The Honorable Richard S. Arnold stepped down as Chief Judge of the United 1 States C ourt of Appeals for the Eighth Circuit at the close of business on April 17 , 1998. He has been succeeded by the Honorable Pasco M. Bowman II.



## United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________ No. 97-2279

___________ State of Missouri; Missouri * Department of Natural Resources, the * Missouri Clean Water Commission, *

Plaintiffs - Appellants, *

v. * District Court for the City of Glasgow, a Missouri * Corporation, *

Defendant - Appellee. * *

* Appeal from the United States

* Western District of Missouri.

*

*

___________ Submitted: January 12, 1998 Filed: August 10, 1998

___________ Before RICHARD S. ARNOLD, Chief Judge, and WOLLMAN and HANSEN, Ci rcuit 1 Judges.

___________ HANSEN, Circuit Judge.

The St ate of Missouri (the state) appeals the district court’s order grantin g summary judgment to the City of Glasgow, Missouri ( Glasgow), claiming that the court-2-

erred in failing to grant de claratory and injunctive relief against Glasgow for violations of the Federal Clean Water Act and in ruling that a state statute requiring Glasgow to pay permit fees to operate its water treatment facility violates the Missouri Constitution. The st ate also claims that the district court improperly ordered it to issue Glasgow a permit for its water treatment facility. We reverse and remand.

I. Factual and Procedural Background
Glasgow operates a water treatment facility that provides drinking water to it s residents. Glasgow pumps water from the Missouri River into the facility, treats th e water to mak

e it suitable for drinking, and then pumps some water back into the river. As part of this treatment process, the facility also discharges the precipitated solid s formed during the treatment process, referred to as sludge, back into t he Missouri River.

Glasgow ’s water treatment facility is regulated by state and federal wate r poll utionlaws. The facility is considered a “point source” under the Federal Clea n Wate r Act and Missouri state clean water laws because it discharges sludge into th e Missouri River. See33 U.S.C. § 1362(6),(14) (1994); Mo. Ann. S tat. § 644.016(8), (9) (West 1998). Under both sovereigns’ laws, a point source (like Glasgow’s facility) is required to have an operating permit in order to lawfully discharge sludge into a river. 33 U.S.C. § § 1311(a), 1342; Mo. Ann. Stat. § 644.051.2. In Missouri, a point source must apply to the Missouri Clean Water Commission for the n ecessary operating permit because the state has chosen to administer its own permit progra m, an option authorized by federal law. See Mo. Ann. Stat. § 644.026.1(13); 33 U.S.C. § 1342(b). Pursuant to § 1342(b), the administrator of the federal Environmental Protection Agenc y approved Missouri’s submitted plan, and hence the issuance of a Missouri state permit constitutes compliance with the federal statute’s national pollu tant discharge elimination system. Glasgow had such a permit to discharge sludge into the Missouri River until 1995, when its permit expired. Glasgow then applied for-3-

a new permit from

the state, but refused to pay the enhanced $1,500 annual permit fee required by an amended state statute. See Mo. Ann. Stat. § 644.052.2(5). Becaus e Glasgow would not pay the fee, the state refused to issue a permit for Glasgow’s water treatment facility.
After sending Glasgow notices of its failure to paythe fee and to obtain a permit, the state filed a complaint in federal district court against Glasgow, alleging: (1) tha t Glasgow is violating federal law by di scharging sludge from its water treatment facility into the Missouri River without a permit; and (2) that Glasgow had failed to pay permit fees re quired by state law. The state sought injunctive and declaratory relief on it s claim that Glas gow is violating federal law and sought money damages for Glasgow’s failure to pay permit fees. In its answer, Glasgow admitted the factual allegations in the complaint regarding its discharge o f sludge into the Missouri River and its operation of the water treatment facility without a per mit, but asserted that it did not have to pay the permit fe es because the state statute requiring the fees violated the Hancoc k Amendment to the Missouri Constitut ion. See Mo. Const. art. 10, § 21. Glasgow also

asse rted a counterclaim, requesting the district court to order the State to issue it a permit.

