In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3809
FRIENDS OF MILWAUKEE’S RIVERS and
LAKE MICHIGAN FEDERATION,
Plaintiffs-Appellants,
v.
MILWAUKEE METROPOLITAN SEWERAGE
DISTRICT,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 02-C-0270 — Charles N. Clevert, Jr., Judge.
____________
ARGUED MARCH 29, 2004—DECIDED SEPTEMBER 2, 2004
____________
Before CUDAHY, ROVNER and DIANE P. WOOD, Circuit
Judges.
CUDAHY, Circuit Judge. For decades, the defendant
Milwaukee 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 re-
duced in number and volume after MMSD’s system’s capacity
was expanded by the Deep Tunnel, which was completed in
1994. However, discharges from sanitary sewers (which
2 No. 03-3809
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), per-
ceived 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 citi-
zens’ suit under the Federal Water Pollution Control Act
(the Clean Water Act or the Act), 33 U.S.C. §§ 1251 et seq.,
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 expendi-
tures 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 dili-
gently 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
Wisconsin. MMSD’s 420-square-mile service area includes
No. 03-3809 3
all cities and villages within Milwaukee County (except the
City of South Milwaukee), and all or part of 10 munici-
palities or sanitary districts in the surrounding counties of
Ozaukee, Washington, Waukesha and Racine. Two types of
municipality-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 sani-
tary waste in the same pipes.1 MMSD’s discharge permit
1
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. SENTINEL, May 29, 2004, at 1A (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 1B. The
remaining 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 southeast-
ern Wisconsin communities) to Wisconsin’s Department of Justice
for possible civil litigation. See Larry Sandler, DNR Calls for
Legal Action in MMSD Dumps, MILWAUKEE J. SENTINEL, August
3, 2004, at 1B.
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
(continued...)
4 No. 03-3809
prohibits overflows 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.)
Nearly thirty years ago, the State of Wisconsin (State)2
entered into a stipulation (1977 Stipulation) with the pre-
decessor organization of the defendant, MMSD. This stipu-
lation resolved litigation that had commenced in 1976 in
the Dane County Circuit Court over violations of MMSD’s
1
(...continued)
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.
2
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 let-
ter (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. Id. 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 administrative 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 contexts and as necessary, the agencies will be
referred to individually.
No. 03-3809 5
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 as-
pects of MMSD’s sewage treatment system. The main im-
provement 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.
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 an-
nually 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). Id. 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’
6 No. 03-3809
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 implement a Capacity, Management, Operation and
Maintenance (CMOM) self-auditing program.3 (MMSD’s Br.
at 13.) However, 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 9.4)
Subsequently, the State and MMSD agreed to meet with
the plaintiffs to discuss their concerns about the proposed
3
MMSD notes that the Environmental Protection Agency acknow-
ledges that “even municipal collection systems operated in an ex-
emplary fashion may experience unauthorized discharges under
exceptional circumstances.” (MMSD’s Br. at 10 n.4.) Also, the EPA
recently advocated reduction or elimination of penalties for munic-
ipalities that adopted the CMOM program. Id. 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 1B.
4
For ease of reference, citations to the Plaintiffs’ Short Appendix
will be designated by “PSA at __.”
No. 03-3809 7
2001 Stipulation. The State agreed, at the plaintiffs’ re-
quest, 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 pro-
vision 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
requested to intervene in the State’s suit but did not do so.
Wis. Stat. § 803.09.
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, re-
quires 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 previously filed.
Shortly thereafter, MMSD moved to dismiss the plaintiffs’
complaint. An Audit Report subsequently released by the
8 No. 03-3809
Wisconsin Legislative Audit Bureau (2002 Audit Report)
(Plaintiffs’ Sep. Appx. at 205-301) highlighted several fac-
tors contributing to MMSD’s continuing CSOs and SSOs,
including 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.
Id. 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
judgment, 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 pur-
suant 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 dismiss-
ing 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 reasonable
inferences from those allegations in plaintiffs’ favor as the
non-moving party. Id. We also employ the de novo standard
in reviewing the dismissal of an action on res judicata
grounds. 4901 Corp. v. Town of Cicero, 220 F.3d 522, 527
(7th Cir. 1999).
