HomeMy Public PortalAboutExhibit MSD 18H7 Counterclaim 091208Case 4:07-cv-01120-CEJ Document 96 Filed OQ/1 7I2nnR Paae 1 of 26
Exhibit MSD 18H7
UNITED STATES DISTRICT Cuun.1
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
UNITED STATES OF AMERICA,
et al.,
Plaintiffs,
and
MISSOURI COALITION FOR THE
ENVIRONMENT FOUNDATION,
Plaintiff/Intervenor
vs.
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT,
Defendant.
No. 4:07 -CV -1120 CEJ
MEMORANDUM AND ORDER
This matter is before the Court on several motions related to
counterclaims brought by defendant the Metropolitan St. Louis Sewer
District (MSD), on a motion to dismiss claims brought by plaintiff -
intervenor Missouri Coalition for the Environment Foundation (the
Coalition), and on the motion of the Missouri Industrial Energy
Consumers (MIEC) to intervene. The issues are fully briefed.
I. Background
This is an action brought by the United States Environmental
Protection Agency (EPA) and the State of Missouri alleging
violations of the Clean Water Act, 33 U.S.C. § 1251 eq seq., and
violations of National Pollution Discharge Elimination System
(NPDES) permits issued to MSD by the Missouri Department of Natural
Case 4:07-cv-01120-CEJ Document 96 Filed 09/12/2008 Page 2 of 26
Resources, pursuant to authorization by the EPA. The State of
Missouri has joined this action as a plaintiff.
Plaintiff -intervenor Missouri Coalition for the Environment
Foundation (the Coalition) is a non-profit corporation formed to
preserve and enhance the natural physical environment. The
Coalition filed an intervenor complaint and intervened in this
action under 33 U.S.C. § 1365(b). The Coalition's complaint also
alleges violations of the Clean Water Act and the NPDES permits
issued to MSD. The EPA, the State of Missouri, and the Coalition
seek civil penalties for the alleged violations, costs of
litigation, and injunctive relief.
II. Legal Standard
The purpose of a motion to dismiss under Rule 12(b)(6) of the
Federal Rules of Civil Procedure is to test the legal sufficiency
of the complaint. The factual allegations of a complaint are
assumed true and construed in favor of the plaintiff, "even if it
strikes a savvy judge that actual proof of those facts is
improbable." Bell Atlantic Corp. v. Twombly, --- U.S. ---, 127 S.
Ct. 1955, 1965 (May 21, 2007) citing Swierkiewicz v. Sorema N.A.,
534 U.S. 506, 508 n.1 (2002); Neitzke v. Williams, 490 U.S. 319,
327 (1989) ("Rule 12(b)(6) does not countenance . . dismissals
based on a judge's disbelief of a complaint's factual
allegations"); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (a well -
pleaded complaint may proceed even if it appears "that a recovery
is very remote and unlikely"). The issue is not whether the
plaintiff will ultimately prevail, but whether the plaintiff is
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entitled to present evidence in support of his claim. Id. A
viable complaint must include "enough facts to state a claim to
relief that is plausible on its face." Bell Atlantic Corp., 127 S.
Ct. at 1974. See also id. at 1969 ("no set of facts" language in
Conley v. Gibson, 355 U.S. 41, 45-46 (1957), "has earned its
retirement.") "Factual allegations must be enough to raise a right
to relief above the speculative level." Id. at 1965.
III. Discussion
A. Coalition's Request for Litigation Costs and Civil
Penalties
Defendant MSD seeks to dismiss the portion of the Coalition's
intervenor complaint that seeks civil penalties and costs of
litigation, for failure to state a claim upon which relief can be
granted, pursuant to Rule 12(b) (6), Fed. R. Civ. P. MSD also moves
to dismiss any claims in the intervenor complaint based on 33
U.S.C. § 1365(a). The Coalition responds that although its
complaint alludes to Section 1365(a), it is clear from the
complaint that Coalition is not seeking relief under that
provision. The Court agrees, and finds that it is clear that
Coalition seeks relief under 33 U.S.C. § 1365(b) (1) (B) . The Court
thus must determine whether, in an action brought pursuant to that
subsection, a citizens' group is entitled to recover civil
penalties, attorney's fees, and costs (including expert witness
fees) .
Civil Penalties
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MSD asserts that the Coalition is not entitled to seek civil
penalties in a suit brought pursuant to Section 1365(b), because
the United States and the State of Missouri are diligently
prosecuting this action, and allowing a citizens' group to seek
penalties could duplicate and/or impede the government's
enforcement efforts.