Th e parties then filed cross-motions for summary judgment. The district court granted the state’s motion, ruling that the Hancock Amendment did not prevent the state fr om charging Glasgow a fee to obtain the permit necessary to operate its wate r treatment facility. See Missouri v. City o f Glasgow , 932 F. Supp. 243, 245 (W.D. Mo. 1996), vacated on reconsiderati on , 966 F. Supp. 905 (W.D. Mo. 1997). Glasgow then filed a motion for reconsideration, arguing that an intervening Supreme Court o f Missouri decision, Missouri Municipal League v. State of Missouri , 932 S.W.2d 400 (Mo. 1996), required the district court to reverse its ruling regarding Glasgow’ s Hancock Amendment defense to the state’s collectio n of permit fees. The district court grante d the motion, vacated its prior ruling, granted Glasgow summary judgment, and ordered the state to issue Glasgow a permit for its water treatment facility. SeeAny “ person or persons having an interest which is or may be adversel y 2 affected” may sue as a “citizen” under the Federal Clean Water Act. 33 U.S.C. § 136 5(g). The definition of the term “person” in the statute includes a state. Id. § 1362(5). Thus, the state can sue Glasgow as a “citizen” under the “citizen suit ”
-4- Missouri v . City of Glasgow , 966 F. Supp. 905, 907 (W.D. Mo. 1997). The stat e appeals, claiming that Glasgow is operating its water treatment facility in violation of federal law and that the Hancock Amendmen t does not prevent the state from requiring Glasg ow to pay the permit fees. The state also argues that even if the Hancoc k Amendment prevents it from requiring Glasgow to pay the permit fees, the district court improperly ordered it to issue Glasgow a permit.
II. Analysis

“We review the district court’s grant of summary judgment de novo. Summary judgment is appropriate when th ere is no genuine issue of material fact and the moving party is entitled

to judgment as a matter of law.” Bremen Bank & Trust Co. v. United States , 131 F.3d 1259, 1264 (8th Cir. 1997) (citations omitted). Because the partie s agre e that the material facts are not in dispute, our review is limited to the question of whether the district court correctly applied the law to these facts.

A. The Federal Law Claim
The state first argues that the district court erred in failing to grant dec laratory and injunctive re lief on its claim that Glasgow is violating federal law. The state contends that Glasgow is violating the Federal Clean Water Act by discharging sludge from its water treatment facility into the Missouri River wi thout an operating permit. We agree.

The state brought this claim as a “citizen” under the “citizen suit” provision of the Federal Clean Water Act. SeeJ. A. at 6; 3 3 U.S.C. § 1365(a). The state requested 2provision of the Federal Clean Water Act.
-5- injunctive and declaratory relief for Glasgow’s alleged violation of federal law. Th e State s ought relief for this federal law violation separate from its claim for damage s against Glasgow for failure to pay permit fees allegedly required by state law.

It is a violation of the Federal Clean Water Act to discharge a pollutant into a navigable water without a permit. See 33 U.S.C. §§ 1311(a); 1342. Glasgow admits that it is discharging sludge from its water treatment facility into the Missouri River and that it does not have a permit to do so. This sludge is considered a “pollutant” under federal law. See id. § 1362(6). The water treatment facility is a “point source” under the statute. See id. § 1362(14). Under the statute, the Missouri River is a “navigable water.” See id. § 1362(7). Thus, by discharging sludge from its w ater treatment facility into the Missouri River without a permit, Glasgow is clearly violating federal law.
Glasgow’s o nly defense to this violation is that the Hancock Amendment to the Missouri Constitution prevents the state from charging it the enhanced fee contained in the amende d state statute to obtain a permit for its water treatment facility. But thi s state constitutional law defense works (if at all) only to prevent the state from charging

an increased fee to obtain a permit in order to comply with the state’s own wate r pollution law. The Supremacy Clause of the federal Constitution dictates that a state law (whether a

statutory or constitutional provision) cannot prevent the administration and exec ution of a federal statute. See Sola Elec. Co. v. Jefferson Co. , 317 U.S. 173, 1 7 6 (1942) (“It is familiar doctrine that the prohibition of a federal statute may not be set at naug ht, or its benefits denied, by state statutes or state common law rules.”) ; Quinones v. City of Evanston , 58 F.3d 275, 277 (7th Cir. 1995) (city’s adherence t o state law that conflicts with federal civil rights law provides no d efense to liability under the federal law). In our view, the state constitutional provision cannot excuse-6-

