning process, and that the WDNR

38a

approved the Facilities Plan on December 9, 1998, following

public review and an opportunity for public comment. (Aff.

McCabe, § 20, Ex. E)

On January 6, 2000, the U.S. EPA and WDNR held the

first of two meetings between the agencies to coordinate their

enforcement efforts against MMSD. (Aff. Lazarski {J 6-7,

Exs. 2 and 3) At the January 6, 2000, meeting, representatives

from the two agencies discussed the importance of consistent

enforcement actions nationwide, the importance of infiltration

and inflow control by the local communities, the problem of

using sanitary sewers to carry storm water, and the

implementation of a Capacity, Management, Operation and

Maintenance (CMOM) self-auditing program. (Aff. Lazarski,

§ 6, Ex. 2) A second meeting held on May 24, 2000,

addressed the complexities of the SSO problem and the need

to address SSOs from the MMSD and the local communities

with a single effort. Participants discussed various strategies

and enforcement options, including imposition of civil

penalties. (Aff. Lazarski § 7, Ex. 3)

By letter dated June 16, 2000, the WDNR advised Anne

Spray Kinney, the MMSD Executive Director, of the

“Department ‘s ongoing review of [MMSD] bypass reports to

determine compliance with Wisconsin Pollutant Discharge

Elimination System (WPDES) permit conditions and

applicable Wisconsin Administrative Codes.” The letter

advised MMSD that it would be required to meet with the

WDNR and U.S. EPA on July 12, 2000, to “report on your

progress to reduce bypassing and outline your strategies to

work with communities to reduce flows and bypassing.”

(Aff.McCabe, § 21, Ex. F) During this time, the U.S. EPA

was developing a proposed rule incorporating the CMOM

self-auditing program into the agency’s nationwide

enforcement strategy. (Aff. Lazarski J 13, Ex. 9, pp. 86-149,

237-242)

39a

Following the July 12, 2000, meeting, the WDNR

informed MMSD that “[G]iven this background and the

frequency and volume of overflows in the Milwaukee area

during 1999 and 2000,” the WDNR Secretary George Meyer

would be presenting a report to the Natural Resources Board

at their January 2001, meeting. (Aff. McCabe § 23, Ex. G) To

prepare the report for the Board meeting, the WDNR

developed a series of questions for consideration focusing on

five interrelated topics: Separated Basin Performance,

Overflow History, Preventing Separated Sewer Overflows,

Minimizing Combined Sewer Overflows, and the Inline

Storage System Operations. (Aff. McCabe § 11, Exs. G and

H) Further, MMSD was required to attend a meeting on

December 13, 2000, between U.S. EPA and the WDNR, and

the WDNR provided MMSD with a request for information.

By letter dated December 18, 2000, MMSD reported to the

WDNR the schedule under which it would be able to compile

the information requested. (Aff. McCabe, Ex. H)

On March 16, 2001, the WDNR Secretary Darrell Bazzell

transmitted to MMSD a copy of the Department’s Report

entitled “Sewer Overflows in Wisconsin--A Report to the

Natural Resources Board.” (Aff. McCabe, Exs. I and J) Two

weeks later, the WDNR advised MMSD that a “series of

near-term and long-term recommendations in the report”

would require “additional work by, and interaction between,

the District and the Department to assume the

recommendations are fully implemented.” (Aff. McCabe

4] 26, Ex. K) The WDNR set forth five projects for MMSD to

“focus on initially.” (Aff. McCabe J 26, Ex. K)/

Between February and July of 2001, the WDNR continued

to investigate overflows to determine the compliance status of

those events. (Aff. McCabe ¥ 27, Ex. L; Aff. Lazarski J 8, Ex.

4) At the same time, MMSD responded to and clarified

previous responses to requests for data. (Aff. McCabe 4 27,

Ex. L)

40a

On July 11, 2001, Attorney Shapiro, counsel for the

Friends of the Milwaukee River (FMR) and Lake Michigan

Federation (LMF), notified the Executive Director of MMSD

of her intent to file a lawsuit against MMSD for violations of

§§ 301 and 402 of the Clean Water Act, and MMSD’s

Wisconsin Pollutant Discharge Elimination System Permit.