The Coalition argues that Section 1365(b) (1) (B) contains no
provision limiting the type of relief that an intervenor may seek,
but merely bars the commencement of a separate "action," not the
assertion of a claim. The Coalition asserts that the supervising
court can prevent double recovery and ensure that the intervenor's
remedies do not interfere with the government's enforcement
efforts.
Title 33, Section 1365, United States Code, provides in
relevant part:
(a) Except as provided in subsection (b) of this
section and section 1319(g) (6) of this title, any
citizen may commence a civil action on his own
behalf - (1) against any person (including (I) the
United States, and (ii) any other governmental
instrumentality or agency to the extent permitted
by the eleventh amendment to the Constitution) who
is alleged to be in violation of (A) an effluent
standard under this chapter or (B) an order issued
by the Administrator or a State with respect to
such a standard or limitation, or (2) against the
Administrator where there is alleged a failure of
the Administrator to perform any act or duty under
this chapter which is not discretionary with the
Administrator. . . .
(b) No action may be commenced (1) under subsection
(a) (1) of this section (A) 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
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(iii) to any alleged violator of the standard,
limitation, or order, or (8) if the Administrator
or State has commenced and is diligently
prosecuting a civil or criminal action in a court
of the United States . . . to require compliance
with the standard, limitation, or order, but in any
such action in a Court of the United States a
citizen may intervene as a matter of right.
Title 33, Section 1319(g)(6) United States Code, provides in
relevant part:
(A) Actions taken by the Administrator . . . under this
subsection shall not affect or limit the
Administrator's . authority to enforce any
provision of this chapter; except that any
violation - (I) with respect to which the
Administrator. . . has commenced and is diligently
prosecuting an action under this subsection . .
shall not be the subject of a civil penalty action
under . . . section 1365 of this title.
(B) The limitations contained in subparagraph (A) on
civil penalty actions under section 1365 of this
title shall not apply with respect to any violation
for which (I) a civil action under section
1365(a) (1) of this title has been filed prior to
commencement of an action under this subsection, or
(ii) notice of an alleged violation of section
1365(a) (1) of this title has been given in
accordance with section 1365(b)(1)(A) of this title
prior to commencement of an action under this
subsection and an action under section 1365(a) (1)
of this title . . . is filed before the 120th day
after the date on which such notice is given.
The United States Supreme Court interpreted the statutory
scheme of Section 1365 in Gwaltney of Smithfield v. Chesapeake Bay
Foundation, Inc., 484 U.S. 49 (1987). It found that if the
Administrator or a State "commences enforcement action" within
sixty days of the citizen's notice of intent to sue, a citizen suit
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is barred, "presumably because governmental action has rendered it
unnecessary." Id. at 59-60. The Court continued
It follows logically that the purpose of notice to the alleged
violator is to give it an opportunity to bring itself into
complete compliance with the [Clean Water] Act and thus
likewise render unnecessary a citizen suit. . . . The bar on
citizen suits when governmental enforcement action is underway
suggests that the citizen suit is meant to supplement rather
than to supplant governmental action.
Id.
The Court went on to conclude that the supplementary nature
of citizen suits would be undermined if citizens could seek civil
penalties to redress a past violation of the Clean Water Act, even
if the violator had addressed the problem and was now in compliance
with the Act. Such a result would transform the citizen's role
"from interstitial to potentially intrusive," a result the Court
concluded Congress did not intend. Id. at 60-61.
A citizens' group thus can seek civil penalties under Section
1365 (a) . The citizen group's role in an action is much more limited
under Section 1365(b), and that role does not extend to seeking
civil penalties when the Administrator or a State (or, as here,
both) are pursuing an enforcement action against an alleged
violator. In this action, the United States and the State of
Missouri allege numerous violations of the Clean Water Act and seek
civil penalties and injunctive relief. Allowing the Coalition to
seek civil penalties would render the Coalition's intervention in
this action "potentially intrusive.i1
1 This result is consistent with the holding in Friends of
the Earth, Inc. v. Laidlaw Environmental Services, Inc., 528 U.S.
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The Court concludes that, as a matter of law, as long as the
United States and the State of Missouri are diligently prosecuting
this action, the Coalition may not seek civil penalties for MSD's
alleged violations of the Clean Water Act. Accordingly, the
Coalition's claims for civil penalties fail to state a claim upon
which relief can be granted, and the Court will dismiss the
Coalition's requests for such penalties.
Costs and Attorney's Fees
MSD moves to dismiss the Coalition's request for litigation
costs and attorney's fees, asserting that costs and fees are
167 (2000), where the Court noted that "the federal government
retains the power to foreclose a citizen suit by undertaking its
own action. 33 U.S.C. § 1365(b)(1) (5)." Id. at 188 n 4. Cf.
