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August 1, 1996

UNITED STATES OF AMERICA, Plaintiff, and Commonwealth of Virginia, Plaintiff-Intervenor,

The opinion of the court was delivered by: HOGAN

 Pending before the Court is plaintiff United States' Motion to Enter Stipulated Agreement and Order ("Agreement"). The Agreement was filed on April 5, 1996, and settles claims asserted in the United States' Complaint brought pursuant to Sections 309(b) and 204 of the Clear Water Act ("CWA"), 33 U.S.C. §§ 1319(b) and 1254, against the District of Columbia ("District") in connection with the Blue Plains Wastewater Treatment Works Facility ("Blue Plains"). On July 1, 1996, the Court granted the Commonwealth of Virginia's ("Virginia") Motion to Intervene, made pursuant to Rule 24(a) of the Federal Rules of Civil Procedure and 33 U.S.C. § 1365(b)(1)(B). Virginia now opposes entry of the Stipulated Agreement. After carefully considering the parties' arguments, the Court will grant the United States' Motion to Enter the Stipulated Agreement.


 The District owns and operates Blue Plains which is located in the southwestern section of the city. Blue Plains processes and treats wastewater from the District, portions of Montgomery and Prince George's Counties, Maryland, and portions of Fairfax, Arlington, and Loudon Counties, Virginia. *fn1" The treated wastewater is discharged from Blue Plains into the Potomac River. These discharges are regulated by National Pollution Discharge Elimination System ("NPDES") Permit No. DC 0021199 ("Permit"). The Permit requires the defendant to properly operate and maintain Blue Plains, a requirement defined to include effective performance, adequate funding, adequate staffing and training, and adequate laboratory and process controls, including appropriate quality assurance procedures, and requires the operation and maintenance of backup or auxiliary facilities or similar systems when necessary to achieve compliance with the Permit. See Complaint at P 18.

 EPA's National Enforcement Investigation Center ("NEIC") inspected Blue Plains in April and November of 1995, and issued two reports, dated July 1995 and January 1996, respectively. After the first EPA inspection report identified problems at Blue Plains, the EPA issued an administrative order on August 30, 1996, pursuant to CWA Section 309(b), 33 U.S.C. § 1319(a), directing the District to correct the problems. When the District failed to address the problems satisfactorily, a second inspection followed. These inspections revealed numerous operation and maintenance deficiencies at Blue Plains including the diversion of at least $ 83 million from Blue Plains to other District uses. This Complaint followed.

 This was not the first time that Blue Plains had run afoul of the law. The United States brought CWA claims against Blue Plains in 1984, which were settled by a consent decree entered by the court in 1985. Under the consent decree entered into on January 31, 1985, the District was required to comply with the terms of the Permit and to take remedial actions to rectify areas of neglect at Blue Plains. The United States sought enforcement of the decree in 1989 (pursuant to a motion alleging 1,854 violations of the decree), and brought additional claims in 1990, which were then settled in a second consent decree entered by the court in 1995. The District's conduct resulted in accrued stipulated fines in the amount of $ 3.1 million which the second consent decree subsequently reduced to $ 500,000 in negotiated fines. The 1995 consent decree differed in significant respects from the 1985 decree, in particular by not requiring the District to comply with the Permit. In neither of those instances did Virginia comment or seek to intervene.

 As a result of the two latest reports issued by NEIC, Virginia prepared to file suit against the District under the CWA. According to Virginia, the diversion of no less than $ 96,060,208 of user fee revenues created a "crisis" at Blue Plains. The facility was short in staff as well as supplies, and the shortage of chemicals caused Blue Plains to suffer violations of effluent limits. The plant ceased preventive maintenance, and according to an October 1995 report to EPA, Blue Plains claimed to need $ 100 million in capital maintenance funds -- notably, about the same amount as that which was allegedly diverted. All of these violations and shortages were violations of the Permit governing the operation of Blue Plains. As a result of these violations, by letter dated February 7, 1996, Virginia served notice of its intent to file suit under the CWA.

 Instead, on April 5, 1996, the United States brought suit against the District pursuant to Sections 309(b) and 204 of the Clean Water Act ("CWA"), 33 U.S.C. §§ 1319(b) and 1284, and the implementing regulations alleging violations of the CWA at Blue Plains. *fn2" The present claims arise primarily out of operation and maintenance deficiencies that the EPA discovered during the 1995 inspections and the diversion of at least $ 83 million of user charges for purposes other than Blue Plains. The Complaint sought injunctive relief on the basis of two claims: (1) failure to operate and maintain Blue Plains properly as required by the Permit, and (2) failure to comply with the requirement, contained in federal construction grants issued to the District pursuant to CWA Title II and the implementing regulations, to implement a user charge system that provides adequate funding for proper operation and maintenance of Blue Plains. According the United States, the thrust of the Complaint is prospective and preventive.