(Pl. Ex. C) The Notice of Intent to Sue (NIS) identified “at

least thirteen occasions during which at least 165 SSO

discharge locations within MMSD’s jurisdiction discharged

sanitary sewerage due to the ‘deep tunnel’ being filled to

capacity.” In addition, the NIS claimed that on “at least nine

(9) occasions there were at least thirteen (13) SSO discharge

locations that discharged sanitary sewerage because of

insufficient conveyance capacity downstream from the

sewerage discharge locations.” (/d.)

Five days after the NIS letter, WDNR Secretary Bazzell

notified MMSD that WDNR had determined that after 1994,

eight of thirteen SSO events associated with the Inline

System were violations of the WPDES permit, and that two

events were in compliance with permit requirements. Three

other events were due to causes which needed to be

determined. (PI. Ex. D) Further, all four events associated

with hydraulic capacity in the Metropolitan Interceptor Sewer

were violations. (Aff. McCabe, Ex. M) Bazzell stated:

I want you to know that we are very appreciative of all

the work the MMSD has done to comply with the

requirements of your Wisconsin Pollutant Discharge

Elimination System Permit. We also appreciate the

District’s commitment to implementing its 2010 Plan.

However, current information indicates that projects

envisioned in that plan will not be sufficient in their own

right to achieve full compliance with applicable permit

requirements. Therefore, we feel there is additional

work to be done and that a jong-term corrective action

4la

plan must be developed and placed into a legally binding

format.

I have notified appropriate legislators and Natural

Resourees Board members of our decisions end have

directed staff to work with you and U.S. Environmental

Protection Agency staff to arrive at a legally binding,

long term corrective action plan. The long term

corrective action plan needs to be consistent with the

recummendations made in “sewer Overflows in

Wisconsin—A Report to the Natural Resources Board”

(March 15, 2001).

(Aff. McCabe, Ex. M)

The MMSD acnied that any of the separate sewer overflow

events from the MMSD system constituted WPDES

violations. (Aff. McCabe, Ex. N) By letter dated August 22,

2001, Secretary Bazzell responded that although the parties

disagreed on the compliance status of the overflow events,

they agreed that corrective action is required. Bazzell directed

staff to meet with MMSD to “discuss developing a legally

enforceable long-term corrective action plan.” (Aff. McCabe,

Ex. O)

MMSD and the WDNR met during August 2001 to

negotiate a corrective action plan, and the WDNR made a

formal referral of the matter to the Wisconsin Department of

Justice. (Aff. McCabe § 31) On September 7, 2001, the

Wisconsin Department of Justice filed a Stipulation and

Proposed Order incorporating the corrective action plan

between the MMSD and the WDNR in Dane Count Circuit

Case No. 152-342. The new Stipulation required MMSD to

complete three major new sewer capacity expansion projects;

to complete all facilities in the approved 2010 Facilities Plan

by a fixed date; to complete the 2020 Facilities Planning by

December 31 2007; to complete the infiltration and inflow

reduction program by a fixed date; and to develop and

42a

implement a Capacity, Management, Operation and Main-

tenance Program no later than December 31, 2007. The

Stipulation required MMSD to report on the progress toward

meeting the requirements of the Stipulation. The estimated

cost of the activities in the Stipulation is $907 million. (Aff.

McCabe, { 32, Ex. P)

Also, on September 7, 2001, :{MSD’s Director of Legal

Services sent a copy of the Stipulation to counsel for LMF

and FMR, Attorney Karen M. Shapiro. (Aff. McCabe § 33,

Ex. Q) The letter states, in part, “[A]fter your clients review

the Stipulation, I am sure they will agree that it more than

meets their concerns.” (/d.) On October 19, 2001, Judge

Moria Krueger of the Dane County Circuit Court stated her

reluctance to sign the Stipulation and Proposed Order in a

case “a quarter of a century old.” (Aff. McCabe 4 34, Ex. S)

Judge Krueger wrote:

From what has recently been presented, it looks as

though further court “oversight” is contemplated for

almost 20 more years. As is noted in the latest

submission, judgment entered in this case in 1977.