Atlantic States Legal Foundation, Inc. v. Koch Refining Co., 681
F.Supp. 609, 611 n 2 (D. Minn. 1988)(disagreed with on other
grounds by United States Environmental Protection Agency v. City
of Green Forest, Arkansas, 921 F.2d 1394 (8th Cir. 1991), citing
33 U.S.C. § 1319(g)(6)(A)) ("In the event either the
administrator or the state commences a civil or criminal action
to enforce compliance with the standards" within sixty days
following a citizen's notice of intent to sue, "then the citizen -
plaintiff is barred from commencing its own suit and is limited
to intervention in the government action. . . . Moreover, a
citizen suit seeking civil penalties (as opposed to injunctive
relief) is also barred if the administrator or state commences an
administrative civil penalty assessment within the sixty-day
period" following notice of intent to sue). And cf. Comfort Lake
Ass'n v. Dresel Contracting, Inc., 138 F.3d 351, 357 (8th Cir.
1998) (construing 33 U.S.C. § 1319(g) and finding that an
administrative enforcement agreement between the EPA or an
equivalent state department "will preclude a pending citizen suit
claim for civil penalties if the agreement is the result of a
diligently prosecuted enforcement process." Such an agency
enforcement action is "entitled to considerable deference if we
are to achieve the Clean Water Act's stated goal of preserving
the `primary responsibilities and rights of States to prevent,
reduce, and eliminate pollution.'" Id., Quoting 33 U.S.C. §
1251 (b) . )
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available only to the prevailing party in a citizens' suit brought
pursuant to 33 U.S.C. § 1365(a), but not to an intervenor under 33
U.S.C. § 1365(b) such as the Coalition. The Coalition argues that
it is entitled to recover attorney's fees if it is a prevailing
party under Section 1365(d).
Title 33, Section 1365(d), United States Code provides: "The
court, in issuing any final order in any action brought pursuant to
this section, may award costs of litigation (including reasonable
attorney and expert witness fees) to any prevailing or
substantially prevailing party, whenever the court determines such
award is appropriate." On its face, the statute thus suggests that
the court has discretion to determine when an award of fees is
appropriate, and which party or parties are entitled to an award.
A district court in a Clean Water Act enforcement action "is vested
with wide discretion and brings to bear an ability to weigh against
the total background" of the litigation "the significance of any
contributions and the appropriateness of any award of fees and
costs." United States v. Comunidades Unidas Contra la
Contaminacion, 204 F.3d 275, 283 (1st Cir. 2000).
"Parties are considered `prevailing parties' for the purposes
of attorney's fees 'if they succeed on any significant issue in
litigation which achieves some of the benefit the parties sought in
bringing suit.'" United States v. Maine Dept. of Transportation,
980 F.Supp. 546, 549 (D. Me. 1997). In Maine Department of
Transportation, the court determined that the plaintiff -intervenors
were not prevailing parties because they "did not seek any
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additional relief beyond that sought by the United States when they
intervened in the United States' enforcement action," although they
could have "filed a complaint when they intervened."2 Id. at 549,
550. The court also found that since the United States had
prosecuted the action diligently, no basis for an award of
attorney's fees existed. Id. at 550. The Court concluded that
plaintiff -intervenors were not entitled to recover attorney's fees
under Section 1365(d) "solely for aiding in the government's
enforcement efforts." Id. at 550-51.
The United States Court of Appeals for the Eighth Circuit has
held that a citizens' group "may still be entitled to an award of
costs and a reasonable attorney's fee as a prevailing party under
[Section 1365(d)] if its citizen suit was the catalyst for agency
enforcement action that resulted in the cessation of Clean Water
Act violations.i3 Comfort Lake Ass'n, Inc. v. Dresel Contracting,
Inc., 138 F.3d 351, 357 (8th Cir. 1997), citing Atlantic States
2 In contrast to the plaintiff -intervenors in Maine Dept. of
Transportation, supra, 980 F.Supp. 546, the Coalition did file a
complaint when it intervened in the present enforcement action.
In the complaint, the Coalition specifically requested an award
of "costs of litigation, including reasonable attorneys' and
expert witness' fees pursuant to" Section 1365(d). Intervenor
Complaint at 10.
3 The Court of Appeals affirmed the district court's denial
of attorney's fees in Comfort Lakes Association because the state
environmental protection department had already begun to enforce
permit conditions before the citizens intervened, and the
citizens' group impeded the agency's enforcement efforts by
suing it in state court and actively opposing a proposed
settlement agreement. Id. at 357.
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Legal Found., Inc. v. Eastman Kodak Co., 933 F.3d 124, 128 (2d Cir.
