BEFORE THE ENVIRONMENTAL QUALITY COMMISSION

OF THE STATE OF OREGON

WHEREAS:

1. On August 9, 1991, the Department of Environmental Quality (Department or DEQ) issued National Pollutant Discharge Elimination System (NPDES) Waste Discharge Permit Number 100828, (Permit) to City of Yachats (Permittee). The Permit authorizes the Permittee to construct, install, modify or operate wastewater treatment control and disposal facilities (facilities) and discharge adequately treated wastewater into the Pacific Ocean, waters of the state, in conformance with the requirements, limitations and conditions set forth in the Permit. Since the discharge is to the Pacific Ocean, adequate dilution occurs at all tide conditions. The Permit has remained in effect since issuance. Permittee made timely application for renewal prior to the June 30, 1996, expiration date.

2. Schedule A, Condition 1 of the Permit does not allow Permittee to exceed the following waste discharge limitations after the Permit issuance date:

Outfall Number 001:

May 1 to October 31:

November 1 to April 30:

3. During the time period the permit has been in effect, Permittee has not been able to consistently meet the above effluent limitations. The Department sent Notices of Noncompliance (NON) to Permittee for violations of the NPDES effluent limitations on the following dates: April 2, 2001 for BOD and fecal exceedances in December 1999 and June 2000; July 26, 2001 for ph violations in May 2001; August 15, 2002 for fecal exceedances on June 2002; and August 27, 2002 for BOD exceedances on July 2002. The Department and the Permittee agree that most of these violations relate to the treatment plant no longer having adequate capacity to consistently treat the wastewater flows in accordance with the Permit discharge limitations.

4. DEQ and the Permittee recognize that until new or modified facilities are constructed and put into full operation, Permittee will continue to violate the permit effluent limitations for BOD and fecal coliform bacteria at times. It is also likely that the facility will not meet the minimum design criteria for dilution during low flow periods.

5. Permittee presently is capable of treating its effluent so as to meet the following interim effluent limitations, measured as specified in the Permit:

6. The Department and Permittee recognize that the Environmental Quality Commission has the power to impose a civil penalty and to issue an abatement order for violations of conditions of the Permit. Therefore, pursuant to ORS 183.415(5), the Department and Permittee wish to settle those past violations referred to in Paragraph 3 and to limit and resolve the future violations referred to in Paragraph 4 in advance by this Mutual Agreement and Order (MAO).

7. This MAO is not intended to settle any violation of any interim effluent limitations set forth in Paragraph 5 above. Furthermore, this MAO is not intended to limit in any way, the Department's right to proceed against Permittee in any forum for any past or future violations not expressly settled herein.

NOW THEREFORE, it is stipulated and agreed that:

8. The Environmental Quality Commission shall issue a final order:

A. Requiring Permittee to comply with the following schedule for sewage

collection system and treatment plant upgrades:

1) By no later than 60 days after the effective date of this MAO, Permittee shall submit Inflow/Infiltration (I&I) Rehabilitation plans and schedules to the Department for approval.

2) By no later than six months after the effective date of this MAO, Permittee shall submit to the Department, an Operation Optimization Study. The study shall include interim operational and/or mechanical improvements that can feasibly be made to the wastewater treatment facility, an implementation schedule for same, and an estimate of the additional capacity that might be achieved by these improvements.

3) By no later than 18 months after the effective date of this MAO, the Permittee shall submit a completed final Facilities Plan for approval.

4) By no later than one year after Departmental approval of the Facilities Plan, Permittee shall secure funding for the project.

5) By no later 18 months after Department approval of the Final Facilities Plan, Permittee shall submit to the Department for approval Plans and Specifications for construction of the wastewater treatment facility upgrades.

6) By no later than three months after Department approval of the final plans and specifications, the construction bids shall be awarded.

7) By no later than 18 months after Department approval, the Permittee shall complete construction of the wastewater treatment plant upgrades.

B. Requiring Permittee to meet the interim effluent limitations set forth in Paragraph 5 above until achieving compliance with Paragraph 8.A. above.

C. Prohibiting Permittee from allowing any new connections, based upon Equivalent Dwelling Units (EDU), to the Permittee’ sewage collection system after the effective date of this MAO, unless otherwise authorized in writing by the Department. Exceptions to this prohibition may be authorized by the Department provided Permittee achieves and maintains the corrective schedules outlined in Paragraph 8.A. above in accordance with the following items:

1) Permittee may allow 10 EDU upon the effective date of this MAO.

2) Permittee may allow connection of additional EDU's upon completion of the Inflow/Infiltration Reduction Plan corrections. Additional EDU's may not exceed the estimated reduction in flow and may not exceed 10 EDU's in total.

3) Permittee may allow connection of up to 10 EDUs upon submittal of a completed Facilities Plan.

4) Permittee may allow up to 10 EDU connections upon submittal of documentation demonstrating that funding arrangements have been completed as required in Paragraph 8.A. (4) above.

5) Permittee may allow 10 EDU connections upon submittal of Plans and Specifications for construction of the wastewater treatment facility upgrades.