(There is also a 1976 judgment in the file). It does seem

to me that at some point a court’s involvement in a case

must end. It also seems to me that this case has gone

well beyond that point. Every encouragement is given to

the parties to continue to resolve their disputes by

written stipulation, but I do not understand why each

agreement (contract) must convert to a court order in a

25 year old case. I also know of no case law mandating

that I sign such on-going orders when presented to me,

no matter how many years after judgment. If you know

of such precedent, I would appreciate your sharing it

with me.

Attorney Shapiro wrote to MMSD on October 10, 2001,

acknowledging receipt of the Stipulation and requesting an

opportunity to discuss the Stipulation with the MMSD and

43a

WDNR. The parties agreed to meet on December 20, 2001.

(Aff. McCabe, Ex. V) The U.S. EPA provided comments on

the proposed Stipulation and Order to the WDNR in advance

of the December 20, 2001, meeting. (Pl. Ex. L) The meeting

was attended by representatives of MMSD, the Wisconsin

Department of Justice, the DNR, U.S. EPA, and LMF and

FMR and their attorneys. (Aff. McCabe, Ex. W) As a follow

up to the meeting, Attorney Shapiro wrote the following letter

to MMSD and Assistant Attorney General Eric J. Callisto:

Thank you for meeting with Friends of Milwaukee’s

Rivers (“FMR”) and Lake Michigan Federation

(“LMF”) on Thursday, December 20, 2001, to discuss

the above-referenced stipulation.

_ | am writing to confirm our understanding of what was

agreed to in terms of next steps. Specifically, by January

11, 2002, Eric Callisto will inform LMF/FMR whether

or not the Wisconsin Department of Justice (“DOJ”) can

formally commit to defer from filing a complaint or

complaint and stipulation against MMSD until] March

15, 2002, at the earliest. If the DOJ can make such a

commitment, LMF and FMR will likewise agree not to

file suit before March 15, 2002.

LMF and FMR will provide DNR, DOJ and MMSD

with written comments concerning the Stipulation by

January 31, 2002. The parties also agreed to schedule a

second meeting to discuss the stipulation and DNR’s,

MMSD’s and DOJ’s response to the LMF/FMR com-

ments. The meeting is currently set for 10:30 a.m. on

February 19, 2002, at MMSD’s offices.

Assistant Attorney General Eric J. Callisto agreed that the

Wisconsin Department of Justice would not file a complaint

or complaint and stipulation against the Milwaukee Metro-

politan Sewerage District prior to March 15, 2002. (Aff.

McCabe, Ex. X) A letter from the U.S. EPA to the WDNR

44a

dated January 8, 2002, states that the U.S. EPA supports the

WDNR taking the lead in negotiating a resolution to the

MMSD’s CSOs and SSOs problems, and that the CWA

requirements would be satisfied if the EPA comments were

incorporated into the Stipulation. (Aff. Lazarski 4 10, Ex. 6)

Attorney Shapiro provided the comments on the stipulation to

the Wisconsin Department of Justice and MMSD on January

31, 2002, and a second meeting was held on February 19,

2002. (Aff. McCabe, Ex. Y)

Prior to the February 19, 2002, meeting, Attorney Shapiro

acknowledged MMSD’s offer to make additional files

available to LMF and FMR for their review. (Aff. McCabe,

Ex. Y) In addition, Attorney Shapiro wrote to McCabe and

Callisto on March 7, 2002, supplementing a settlement

proposal with a request for attorney’s fees and costs in the

amount of $110,000. (Aff. McCabe, Ex. Y)

On March 15, 2002, at 7:57 a.m., plaintiffs filed this suit.

Later that day, the Wisconsin Department of Justice filed an

action against MMSD in Milwaukee County Circuit Court.