1991); Green Forest, supra, 921 F.2d at 1402.
This litigation is not yet at the stage where the Court can
assess the Coalition's contribution to the case or otherwise
exercise its discretion to determine whether an award of attorneys'
fees and costs is appropriate. But the Coalition is not barred as
a matter of law from seeking an award of fees and costs. The Court
will deny MSD's motion to dismiss the Coalition's request for costs
and fees.
B. MIEC Motion to Intervene
The Missouri Industrial Energy Consumers (MIEC) is a non-
profit trade association of businesses, some of which use the MSD
system and consequently are ratepayers. MIEC seeks to intervene as
a neutral, undesignated party for the limited purpose of
participating in proceedings related to any remedy, including
settlement negotiations, for the alleged violations of the Clean
Water Act and NPDES permits at issue in this action. MIEC expressly
states that one of its goals as proposed intervenor is to maintain
MSD rates at "reasonable levels," but MIEC denies that its interest
is limited to financial concerns. It claims that MIEC members have
an interest in maintaining a reliable sewer system that can
accommodate continued regional growth and is protective of the
environment; in the manner and time -frame in which any upgrades or
alterations are made; and in protecting regional rivers and
streams.
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MIEC claims that it has an unconditional right to intervene
pursuant to 33 U.S.C. § 1365(b) (1) (B) . It also asserts it meets the
criteria for intervention as of right, under Rule 24(a)(1) and (2) ,
Fed. R. Civ. P. Finally, MIEC moves, in the alternative, for
permissive intervention under Rule 24(b), Fed. R. Civ. P.
The United States and the Coalition oppose MIEC's motion to
intervene on several grounds.' They claim in part that MIEC does
not have Article III standing. Because the Court lacks jurisdiction
over the claims of a party that lacks standing, the Court will
address this issue first.
"Article III standing is a prerequisite for intervention in a
federal lawsuit." Curry v. Regents of the University of Minnesota,
167 F.3d 420, 422 (8th Cir. 1999), quoting Standard Heating & Air
Conditioning Co. v. City of Minneapolis, 137 F.3d 567, 570, 573
(8th Cir. 1998). A party has standing to bring a claim "only if it
has satisfied constitutional standing requirements and the court
determines as a prudential matter that the party is the appropriate
proponent of the legal rights raised." Nat'l Federation of the
Blind of Missouri v. Cross, 184 F.3d 973, 979 (8th Cir. 1999)."The
party invoking federal jurisdiction bears the burden of
establishing the[] elements" of standing. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561 (1992) (citations omitted).
4 Plaintiff the State of Missouri and defendant MSD have not
responded to the motion, and the time allowed for doing so has
expired.
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A federal court only has jurisdiction to hear actual cases and
controversies. Id. To show that an actual case or controversy
exists, a party must show it has suffered "some actual or
threatened injury that can be traced to the allegedly illegal
conduct and that is capable of being redressed." Nat'l Federation
of the Blind, 184 F.3d at 979 (citation omitted). An injury in fact
is "an invasion of a legally protected interest that is concrete,
particularized, and either actual or imminent." Curry, supra,
citing Lujan, 504 U.S. 555.
An association has standing to bring suit on behalf of its
members when its members would otherwise have standing to sue
in their own right, the interests at stake are germane to the
organization's purpose, and neither the claim asserted nor the
relief requested requires the individual participation of
individual members in the lawsuit.
Friends of the Earth, Inc. v. Laidlaw Environmental Services, Inc.,
528 U.S. 167, 181 (2000).
"[A]llegations of injury are sufficient to invoke the
jurisdiction of a court." Gwaltney of Smithfield v. Chesapeake Bay
Foundation, Inc., 484 U.S. 49, 65 (1987). "A suit will not be
dismissed for lack of standing if there are sufficient `allegations
of fact' - not proof - in the complaint or supporting affidavits."
Id., quoting Warth v. Seldin, 422 U.S. 490, 501 (1975). "At the
pleading stage, general factual allegations of injury resulting
from the defendant's conduct may suffice, for on a motion to
dismiss [the court presumes] 'that general allegations embrace
those specific facts that are necessary to support the claim."
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Lujan, supra, at 561, Quoting Lujan v. National Wildlife
Federation, 497 U.S. 871, 889 (1990).
The issue is thus whether, at this stage of the litigation,
MIEC has sufficiently alleged an injury in fact to survive
dismissal.
The parties dispute whether MIEC's claimed economic injury
(higher rates) is sufficient to constitute an injury in fact. MIEC
denies that its only interest is economic, as explained above. The
Court finds that it is unnecessary to determine whether economic
injury alone is sufficient to confer standing, because the proposed
intervenor cannot show that any such injury is "imminent."