Glas gow’s operation of its water treatment facility without a permit in violation o f federal law. Given Glas gow’s admissions, we reverse the district court’s judgment on Count I, and we remand for the issuance of an immediate order declaring Glasgow to be in violation of the federal statute and enjoining Glasgow f rom discharging any sludge from its water treatmen t facility into the Missouri River until such time as a permit has been issued allowing it to do so. Our remand instructions do not prevent the distric t court from granting such other and further relief to the state as that court deems merited and proven under the claims asserted in Count I of the complaint upon remand.

B. The Collection of Permit Fees
In Count II of its complaint, the state sought to collect the enhanced annua l permit fee which Glasgow had not paid together with its attorney’s fees and costs, all pursuant to the Mi ssouri clean water statute. The district court ruled that the Hancoc k Amendment prevented the state from requiring the city to pay an enhanced fee to obtain a permi t, and the state appeals. The resolution of this issue requires the interpretation of Misso uri law. We review the district court’s interpretation of state law de novo

. Salve Regina College v. Russell , 499 U.S. 225, 231 (1991). We are bound by th e deci sions of the Supreme Court of Missouri in interpreting Missouri law. B.B. v

. C o ntinental Ins. Co. , 8 F.3d 1288, 1291 (8th Cir. 1993). Because the Supreme Court of Missouri has not yet addressed this preci se issue, we must determine what that court would probably h old if it were called upon to decide the issue. Id. “In making thi s determination, a federal court may consider relevant state precedents, analogou s de cisions, considered dicta, scholarly works, and any other reliable data tendin g convincing ly to show how the highest court in the state would decide the issue.” Id

. (internal quotation omitted).

Missouri state law, like the Federal Clean Water Act, provides that it is unlawful to “operate, use or maintain” a water pollution “point source, ” such as Glasgow’s water treatment facility, unless the point source obtains a permit issued by the Missouri-7-

Clean Water Commission. SeeMo. Ann. Stat. § 644.051.2. In order to obt ain a permit, Missouri law requires a point source to pay a fee to the state. See id. § 644.052. State law pro vides that a city-owned water treatment facility with operating volume in th e range of Glasgo w’s facility shall pay an annual fee of $1,500. See id. § 644.052.2(5).

The annual permit fee requirements for municipal water treatment facilitie s containedin section 644.052.2 became law in 1990. See 1990 Mo. Legis. Serv., Act of July 9, 1990, S.B. 582 (West). Until 1990, Missouri law required cities to pay a “filing fee” of $75 each time they applied for a five-year permit. See Mo. Stat. Ann. § 64 4.051.9 (West 1989). This filing fee of $75 existed prior to the passage of th e Hancock A mendment to the Missouri Constitution. See Mo. Stat. Ann. § 204.05 1 (West 1973). The filing fee was repealed in 1990 when sectio n 644.052.2 was enacted. See1990 Mo. Legis. Serv., Act of July 9 , 1990, S.B. 582, § A. Thus, the 1990 change in state law substantially increased the cost to Glasgow for obtaining a permit for it s water treatment facility—from $75 every five years to $1,500 each year.

The Hancock Amendment to the Missouri Co nstitution was passed by the voters of Missouri on November 4, 1980. See Missouri Mun. League , 932 S.W.2d at 401

. The provisions of thi s amendment are set out in sections 16 through 24 of article 10 of the Miss ouri Constitution. Id. When a Missouri statute conflicts with the Missour i Constitution, the statute is invalid. Labor’s Educ. and Politi cal Club Indep. v. Danforth , 561 S.W.2d 339, 343 (Mo. 1977).
The district court ruled that the permit fee in section 644.052.2 is ren dered invalid by the following provision of the Hancock Amendment:

The s tate is hereby prohibited from reducing the state finance d propo rtion of the costs of any existing activity or service required o f counties and other political subdivisions. A new activity or service or an-8-

increase in the level of any activity or service beyond that required b y existing law shall not be required by the general assembly or any stat e agency of counties or other political subdivisions, unless a stat e appropriation is made and disbursed to pay the county or other political subdivision for any increased costs.