The Milw: kee County suit alleged eight violations of

MMSD’s wWPDES permit based upon sanitary sewer

overflow events on August 27, 1995, June 16, 1996, April 8,

1999, April 21, 1999, June 12, 1999, May 17, 2000, August

5, 2000, and September 11, 2000. The complaint sought

forfeitures as provided in Wis. Stat. § 283.91(2), a 23%

penalty assessment pursuant to Wis. Stat. 757.05(1), a 10%

environmental assessment pursuant to Wis. Stat. § 299.93(1),

a 1% jail assessment pursuant to Wis. Stat. § 302.46(1), court

costs and disbursements, including attorney fees, as well as

injunctive relief. (Pl. Ex. N; Aff. McCabe, Ex. Z)

The EPA provided additional comments on the Stipulation

to the WDNR on April 4, 2002. (Aff. Lazarski J 11, Ex. 7)

On May 17, 2002, the DOJ filed a revised Stipulation and

Proposed Order resolving the state’s claims against MMSD.

(Aff. McCabe, Ex. AA) The Stipulation and Order was signed

45a

by Milwaukee Coun*’ Circuit Court Judge Mel Flanagan on

May 29, 2002. The Final Stipulation states:

. In lieu of a penalty assessment or other monetary

sanction, the establishment of a legally binding long-

term corrective action program for future water pollution

abatement construction projects ... is consistent with

the missions of both agencies to meet the requirements

of the Federal and State Clean Water Acts, including the

elimination of sanitary sewer overflows and the further

reduction of combined sewer overflows, and to redress

alleged sanitary sewer overflow violations of the

District’s WPDES permit; . . .

(Aff. McCabe § 41, Ex. AA, p. 2)

Compliance with this Stipulation will increase the MMSD

system’s storage capacity by 116 million gallons (approxi-

mately 30%) and will force MMSD to :mplement the CMOM

self-auditing program. The total cost of compliance with this

Stipulation is estimated at approximately $907 million

dollars.

On the federal level, the U.S. EPA filed a ten-page request

for information with the MMSD under Section 308 of the

Clean Water Act, 22 U.S.C. § 1318(a) in November of 2001.

The request focused on MMSD’s system operation, capacity

and overflow history. The MMSD responded to this request

with four cartons of information on February 14, 2002. (Aff.

McCabe § 36, Exs. T and U) In addition, a letter dated August

1, 2002, to Congressman Jan Schakowsky of Chicago,

Illinois, from Christine Whitman, Chief U.S. EPA, explains

the U.S. EPA’s role in supervising the CSOs and SSOs that

have occurred in Milwaukee:

The United States Environmental Protection Agency

(EPA) has been working with the Wisconsin Department

of Natural Resources (the Department) and other

concerned parties on the issues of CSO and SSOs for

46a

several years, and has been taking an active role in these

matters. Prior to the State’s filing of the stipulation and

order against MMSD addressing SSOs, we participated

in discussions with the Department, MMSD, and

Environmental groups to develop a strategy to address

the overflow problems. EPA is committed to working

with the State on reissuance of its National Pollutant

Discharge Elimination System (NPDES) permit to

MMSD, which will include a long-term control plan to

address the CSO problems. EPA supports the State’s

decision to issue individual NPDES permits to the

MMSD service communities. The permits will include a

commitment to control inflow and infiltration, which

contribute to MMSD’s overflows.

Attached to the letter is a fact sheet detailing “the positive

steps that the Department, MMSD, and EPA, have taken

toward correcting the difficult problem of wet weather

overflows.” (Supp. Aff. Lazarski J 4, Ex. C) The fact sheet

explains that the U.S. EPA Region 5 has issued information

requests to three MMSD service communities and one to

MMSD. “The purpose of the requests is to obtain the latest

technical information so that U.S. EPA can make an informed

decision on permitting and, if necessary, enforcement.”

Continuing, the fact sheet states that the EPA strategy to date

has been to follow the State lead on the issue while

maintaining a federal presence. (/d.)

In their submissions, plaintiffs have included several

articles from the Milwaukee Journal Sentinel covering

the MMSD and sewage dumping by MMSD after the 2002

Stipulation and Order was signed by Milwaukee County

Circuit Judge Flanagan. (Pl. Exs. P, Pi. Ex. To Sur-Reply,

A-E)

ee,

47a

CONCLUSIONS OF LAW

A. Standard on a Motion to Dismiss

The standard of review for a Rule 12(b)(1) motion to

dismiss for lack of subject matter jurisdiction depends upon

the purpose of the motion. 2 James Wm. Moore et al.,

Moore’s Federal Practice, § 12.30[4] (3d ed. 2003). If the

motion simply challenges the sufficiency of the allegations of

subject matter jurisdiction, “the court must accept as true all

well-pleaded factual allegations and draw _ reasonable

inferences in favor of the plaintiff.” Transit Exp., Inc. v.

Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001) (citing Rueth v.

EPA, 13 F.3d 227, 229 (7th Cir. 1993)). If, however, the

motion denies or controverts the truth of the jurisdictional

allegations, it is permissible for the court to “look beyond the

jurisdictional allegations of the complaint and view whatever

evidence has been submitted on the issue to determine

whether in fact subject matter jurisdiction exists.” Capitol

Leasing Co. v. F.D.1.C., 999 F.2d 188, 191 (7th Cir. 1993).

B. Subject Matter Jurisdiction

Plaintiffs assert that this court has subject matter

jurisdiction over their claims pursuant to § 505(a) of the

CWA. Under § 505\: |, a suit to enforce any limitation in an

NPDES permit may be brought by any “citizen,” defined as

“a person or persons having an interest which is or may be

adversely affected.” 33 U.S.C. §§ 1365(a), (g). Sixty days

before initiating a citizen suit, however, plaintiffs must give

notice of the alleged violation to the EPA, the State in which

the alleged violation occurred, and the alleged violator.

§ 1365(b)(1)(A). The Act bars citizens from suing if the EPA

or the State has already commenced, and is “diligently

prosecuting,” a civil or criminal action. 33 U.S.C. § 1365

(b)(1)(B); 33 U.S.C. § 1319(g)(6).

In cases such as this, deference to governmental enforce-

ment agencies is appropriate because the CWA delegates

48a

primary enforcement responsibility to designated state and

federal agencies. Friends of the Earth, Inc. v. Laidlaw

Environmental Services (TOC), Inc., 890 F.Supp. 470, 487

(D.S.C.1995). For example, the requirement in section

505(b)(1)(A) that citizens file a notice letter sixty days before

bringing a private enforcement suit was designed to give the

governmental agencies the “first shot” at enforcement. /d. As

the Supreme Court explained, “the citizen suit is meant to

supplement rather than to supplant governmental action.” /d.,

(quoting Gwaltney of Smithfield, Ltd. v. Chesapeake Bay

Found., Inc., 484 U.S. 49, 61, 108 S.Ct. 376, 98 L.Ed.2d 306

(1987)). Such limitations on citizen suits “allow for smoother

operation of ordinary enforcement mechanisms” and encour-

age out-of-court settlements between agencies and polluters.

Id., (citing Connecticut Coastal Fishermen’s Ass'n v. Remin-

gton Arms Co., 777 F.Supp. 173, 179, 186 (D.Conn. 1991),

aff ‘d in part, rev'd in part, 989 F.2d 1305 (2d Cir. 1993); cf.

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

F.2d 1320, 1324 (7th Cir. 1992) (action under the Resource

Conservation and Recovery Act (RCRA), stating: “An

Administrator unable to make concessions is unable to obtain

them. A private plaintiff waiting in the wings then is the

captain of the litigation.... To say... that the EPA is not

‘diligently prosecuting’ the action if it does not sue the

person, or use the theories, the plaintiff prefers would strip

EPA of the control the statute provides.”’).

MMSD argues that dismissal is appropriate under two

sections of the CWA. The first is 33 U.S.C. § 1365(b)(1)(B),

which provides that no action may be commenced “if the

Administrator [of the EPA] or State has commenced and is

diligently prosecuting a civil or criminal action in a court of

the United States, or a State to require compliance with the

standard, limitation, or order.” MMSD submits that the State,

under the oversight of the U.S. EPA, has commenced and

prosecuted judicial enforcement actions diligently in Dane

County and Milwaukee County Circuit Courts. The second is

49a

33 U.S.C. § 1319(g)(6), which provides in relevant part, that

any violation “with respect to which a State has commenced

and is diligently prosecuting an action under a State law

comparable to this subsection, ... shall not be the subject of

a civil penalty action under... section 1365 of this title.”

Under either limitation, plaintiffs bear the burden of

proving that the state agency’s prosecution was not diligent.