In Lujan, 504 U.S. 555, the Supreme Court found that "`some
day' intentions - without any description of concrete plans, or
indeed even any specification of when the some day will be - do not
support a finding of the `actual or imminent' injury that our cases
require." Id. at 564. The "imminence" requirement is "concededly a
somewhat elastic concept," but its purpose is "to ensure that the
alleged injury is not too speculative for Article III purposes -
that the injury is `certainly impending.'" Id. at 564 n 2, Quoting
Whitmore v. Arkansas, 495 U.S. 149, 155 (1990). "[T]he injury or
threat of injury must be both 'real and immediate,' not
`conjectural' or `hypothetical.'" City of Los Angeles v. Lyons, 461
U.S. 95, 102 (1983) (citations omitted). Mere "conjecture" or
"speculation" is not sufficient. Id. at 108.
MIEC claims that "[i]f found liable as a result of" this
action, "MSD will need to pass the cost of corrective actions
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required to implement the remedy in this case to its ratepayers."
MIEC Statement of Interest at 3. "As MSD ratepayers, MIEC members
will directly bear the burden of any increase required to implement
the remedies adopted."Id. MIEC also claims, "If found liable as a
result of this proceeding, MSD will channel any civil fines and
environmental expenditures to its ratepayers." Id. at 7. Finally,
MIEC alleges that MSD does not have "stockholders who can bear some
of the costs needed for capital improvements and long term .
maintenance activities," and MSD has announced that it is
undertaking "a $3.7 billion, multi -year capital improvement and
replacement program." Id. MIEC states, "It is unclear the extent to
which this program will address the alleged violations" raised in
this action, "and whether additional funds will be needed in
addition to this $3.7 billion program to remedy the issues" alleged
in this action. Id.
According to the pleadings filed by MIEC, before the injury of
the rate increases MIEC fears can actually occur, several things
must happen: (1) MSD must be found liable of the violations
alleged, (2) civil penalties must be imposed on MSD, or it must be
required to undertake costly improvements projects, and (3) MSD
must determine to pass on the cost of such penalties or projects to
the ratepayers. Only then would MIEC be required to pay higher
rates. While the above sequence of events is surely not
inconceivable, the Court finds that it is too speculative and
remote to meet the actuality and imminence requirements for
standing purposes.
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The Court also notes that, as the United States and the
Coalition observe, MIEC members are not the only ratepayers in the
MSD system. All ratepayers would have to bear the burden of
increased rates, and thus MIEC cannot show that its alleged injury
is particularized.
MIEC claims that it has an interest in maintaining a reliable
sewer system that can accommodate continued regional growth and is
protective of the environment; in the manner and time -frame in
which any upgrades or alterations are made; and in protecting
regional rivers and streams. The reliability of the sewer system is
not at issue in this action for alleged violations of the Clean
Water Act and NPDES permits. Because MSD's liability has not yet
been decided, no upgrades or alterations have been proposed, it is
not clear whether any will be required, and the manner and time -
frame of any such alterations are a matter of pure conjecture and
speculation. These alleged interests are thus insufficient to be
injuries in fact.
Although MIEC claims an interest in protecting regional rivers
and streams, it avowedly takes a neutral position on whether MSD
has violated the Clean Water Act: "The MIEC is not intervening for
the purpose of establishing or defending the liability of MSD (or
any other party) for violations under the CWA." Statement of
Interest at 8. Thus, MIEC is expressly not claiming that regional
rivers and streams are not being protected, causing MIEC injury.
The Court thus finds that MIEC has not met its burden of
alleging an imminent and particularized injury in fact sufficient
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to confer Article III standing, and the Court lacks jurisdiction to
consider its motion to intervene.
C. Motion to Dismiss MSD's Counterclaims and to Strike MSD's
Affirmative Defenses
Missouri moves to strike MSD's affirmative defenses numbers 9,
10, 11, and 12 to the complaint, and to dismiss MSD's
counterclaims.
The challenged affirmative defenses are as follows:
9. Due to Art. X, Sec. 22(a) of the Missouri Constitution,
MSD has been unable to raise revenues necessary to comply
with any judgment that may be entered against it.
10. Due to Art. VI, Sec. 26(b) and Art. X, Sec. 22(a) of the
Missouri Constitution, MSD will be unable to raise
revenues necessary to comply with any judgment that may
be entered against it.
11. The relief sought by Plaintiffs constitutes in whole or
in part an unfunded mandate prohibited by Art. X, Sec. 16
of the Missouri Constitution.