Mo. Const. art. 10, § 21 (emphasis added). The court based its Hancock Amendment analysis o n the first sentence of this section. City of Glasgow , 966 F. Supp. at 906

. The court ruled that although Glasgow is not required by state law to operate a water treatment facility, the permit fees in section 644.052.2 are “required” und er the Hancock Amendment as that term was interpreted by the Supreme Court of Missouri in Missouri Municipal League

. Id. at 907. The court determined that the state had fully funded the administra tion of the permit program prior to the passage of the Hancock Amendment and that after the enactment of the section 644.052.2 permit fee requirements, the permit pro gram was now funded, at least in part, by cities. Id. Thus, the court ruled that the permit fees were unconstitutional because “there has been a reduction in the stat e financing” of the permit program in violation of the Hancock Amendment. Id.

The state first cl aims that the permit fees are not “required” under state law and therefore do not viol ate the Hancock Amendment. The opinion in Missouri Municipal League requires us to reject this argument. In Missouri Municipal League , a group of cities c laimed that a state statute that required them to pay a fee to have their drinking water tested by a state lab violated the Hancock Amendment. 932 S.W.2d at 402. The state argued that because the provision of drinking water was a “discretionary activity” for a city, it was not “required” by state law and, therefore, the Hancock Amendment did not bar the state from charging local governments a fee to have their drinking water tes ted. Id. The Supreme Court of Missouri rejected this argument, explaining that i t would “t hwart the purpose of the Hancock Amendment” to allow such a distinctio n between services and activities that a local government must provide for its resident s under state law and those that it provides at its discretion. Id. at 402-03.-9-

The co urt stressed that “[o]nce the state imposes a requirement on a politica l sub division, it makes no difference whether the underlying service is one traditionally performed by the government.” Id. at 403. Thus, the court held that the drinking water testing fee was “required” under the Hancock Amendment. Id.

Und er Missouri Municipal League , it is irrelevant to the Hancock Amendmen t analysis that the operation of Glasgow’s water treat ment facility is not required by state law. Section 64 4.052.2 states that municipalities “shall” pay the operating permit fee, and s ection 644.055 provides penalties for those cities that do not pay the fee. Th e permit fees are “required” by the state for purposes of the Hancock Amendment.

The state next argues that section 644.052.2 does not violate the Hancoc k Amendment

because the permit fees are part of the State’s implementation of federa l requirements. We disagree. The state is not required to administer its own permi t program u nder federal law, but it may elect to do so. See 33 U.S.C. § 1342(b ) (providing that a state may voluntarily administer its own permit p rogram after receiving approval from federal authorities). Federal law does not require the state to charge a fee for obtaininga permit. Thus, the permit fees at issue here are simply requirements of Missouri state law an d therefore “must conform to the requirements of the Missouri Constitution.” Missouri Mun. League , 932 S.W.2d at 403.
Finally, the state argues that the district court erred in ruling that permit fees in section 6 44.052.2 violate the Hancock Amendment because Glasgow has failed t o prove tha t the state decreased its proportion of funding for the administration of th e permit program, c iting Fort Zumwalt School District v. State of Missouri , 896 S.W.2d 918, 922 ( Mo. 1995). In Fort Zumwalt , the plaintiffs claimed that the Hancoc k Amen dment

required the state to maintain the same proportion of funding for state

mandatedspecial education services in each school district as it provided prior to the passage of the Hancock Amendment. 896 S.W.2d at 922. The Supreme Court o f Missouri agreed and held that the Hancock Amendment “requires the state to-10-

approp riate funds for financing special education in local school districts in amount s sufficient tokeep the state’s contribution to the cost of special education in the school distr icts at the same ratio as existed in fiscal year 1980-81,” the time of the Hancoc k Amendmen t’s passage. Id. The court further explained that the “state’s liability i s limited to the sta