No. 03-3809 9
The Clean Water Act provides that “any citizen may com-
mence 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, and (iii) to any alleged
violator of the standard, limitation, or order.” Id. at
§ 1365(b)(1)(A). Citizens are also barred from bringing suit
“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.” Id. 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 address-
ing 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. Id. 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 “com-
menced and [was] diligently prosecuting a civil . . . action”
or administrative 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
prosecute a civil or administrative action?
In determining whether the plaintiffs’ suit was barred
under § 1365(b)(1)(B), the district court discussed three of
10 No. 03-3809
the State’s judicial actions: the 1977 Stipulation (which
arose out of the 1976 litigation and addressed earlier vio-
lations); the 2001 Stipulation (which was filed as an at-
tempted continuation 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 adminis-
trative actions undertaken by the State barred the plain-
tiffs’ 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
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 con-
templated violations that were going to continue to occur
until work was completed under the 1977 Stipulation is not
No. 03-3809 11
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 1977 Stipulation was intended to comprehensively
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 to 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 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 Milwaukee 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 diligently 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 com-
pleted 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 lawsuit rather than a new
12 No. 03-3809
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 Stipula-
tion was never approved by the court and was later re-
scinded does not affect its timeliness, which is determined by
the date of filing.5 Connecticut Fund for the Environment,
Inc. v. Upjohn Co., 660 F. Supp. 1397, 1404 (D. Conn. 1987)
(“[T]he court must apply an inflexible rule which deter-
mines jurisdiction from the time of filing the complaint.”).
But the court’s non-approval does render the 2001 action a
non-diligent prosecution.6 Even though the 2001 Stipulation
may have been intended to address “dry and wet weather
5
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 Fisherman’s Ass’n v. New York City Dept. 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 since 1983”). Here,
the 2001 Stipulation was filed before the 60-day window expired
or a citizens’ suit was filed and was therefore timely.
6
It is also troubling that the 2001 Stipulation was filed without
opportunity for notice and comment by the public, including the
plaintiffs.
No. 03-3809 13
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 jurisdic-
tional 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 ac-
tion 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 post-
pone filing its complaint until March 15, 2002 at the plaintiffs’
request, in order to give the parties a chance to negotiate a
satisfactory resolution. The parties did not incorporate 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
14 No. 03-3809
here, are rare, though the caselaw relating to such situa-
tions 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 citi-
zens’ 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.
However, 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 de-
termined as of the time of the filing of a complaint. More-
over, the verb tenses used in subsection (b)(1)(B) and the
scheme of the statute demonstrate 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 omitted); Connecticut
Fund for the Env’t, 660 F. Supp. at 1404 (“[T]he court must
apply an inflexible rule which determines 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 jurisdic-
tional point dictate a conclusion that the State’s 2002
No. 03-3809 15
litigation (and resulting 2002 Stipulation) cannot qualify as
a timely commenced action barring the plaintiffs’ suit.7
Any similarity of the 2002 Stipulation to an ineffective
stipulation that was timely filed in a different suit in a dif-
ferent court (i.e., the 2001 Stipulation) does not alter the
outcome. Thus, we find that the State’s judicial action re-
sulting 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 dili-
gent prosecution requirement (which, as the district court
noted, is a deferential standard). Since the Milwaukee
County action does not meet the timely commencement re-
quirement, 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 dili-
gent prosecution of the violations alleged by the plaintiffs
later, in our discussion of res judicata.
4. WisDNR’s administrative actions
As the Eleventh Circuit has recently noted,
[c]ourts that have addressed § 1319(g)(6)(A)(ii)—the
“diligent-prosecution bar”—have interpreted 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.
7
We note that the State could have avoided this outcome by
incorporating a “first to file” provision into its agreement with the
plaintiffs to postpone filing any suit until March 15, 2002.