12. Pursuant to Sec. 309(e) of the Clean Water Act, 33 U.S.C.
§ 1319(e), the State of Missouri is liable for the
payment of any judgment that may be entered against MSD
and for the payment of any past or future expenses
incurred as a result of complying with any judgment that
may be entered against MSD.
MSD asserts two counterclaims against the State of Missouri.
Counterclaim I alleges that the State of Missouri is liable for any
judgment, or the cost of complying with any judgment in this
action, under the Clean Water Act, Section 309(e); 33 U.S.C. §
1319(e). That statute provides:
Whenever a municipality is a party to a civil action brought
by the United States under this section, the State in which
such municipality is located shall be joined as a party. Such
State shall be liable for payment of any judgment, or any
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expenses incurred as a result of complying with any judgment,
entered against the municipality in such action to the extent
that the laws of that State prevent the municipality from
raising revenues needed to comply with such judgment.
33. U.S.C. § 1319(e).
MSD alleges that it is a municipality within the terms of the
Clean Water Act, and that provisions of the Hancock Amendment to
the Missouri Constitution (Mo. Constitution, Art. X, § 16; Art. X,
§ 22(a); and Art. VI, § 26(b)) prevent MSD from raising revenues
needed to comply with such judgment. As a result, MSD claims, under
Section 1319(e), supra, the State of Missouri is liable for the
amount of any judgment and the costs of complying with that
judgment. Count II of MSD's counterclaim alleges that, because of
the foregoing, the State of Missouri has an equitable duty to
indemnify MSD for the costs incurred defending this action and in
complying with any judgment, including penalties and fines.
MSD opposes the motion to strike the affirmative defenses and
the motion to dismiss on several grounds, which the Court will
consider in turn.
Standing
Missouri argues that MSD lacks standing to bring a claim under
the Hancock Amendment, because only taxpayers can bring claims or
raise affirmative defenses under the Amendment. MSD denies that
taxpayers are the only parties who have standing to raise Hancock
Amendment claims or defenses.
The relevant portion of the Hancock Amendment provides:
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Notwithstanding other provisions of this constitution or other
law, any taxpayer of the state, county, or other political
subdivision shall have standing to bring suit in a circuit
court of proper venue and additionally, when the state is
involved, in the Missouri supreme court, to enforce the
provisions of [Missouri Constitution Art. X] sections 16
through 22, inclusive of this article, and, if the suit is
sustained, shall receive from the applicable unit of
government his costs, including reasonable attorneys' fees
incurred in maintaining such suit.
Mo. Constitution, Art. X, Sec. 23.
"MSD is a political subdivision of the state.i5 Ring v.
Metropolitan St. Louis Sewer Dist., 969 S.W.2d 716, 718 (Mo. banc
1998). As such, by the plain terms of Section 23, it has standing
to enforce the provisions of the Hancock Amendment. See also
Buchanan v. Kirkpatrick, 615 S.W.2d 6, 13 (Mo. banc 1981). The
Court finds that MSD has standing to raise the Hancock Amendment as
an affirmative defense and as a counterclaim.
Sovereign Immunity
Missouri asserts that it enjoys sovereign immunity to suit on
MSD's counterclaims under the Eleventh Amendment to the United
States Constitution, and that this Court lacks jurisdiction over
MSD's counterclaims against the State. MSD contends that Missouri
waived its Eleventh Amendment immunity when it voluntarily joined
this action.
The Eleventh Amendment provides, "The Judicial power of the
United States shall not be construed to extend to any suit in law
or equity, commenced or prosecuted against one of the United States
5 MSD is also a municipal corporation. See Complaint at 3;
Answer at 4.
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by Citizens of another State, or by Citizens or Subjects of any
Foreign State." U.S. Const. amend. XI.
"A State's Eleventh Amendment immunity may be waived if a
state actor with the power to bring suit in federal court invokes
federal jurisdiction in a clear and voluntary manner. Union Elec.
v. Missouri Dept. of Conservation, 366 F.3d 655, (8th Cir. 2004),
citing Lapides v. Bd. of Regents, 535 U.S. 613, 619-22 (2002). In
determining whether a state has clearly invoked federal
jurisdiction, the relevant consideration is not the nature of the
relief sought, but instead, the clarity of "the litigation act the
State takes that creates the waiver." Lapides, 535 U.S. at 620.
Thus, removal of a case to federal court is a clear, voluntary act
that invokes federal jurisdiction and waives a state's Eleventh
Amendment immunity, id., while entering a general appearance in
federal court and defending against a suit is not such an act and
does not waive a state's immunity. Union Elec., 366 F.3d at 660.