6) Permittee may also submit for Department approval a plan for interim capacity. Upon Department approval and completion of the improvements, Permittee may allow additional EDU connections.

7) In the event Permittee fails to comply with the corrective schedule in Paragraph 8.A. above, the Department may rescind authorization for any EDU connections not yet completed until the Permittee complies with the schedule in Paragraph 8.A.

For the purposes of this MAO, an EDU is defined as equivalent to a single-family residence. For EDUs of other types of establishments, the flow shall be calculated as specified in OAR Chapter 340 Division 71 Table 2 Column 1, and divided by 250 gallons per day. Permittee shall submit quarterly reports on the number of EDUs connected in the previous quarter. Reports shall be submitted no later than 15th of the month following the quarter.

D. Requiring Permittee, upon receipt of a written Penalty Demand Notice from the Department, to pay the following stipulated civil penalties:

1) $250 for each day of each violation of the compliance schedule set forth in Paragraph 8A.

2) $100 for each violation of each weekly average waste discharge limitation set forth in Paragraph 5.

3) $500 for each violation of each monthly average waste discharge limitation set forth in Paragraph 5.

4) $10,000 for any EDU connection not authorized by the Department pursuant to the terms and condition of this MAO.

9. If any event occurs that is beyond Permittee's reasonable control and that causes or may cause a delay or deviation in performance of the requirements of this MAO, Permittee shall immediately notify the Department verbally of the cause of delay or deviation and its anticipated duration, the measures that have been or will be taken to prevent or minimize the delay or deviation, and the timetable by which Permittee proposes to carry out such measures. Permittee shall confirm in writing this information within five (5) working days of the onset of the event. It is Permittee's responsibility in the written notification to demonstrate to the Department's satisfaction that the delay or deviation has been or will be caused by circumstances beyond the control and despite due diligence of Permittee. If Permittee so demonstrates, the Department shall extend times of performance of related activities under this MAO as appropriate. Circumstances or events beyond Permittee's control include, but are not limited to, acts of nature, unforeseen strikes, work stoppages, fires, explosion, riot, sabotage, or war. Increased cost of performance or consultant's failure to provide timely reports may not be considered circumstances beyond Permittee's control.

10. Regarding the violations set forth in Paragraphs 3 and 4 above, which are expressly settled herein without penalty, Permittee and the Department hereby waive any and all of their rights to any and all notices, hearing, and judicial review, and to service of a copy of the final order herein. The Department reserves the right to enforce this MAO through appropriate administrative and judicial proceedings.

11. Permittee acknowledges that Permittee is responsible for complying with the schedule set forth in Paragraph 8.A. above regardless of the availability of any federal or state grant monies.

12. The terms of this MAO may be amended by the mutual agreement of the Department and Permittee.

13. The Department may amend the compliance schedule and conditions in this MAO upon finding that such modification is necessary because of changed circumstances or to protect public health and the environment. The Department shall provide Permittee a minimum of thirty (30) days written notice prior to issuing an Amended Order modifying any compliance schedules or conditions. If Permittee contests the Amended Order, the applicable procedures for conduct of contested cases in such matters shall apply.

14. This MAO shall be binding on the parties and their respective successors, agents, and assigns. The undersigned representative of each party certifies that he or she is fully authorized to execute and bind such party to this MAO. No change in ownership or corporate or partnership status relating to the facility shall in any way alter Permittee's obligations under this MAO, unless otherwise approved in writing by DEQ.

15. All reports, notices and other communications required under or relating to this MAO should be directed to Ruben Kretzschmar, DEQ Coos Bay Regional Office, 340 Front, Coos Bay, Oregon 97420, phone number (541) 269-2721, ext. 23. The contact person for Permittee shall be Mayor, City of Yachats, PO Box 345, Yachats, Oregon 97498, phone number (541) 547-3565.

16. Permittee acknowledges that it has actual notice of the contents and requirements of the MAO and that failure to fulfill any of the requirements hereof would constitute a violation of this MAO and subject Permittee to payment of stipulated civil penalties pursuant to Paragraph 8.E. above.

17. Any stipulated civil penalty imposed pursuant to Paragraph 8.D. shall be due upon written demand. Stipulated civil penalties shall be paid by check or money order made payable to the "Oregon State Treasurer" and sent to: Business Office, Department of Environmental Quality, 811 S.W. Sixth Avenue, Portland, Oregon 97204. Within 21 days of receipt of a "Demand for Payment of Stipulated Civil Penalty" Notice from the Department, Permittee may request a hearing to contest the Demand Notice. At any such hearing, the issue shall be limited to Permittee's compliance or non-compliance with this MAO. The amount of each stipulated civil penalty for each violation and/or day of violation is established in advance by this MAO and shall not be a contestable issue.

18. Providing Permittee has paid in full all stipulated civil penalties pursuant to Paragraph 17 above, this MAO shall terminate 60 days after Permittee demonstrates full compliance with the requirements of the schedule set forth in Paragraph 8.A. and 8.B. above.