16 No. 03-3809
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 enforce-
ment 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 subse-
quently 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 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
No. 03-3809 17
a citizens’ suit for civil penalties.8 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 pro-
posed 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 enforce-
ment action if it triggers notice and hearing procedures
designed to protect and give access to the public and in-
terested parties. Cf. Arkansas Wildlife Fed’n, 29 F.3d at
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 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
8
See McAbee, 318 F.3d at 1251 n.6 (“[M]ost courts that have
addressed the issue have concluded that issuance of an adminis-
trative consent order . . . would satisfy the ‘commencement’ re-
quirement.”); 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 specifi-
cally providing for due process protections in the initiation of
enforcement proceedings, was the actual initiation or ‘commence-
ment’ of an enforcement proceeding”).
18 No. 03-3809
has been commenced, that “[w]riting 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
enforcement 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 pur-
poses 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 Wisconsin law does not authorize administrative
penalty proceedings 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 permissive 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 Wisconsin, the “formal moment” at which an action
is commenced is when WisDOJ files a complaint with state
or federal court because “[f]rom this formal moment en-
forcement becomes public.” Wisconsin Envtl. Law Advocates v.
Wisconsin 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
No. 03-3809 19
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 san-
itary 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,
[u]nder 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
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 (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
20 No. 03-3809
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 determin-
ing whether there is an identity of causes of action. N.
States Power Co. v. Bugher, 189 Wis. 2d 541, 550 (1995).
“What factual grouping constitutes a ‘transaction,’ and what
groupings constitute a ‘series,’ are to be determined prag-
matically, giving weight to such considerations as whether the
facts are related in time, space, origin, or motivation, [and]
whether they form a convenient trial unit . . . .” Id. at 554.
The plaintiffs argue that their suit is broader and dif-
ferent in scope than the State’s 2002 suit in Milwaukee
County. The plaintiffs point to specific differences, including
their allegations of violations 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 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 comprehen-
sive 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
No. 03-3809 21
liability for all 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 undeni-
able 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 responsibil-
ity 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 (1989)
(internal citation omitted). Even if the unspecified viola-
tions, 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 un-
derlying causes of the continuing violations by implement-
ing remedial measures some of which, due to their large
22 No. 03-3809
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 violations) 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 repre-
sent the person’s interests.” Restatement (Second) of
Judgments § 41(1)(d). Thus, “[e]ven when an agency en-
forcement 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 representa-
tive of the public. As a representative of the public’s
interests, the State is subject to the exceptions enumerated
in section 42 of the Restatement (Second) of Judgments,
including the following: “A person is not bound by a judg-
ment for or against a party who purports to represent him
if . . . [t]he 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
No. 03-3809 23
public’s interests, the state’s subsequently-filed government
action must be a diligent prosecution. And if the subse-
quently-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.”9 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 dili-
gently 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 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). Not-
withstanding 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
9
We decline to adopt the plaintiffs’ argument that “in a situation
where a citizen suit has been filed prior to the State’s commence-
ment 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 ac-
tion 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.”).
24 No. 03-3809
materially similar diligent prosecution requirement, “[t]he
statute does not require that the [State] succeed; it requires
only that the [State] try, diligently.” 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 signifi-
cant changes to MMSD’s operating structure at consider-
able expense, including storage and conveyance capacity ex-
pansions and treatment plant and interceptor sewer up-
grades. 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 pre-
sumed. See, e.g., Connecticut Fund for the Env’t v. Contract
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.”). 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 (1987), but also to the fact that courts
are not in the business of designing, constructing or
maintaining sewage treatment systems. See North & S.
No. 03-3809 25
Rivers Watershed Ass’n v. Scituate, 949 F.2d 552, 557 (1st
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 prosecu-
tion 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 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). 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
26 No. 03-3809
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 com-
pliance 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 mag-
nitude.” (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 facil-
ities. We conclude that the construction deadlines incorpo-
rated 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 fail-
ures 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.10 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
10
This policy was first mentioned by the plaintiffs at oral argu-
ment when discussing MMSD’s “mismanagement.” Prior to that,
the plaintiffs had never specified which operational or manage-
ment problems were causing violations.