Under 33 U.S.C. § 1319(e), "[w]henever a municipality is a
party to a civil action brought by the United States under this
section, the State in which such municipality is located shall be
joined as a party." Missouri claims that this provision required it
to join this action, and thus Missouri cannot be said to have
voluntarily invoked federal jurisdiction. Missouri points to the
fact that it raised no independent claims of relief when it joined
the suit. The Court finds no merit in Missouri's position. Missouri
joined this action as a plaintiff. Missouri could have been joined
as a defendant and maintained its Eleventh Amendment immunity;
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instead, it chose to join the suit as a plaintiff, thus clearly and
voluntarily invoking this Court's jurisdiction. Its failure to
bring independent claims is not relevant to the clarity of the
"litigation act" of joining as a plaintiff. Missouri thus waived
its Eleventh Amendment immunity.
State Law Sovereign Immunity
Missouri also claims that state law sovereign immunity also
bars MSD's counterclaims. MSD responds that a federal claim, such
as MSD's counterclaim under Section 309(e) of the Clean Water Act,
cannot be defeated through assertions of state law sovereign
immunity. The Court agrees.
The United States Congress is "the supreme sovereign on
matters of federal law." Owen v. City of Independence, Mo., 445
U.S. 622, 647 (1980). When Congress adopts an act, it speaks "for
all the people and all the states, and thereby establishes] a
policy for all." Howlett v. Rose, 496 U.S. 356, 371 (1990).
The Clean Water Act defines a municipality to include a
"public body created by or pursuant to State law and having
jurisdiction over disposal of sewage, industrial wastes, or other
wastes." 33 U.S.C. § 1362(4). Consequently, MSD is a municipality
within the terms of the Clean Water Act. Section 309(e) of the Act
imposes liability on the state in which a municipality is located
for judgments under the Act, to the extent that a state law
prevents the municipality from raising revenues needed to comply
with the judgment. 33 U.S.C. § 1319(e). Congress thus has waived
the State's sovereign immunity in such circumstances. Accordingly,
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MSD's claim under Section 309(e) is not barred by common law
sovereign immunity.
Missouri also asserts that common law sovereign immunity bars
MSD's counterclaim that the Hancock Amendment has prevented it from
raising revenues necessary to comply with the Clean Water Act, or
with any judgment in this case. The only basis Missouri has
identified for dismissing MSD's claims under the Hancock Amendment
on jurisdictional grounds is that MSD lacks standing because it is
not a taxpayer. The Court has already determined that MSD has
standing to sue to enforce the Hancock Amendment. The Court thus
finds that state common law sovereign immunity does not bar MSD's
counterclaims or affirmative defenses under the Hancock Amendment.
Failure to Exhaust Administrative Remedies
Missouri alleges that in its counterclaims, MSD "in effect"
claims that the NPDES permit conditions cannot be enforced against
it, and that MSD is thus "in reality, challenging the
constitutionality of" the NPDES permits. Missouri thus concludes
that MSD can only attack the validity of the NPDES permits by
appealing the permit conditions to the Administrative Hearing
Commission and the Missouri Clean Water Commission. Because MSD
failed to do so, Missouri argues, it failed to exhaust available
administrative remedies, and this Court lacks jurisdiction over
MSD's counterclaims to the extent they relate to the NPDES permits
at issue.
MSD responds that it is not challenging the terms of the NPDES
permits, but rather, is contesting the enforcement of those
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permits, and thus there are no administrative remedies to exhaust.
The Court agrees. In an action challenging a permit's terms or
conditions, or the denial or issuance of a permit, the failure to
exhaust administrative remedies deprives the Court of jurisdiction.
See City of St. Peters v. Dept. of Natural Resources of State of
Missouri, 797 S.W.2d 514, 516-17 (Mo. Ct. App. 1990); City of Ames,
Iowa v. Reilly, 986 F.2d 253 (8th Cir. 1993). As MSD notes,
however, it is not challenging the denial, issuance, or terms of
the NPDES permits referred to in the complaint. Consequently, it is
not required to exhaust administrative remedies, and the Court is
not deprived of jurisdiction to consider its challenge to the NPDES
enforcement action.
Hancock Amendment
Missouri claims that the Hancock Amendment provisions cited by
MSD in its counterclaims and affirmative defenses do not, as a
matter of fact and law, bar MSD from raising rates to cover the
expenses associated with a judgment against it. MSD disputes
whether the Hancock Amendment applies to costs incurred through an
action enforcing compliance with federal law, and whether any such
expenses can constitute a "new or expanded" activity or a shifting
of the tax burden under the Hancock Amendment.