Williams Pipe Line Co. v. Bayer Corp., 964 F. Supp. 1300,

1324 (S.D. Iowa 1997). This burden is heavy because

diligence on the part of the enforcement agency is presumed.

See Connecticut Fund For Environment v. Contract Plating

Co., Inc., 631 F.Supp. 1291, 1293 (D.Conn.1986). As several

courts have recognized, “the state [enforcement] agency must

be given great deference to proceed in a manner it considers

in the best interests of all parties involved.” Arkansas Wildlife

Fed’n v. ICI Americas Inc., 842 F. Supp. 1140, 1147 (E.D.

Ark.1993), aff'd, 29 F.3d 376 (8th Cir. 1994), cert. denied,

513 U.S. 1147, 115 S.Ct. 1094, 130 L.Ed.2d 1062 (1995).

With respect to the first limitation on citizen suits, MMSD

argues that the WDNR has maintained an open judicial action

against MMSD since 1976 in Dane County Circuit Court, and

more recently in Milwaukee County Circuit Court. From

1977 through 1994, the WDNR required the submission of

and court approval for annual compliance reports and

construction schedules. The WDNR refused to dismiss the

1976 Dane County action notwithstanding repeated requests

by the MMSD in 1994, 1995, 1996, and 1997. Throughout

2000 and 2001, the WDNR investigated overflows from the

MMSD system and concluded they were permit violations

requiring a “legally binding corrective action plan.” The

WDNR referred the matter to the Wisconsin Department of

Justice which filed the corrective action plan, in the form of a

Stipulation and Order, with the Dane County Circuit Court in

2001. The Stipulation and Order addressed post-1994 SSO

50a

events, and was revised following U.S. EPA and citizen

comment. After the Wisconsin Department of Justice filed a

judicial enforcement action in Milwaukee County Circuit

Court on March 15, 2002, the revised Stipulation was

approved on May 29, 2002. Plaintiffs had the opportunity to

intervene in the Dane County and Milwaukee County actions,

but failed to do so. Wis. Stat. § 803.09.

Not surprisingly, plaintiffs have a different view of the

facts. They claim that the 1977 and 2002 Stipulations were

“sweetheart deals,” and that the WDNR filed its only judicial

enforcement action in Milwaukee County Circuit Court after

plaintiffs issued their NIS and filed this lawsuit. According to

plaintiffs, the March 15, 2002, complaint filed in Milwaukee

County Circuit Court and the 2002 Stipulation procedurally

and substantively fall short of “diligent” prosecution.

Plaintiffs first take issue with the timing and manner in

which the Milwaukee County action and the Stipulation were

filed. They clarify that the WDNR did not commence the

1976 action, but rather filed a counterclaim in the action

commenced by MMSD’s predecessor. Therefore, the

Milwaukee County action is the only enforcement action

“commenced” by the WDNR and Wisconsin Department of

Justice.

Next, plaintiffs note that the WDNR returned to the Dane

County Circuit Court nearly twenty-five years later seeking

the entry of a “new” stipulation. The new stipulation was

filed just one business day before the expiration of the sixty-

day tolling period initiated by the LMF and FMR’s NIS. LMF

and FMR were not invited to comment on the Stipulation

until after it was filed with the Dane County Circuit Court.

Finally, Wisconsin Department of Justice filed the enforce-

ment action in Milwaukee County Circuit Court after

plaintiffs filed their citizen suit with this court.

Sla

A closer look at the documents on file undermines

plaintiffs’ arguments. The 1977 Stipulation and Order filed in

Dane County Circuit Court was drafted to address the

“bypass and overflow discharges” and expresses the parties

intent to “settle the above entitled action by agreeing to a

program of pollution abatement projects to be carried out in

the District.” (Pl. Ex. A, p. 3) Paragraph 11 of the Stipulation

provides that the “Judgment entered pursuant to this

Stipulation shall remain in full force and effect until all the

terms and conditions of the Judgment have been fulfilled, or

until otherwise modified by the Court.” Clearly, the parties

and the court contemplated ongoing supervision. Stipulations

were entered as orders in 1982, 1984, 1985, 1986 (March an

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