No. 03-3809 27
reduced the volume of SSOs, it did so by allowing CSOs
instead, even at times when the Deep Tunnel was not filled
to capacity. (Id.) 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 informa-
tion 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.11
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 manage-
ment difficulties behind it, the plaintiffs’ vague allegations
that the 2002 Stipulation fails to address MMSD’s opera-
11
Mechanical failures have also caused some SSOs, but they rep-
resent less than half of one percent of the total volume discharged
from sanitary sewers from 1994-2002. Id. at 234. MMSD con-
firmed at oral argument that its dry weather SSOs were caused
by equipment malfunction.
28 No. 03-3809
tional and management difficulties are insufficient to
indicate that MMSD will thereby be prevented from com-
plying 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,12 the State and MMSD are entitled by the Act
to an opportunity to resolve 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
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
12
See, e.g., Resler, The Sound of Lame Excuses, MILWAUKEE J.
SENTINEL, May 20, 2004, at 22A (“Officials of the Milwaukee
Metropolitan 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 system was actually work-
ing. 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] construc-
tion 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
tanks are being replaced now during the rainy season, a legiti-
mate point.”); Steve Schultze and Marie Rohde, Equipment
Glitches Still Plague MMSD, MILWAUKEE J. SENTINEL, June 17,
2004, at 1A (“MMSD officials [agreed] that yet another project—
replacement of giant sewage holding tanks—also probably con-
tributed 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.”).
No. 03-3809 29
Scituate, the government may choose to forego civil pen-
alties 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 sufficiently high to deter the violations. See Miller,
supra, 10 Wid. L. Symp. J. at 86. In order to have a deter-
rent 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. Svcs. (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 (2000).
But penalties are by no means a requirement for compli-
ance 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 “[d]uplicative actions aimed at exacting finan-
cial 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; 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
30 No. 03-3809
when expensive remedial action is required both hinders
negotiated settlements and is unlikely to help the environ-
ment). Levying additional penalties on violators who are
undertaking massive remedial projects 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 expen-
sively 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. (PSA at 231.)
During planning for the Deep Tunnel, the capacity require-
ments 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
five storms larger than the June 1940 storm of record, result-
ing 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
No. 03-3809 31
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.)13
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 the 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. . . . [R]eduction in
number of SSO events is contemplated; not a percent re-
duction in total volume of SSO’s.” (MMSD’s Supp. Appx. at
98; see also MMSD’s Br. at 46 (noting that the State ac-
complished “guaranteed meaningful relief in the form of
capital improvements and operational changes that will
actually reduce the number of overflow events”) (emphasis
added).) Compliance means an end to violations, not merely a
reduction in 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
13
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).
32 No. 03-3809
continue notwithstanding the polluter’s settlement with the
government. 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 Sanita-
tion, 772 F. Supp. 162, 168 (S.D.N.Y. 1991).
Contrary to the district court’s finding, we do not feel con-
fident that the 2002 Stipulation will indeed result in elimina-
tion 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”14).
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.15
14
Schultze and Rohde, supra note 2, at 1B.
15
Of course, we are aware that here, as with other regulatory cir-
cumstances, “efforts to achieve ‘the last 10 percent’ ” would be very
expensive. Stephen Breyer, BREAKING THE VICIOUS CIRCLE:
TOWARD EFFECTIVE RISK REGULATION 28 (Harvard Univ. Press
1993). But we are not talking about whether the proposed re-
(continued...)
No. 03-3809 33
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 strat-
egy. 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.16
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 determination of that issue. Specifically, the district court
15
(...continued)
medial 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.
16
We therefore need not determine whether fairness would render
res 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 con-
siderations.”) (internal quotations 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).
34 No. 03-3809
should determine whether the systemic inadequacies of
MMSD’s sewerage facilities will be sufficiently ameliorated
by the proposed remedial projects to result in compliance.
If the district court concludes, after giving some deference
to the judgment of the State, that there is a realistic
prospect that violations due to the same underlying causes
purportedly addressed by the 2002 Stipulation will continue
after the planned improvements are completed, the plain-
tiffs’ 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 exception to the res judicata doctrine
should be applied here.17
Although we have allowed the plaintiffs’ suit to continue
(at least for the time being), we hope that the State, to-
gether 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.
17
As Wisconsin’s Supreme Court has noted, “[c]laim 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 ex-
ception 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.
No. 03-3809 35
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-2-04