Even if a party has standing to raise a claim or defense under
the Hancock Amendment, the party "must still establish that the
case is ripe." Brooks v. State, 128 S.W.3d 844, 848 (Mo. banc
2004). Ripeness means that "'the parties' dispute is developed
sufficiently to allow the court to make an accurate determination
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of the facts, to resolve a conflict that is presently existing and
to grant specific relief of a conclusive character.'" Id., c{uoting
Mo. Health Care Ass'n v. Attorney General of the State of Mo., 953
S.W.2d 617, 621 (Mo. banc 1997). "Under Hancock, a case is not ripe
without specific proof of new or increased duties and increased
expenses, and these elements cannot be established by mere `common
sense' or `speculation and conjecture.'" Id., quoting Miller v.
Director of Revenue, 719 S.W.2d 787, 789 (Mo. banc 1986).
This action is not sufficiently ripe to allow the Court to
determine the facts relevant to MSD's counterclaims and defenses
under the Hancock Amendment or to resolve a presently existing
conflict regarding the Amendment. MSD asserts that new or increased
duties and expenses will be required if a judgment against MSD
results from this action, and that the Hancock Amendment would
render the State of Missouri, and not MSD, liable for those new
duties and expenses. MSD has not presented specific proof of new or
increased duties or expenses. The Court thus concludes that MSD's
affirmative defenses based on the Hancock Amendment (numbers 9, 10,
11 and 12) are not ripe and must be dismissed. Likewise, MSD's
counterclaims will be dismissed to the extent they rely on the
Hancock Amendment.
Missouri moves to strike MSD's affirmative defenses numbers 9
through 12 of the Coalition's complaint in intervention. Those
defenses correspond to the Hancock -Amendment -based defenses
discussed above, and will be struck for the same reasons.
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D. Motion to Strike Defendant's Answer to Intervenor
Complaint
The Coalition moves to strike MSD's affirmative defenses
numbers 2, 3, 5, and 17 to claims in the complaint in intervention.
Those defenses assert that it was impossible or impracticable for
MSD to prevent the violations alleged in the complaint in
intervention (No. 2); that MSD does not have the financial
capability to prevent the violations (No. 3); that MSD has
negotiated in good faith with the United States and State of
Missouri to agree on a schedule for complying with the federal and
state Clean Water Acts (No. 5); and that MSD has acted with due
care and conducted itself reasonably and within applicable law with
respect to the alleged violations (No. 17) . The Coalition argues
that these affirmative defenses are relevant to MSD's state of mind
and as such are legally insufficient, because the Clean Water Act
is a strict liability statute, and the defendant's state of mind is
inapposite.6
The United States moves to stay the Court's ruling on the
Coalition's motion to strike until after the parties have engaged
in mediation. The Coalition does not oppose the request, nor do MSD
and the State of Missouri. The Court supports the parties' efforts
6 MSD observes that the motion to strike was not timely
filed and should be denied on that basis. MSD filed its answer to
the complaint in intervention on January 16, 2008. Under Rule
12(f), Fed. R. Civ. P., any motion to strike was due on February
5, 2008. Allowing three days for service, pursuant to Rule 6(d),
Fed. R. Civ. P., any motion to strike was due on February 8,
2008. The Coalition's motion to strike was filed on February 15,
2008, and was thus untimely. The Court will not deny the motion
to strike on that basis, however, in the interest of justice.
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to resolve the issues in this case through mediation and agrees
that ruling on the motion to strike would be premature.
Accordingly, the Court will grant the United States' motion to stay
consideration of the Coalition's motion to strike.
Accordingly,
IT IS HEREBY ORDERED that the defendant's motion to dismiss
plaintiff-intervenor's requests for civil penalties and costs of
litigation and attorney's fees [# 37] is granted in part and denied
in part.
IT IS FURTHER ORDERED that the motion of the Missouri
Industrial Energy Consumers to intervene [# 42] is denied.
IT IS FURTHER ORDERED that the State of Missouri's motion to
dismiss defendant's counterclaims and strike affirmative defenses
numbers nine through twelve to the Complaint [# 26] is granted in
part and denied in part.
IT IS FURTHER ORDERED that the State of Missouri's motion to
dismiss defendant's counterclaims and strike affirmative defenses
numbers nine through twelve to the Complaint in Intervention [# 47]
is granted in part and denied in part.
IT IS FURTHER ORDERED that the motion of the United States to
stay the ruling on the plaintiff-intervenor's motion to strike
defendant's affirmative defenses [# 76] is granted.
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IT IS FURTHER ORDERED that consideration of the plaintiff-
intervenor's motion to strike defendant's affirmative defenses [#
56] is stayed pending completion of mediation proceedings.
CAROL E./JACKSON/
L
UNITED STATES DISTRICT JUDGE
Dated this 12th day of September, 2008.
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