te’s mandated activity and the state financed proportion of the cost of that activity in effect in 1980-81. ” Id. at 923. The court then remanded the case to the trial court to determine this ratio for each school district. Id.
As explained above, at the time Missouri voters passed the Hancock Amendment, the state charged cities a filing fee of $75 to obtain a permit to o perate a water treatment facility. See Mo. Ann. Stat. § 644.051.9 (West 1989). Missouri law provided tha t thes e filing fees were to be used to fund the administration and enforcement of th e state’s water pollution laws. Id. Simi larly, under current Missouri law, the permit fees colle cted from cities pursuant to section 644.052.2 “shall” be used “solely for th e administrati on of” the state’s water pollution laws. Mo. Ann. Stat. § 644.054 (Wes t 1998).

Under Fort Zumwalt , we must determine if th e state has decreased its proportion of funding for the administration of the state water pollution laws by increasing the fees charged to citie s to obtain a permit to operate a water treatment facility. To make this de termination, we must first find the state-funded proportion of the costs o f administerin g the state water pollution laws in fiscal year 1980-81, the time of th e Hancock Amen dment’s passage. See Fort Zumwalt , 896 S.W.2d at 922. Second, we mustfi nd the state-funded proportion of the costs of administering the state wate r pollution laws today. Id. Finally, we must compare these two proportions to see if the state has unlawfully decreased its proportion of funding for the costs of administering the state water pollution laws. Id.
The district court erred in applying the first of th ese three steps when it implicitly ruled that the state had funded all of the costs of administering the state water pollution-11-

laws prior to the Hancock Amendment’s passage. As shown above, the filing fee s charged to cities prior to the passage of the Hancock Amendment were u sed by the state to fund at least

some of the costs of administering the state water pollution laws. This case is therefore unlike Missouri Municipal League , in which the state had funded 100 percent of the costs of the drinking water testing program prior to the passage of th e Hancock Amendment. In that case, any fee charged to cities for the drinking wate r tes ting program represented a decrease in the state-funded proportion of the program. See932 S.W.2d at 401. In this case, the state has never funded 100 p ercent of the costs of a dministering the water pollution laws—the state has always charged cities som e type of fee to obtain a permit to operate a water treatment facility and has used the fees to fund at least some of the costs of admini stering the state water pollution laws. Thus, Fort Zumwalt , rather than Missouri Municipal League , controls here. The state ma y lawfully increase the fees charged to cities for operating permits so long as the stat e cont inues to fund the costs of administering the state water pollution laws in the same proportion as existed at the time of the Hancock Amendment’s passage. However, if the stat e funding proportion has decreased, then the amount of the permit fees tha t represent a decrease in that proportion violates the Hancock Amendment.

The record before us does not contain the evidence necessary to determine if any of the p ermit fees in section 644.052.2 represent a decrease in the state-funde d prop ortion of the costs of administering the state water pollution laws. We therefor e
reverse the district court’s ruling that section 644.052.2 violates the Hancoc k Amendment, and we remand to the district court for a determination of w hether the state has unlawfully decreased its proportion of funding for the costs of administering th e state w ater pollution laws by charging Glasgow operating permit fees pursuant t o section 644.052.2. See Fort Zumwalt , 896 S.W.2d at 922-23.-12- C. Ordering the State to Issue Glasgow a Permit

Because we remand the case for a determination of whether the permit fees i n section 644.052.2 r epresent an unlawful decrease in the state-funded proportion of the costs of administering the state water pollution laws, we also reverse the district court’s ruling ordering the state to issue Glasgow a permit to operate its water tre atment facility.

III. Conclusion
We reverse the district court’s judgment and remand for the issuance of an order decla ring Glasgow to be in violation of federal law and enjoining Glasgow fro m discharging sludge from its water treatment facility into the Missouri River withou t obt aining an operating permit. We also remand for a determination of whether th e op erating permit fees in section 644.052.2 represent a decrease in the state-funde d proportion of the costs of administering the state water pollution laws in violation of the Hancock Amendment to the Missouri Constitution. Finally, we reverse the distric t court’s ruling ordering the state to issue Glasgow a permit to operate its water treatment facility.
A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS. EIGHTH CIRCUIT.