 Stipulated Agreement and Order

 In addition, on April 5, 1996, the United States filed with the Court a proposed Agreement settling the United States' claims against the District. *fn3" The United States claims that the Agreement is a fair and reasonable settlement of the limited claims the United States has brought and that entry of the Agreement will allow important preventive measures and capital improvements to be implemented without delay. The Agreement (or consent decree) is primarily injunctive in nature, and requires a series of capital projects that respond to specific operating and maintenance deficiencies identified in the NEIC reports. The Agreement includes detailed schedules for rehabilitation and maintenance of treatment equipment including nitrification sedimentation basins, sludge dewatering equipment, and chemical storage facilities, and requires the District to maintain chemical inventories necessary to treat wastewater. Agreement §§ I-V. In addition, the District is required to make timely payments on contracts necessary to operate and maintain Blue Plains, and to maintain $ 250,000 in contracting authority for supplies, materials, equipment and services for Blue Plains. Agreement §§ VII and VIII. The District is also required to make monthly reports to the EPA on compliance with these injunctive provisions. Agreement § XII.

 The Agreement deals with the issue of diverted user fees in a more indirect fashion. The Agreement's failure to more aggressively address the issue of diversion of user charges appears to be based, at least in part, on the fact that user fees have recently been the subject of extensive legislation in the District. Blue Plains user charges are now required by law to be segregated. Under District Appropriation Bill, P.L. 104-134, 110 Stat. 1321, signed into law on April 26, 1996, the District is now required to establish an "Operation and Maintenance Account." This account is to be "used solely for funding the operation and maintenance of [Blue Plains] and may not be obligated or expended for any other purpose. . . ." § 154(a)(2), P.L. No. 104-134, 110 Stat. 1321. The Water and Sewer Authority Establishment and Department of Public Works Reorganization Act of 1996, District Bill 11-111, to be codified at D.C. Code § 43-1661 et seq. calls for the creation of a Water and Sewer Authority to be formed for the administration of water supply and wastewater treatment services including Blue Plains. The effect of the creation of a Water and Sewer Authority will be to transfer direct control of Blue Plains away from the District. *fn4" Effective April 18, 1996, the law requires that user charges be used only "for the maintenance of the District's supply of water and sewage systems." Finally, as for user charges that have been diverted in the past, the District has proposed in its Fiscal Year 1997 Budget and Multiyear Plan to restore these funds over a four-year period. Restoration in the amount of $ 83 million is to be made in equal payments beginning on October 1, 1997. The Agreement reserves the United States' right to seek an order requiring prospective segregation of user charges if the District's legislative solutions do not succeed or if in fact the District does not segregate the funds. The Agreement also provides that the United States may seek an order, not earlier than October 1, 1997, requiring the District to restore user charges that were directed to purposes other than Blue Plains in the event the District has not restored those funds in accordance with its fiscal year 1997 Budget and Multiyear Plan.

 The United States maintains that the Agreement is a fair and reasonable settlement of the limited claims the United States is asserting here and that entry will address the most pressing problems identified by the EPA while protecting the environment during the transition to new management. Likewise, the United States points to the fact that the District has begun complying with the Agreement, improvements at Blue Plains are underway, and legislation has initiated the transfer of control of Blue Plains from the District to a Water and Sewer Authority.

 Virginia's Objections

 Virginia moved to intervene in the aforementioned case on the ground that the Agreement did not adequately protect its citizens' interests; on July 1, 1996, the Court granted that motion. *fn5" Virginia considers the Agreement "unfair, inadequate to protect the Potomac River and not in the public interest." Virginia Comment at 1. Virginia claims that the Agreement in large part relies on the District to obey the law despite its "enduring lack of self control" -- a reliance it deems misplaced in light of what it considers a long history of mismanagement of Blue Plains by the District coupled with tepid enforcement efforts by the EPA. According to Virginia, the District has been neglecting Blue Plains for over 16 years. At bottom, Virginia takes issue with the Agreement because it does not: (1) require repayment of misdirected funds, (2) forbid future misappropriation of dedicated funds, (3) forbid the neglect of other treatment units or maintenance activities, (4) require full staffing, (5) forbid the imposition of costs of the violations on the ratepayers, or (6) command the District to comply with the Permit. According to Virginia, the latest Agreement is merely a short term fix which does not address the long-term ills confronting Blue Plains.


 I. Standard of ...

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