About a decade ago, the District government was ready to spend $2.1 million to develop 217 acres of newly bought rural property in southernmost St. Mary's County, Md., that had been used for years as a youth summer camp.

The city planned to build a swimming pool, dormitories, bathhouses, an arts and crafts center and an administration building. City officials said they were excited about turning the free camp into a first-class, year-round retreat that could possibly make some money for city coffers.

Today, the plans are still just words and drawings on paper. A sewage system that the county required built before the camp could be expanded and upgraded has been delayed for years by red tape and squabbles between county residents over its use.

But officials said recently the disagreements have been tentatively resolved, and they are drafting final plans for the sewer line. Construction could begin within the first half of next year if the project receives needed federal funds.

The camp grounds are 80 miles south of Washington in Scotland, Md., a city of about 5,000 that sits serenely on a quiet peninsula. Stretched along the river bank near cornfields, pastures and quaint homes, the camp is within a short drive of scenic Point Lookout State Park, where the Potomac and Patuxent rivers and the Chesapeake Bay merge.

The 10-year delay has frustrated District officials, especially those in the Department of Recreation, which runs the facility, officially called the Resident Camp. In the meantime, inflation has reduced the funds that the city set aside for the camp project in 1974, so the construction plans have been scaled down.

"We can't do nearly as much with the money now," said F. Alexis Roberson, who joined the recreation department in 1980 and now serves as its director. "We'll apply for more federal grant monies to do what we can't do now," she said. "The camp could really be a major retreat. You can go fishing, boating and crabbing there now. You could do year-round camping there once we get heated cabins."

The camp's problem for the last decade has been how to dispose of its waste. The St. Mary's County health department has refused to issue the necessary building permits for the camp's expansion until the waste-disposal problem was resolved.

For years, the camp and a nearby camp operated by the Metropolitan Police Boys and Girls Club used septic tanks for waste disposal, but both District and county officials knew that an expanded camp would need a more sophisticated system.

District officials first planned a lagoon for the waste disposal, but county officials objected in l975. For the next two years there was no action.

Then in l977, the county warned the District that the existing septic tank system was on the brink of failing because the system was being heavily used and the compact soil could not adequately absorb the waste. The waste was liquefying and getting into the Potomac, causing pollution.

A year later, county health officials decided both city camps were public health hazards and refused to give them permission to open.

The city appealed to state health officials and won the right to keep them if the city cut its summer enrollments in half. Currently, the D.C. camp accommodates 1,000 in groups of 100 a week, and the police camp 2,000, in groups of 200 during the 10 weeks both camps operate, officials said.

Meanwhile, county officials warned a permanent solution must be found or they would again ask for a complete shutdown.

After an engineering study, St. Mary's officials recommended to city officials that only a sewer system could solve the camps' problems. But that called for a treatment plant.

Another three years passed while St. Mary's went through a long, tedious bureaucratic process of studying the proposed solution.

It was finally agreed that instead of a new plant the District camps should connect their new lines to the existing state-owned sewage treatment at Point Lookout Park, about four miles south of the D.C. camps.

The Maryland State Board of Public Works, headed by Gov. Harry Hughes, made an exception to state regulations that allow only state-owned properties to use a state-owned waste facility and granted the camps permission to tie in.

"They made an exception because of the nature of the camps. The Resident Camp is an element of another government, and the boys and girls camp is operated by a public agency, the police," said Reed McDonagh, chief of Maryland Environmental Services, an agency in the Department of Natural Resources. "What was at risk was the children having a place to go for the summer for recreation," he said.

It was now l981.

Next the plan needed the approval of the St. Mary's County Metropolitan Commission, the local board of public works, because the new sewer lines would cross county property.

The first public hearings, held by the commission early in 1982 where the commission approved the plans, were later nullified because no official transcripts were recorded, according to George Aud, chairman of the County Board of Commissioners, which appoints the members of the metropolitan commission.

At the second public hearing, some county residents wanted to connect their homes to the sewer lines that would cross their property, while others feared the sewer project would attract large developers who would change the character of the quiet residential resort area that features several picturesque, private beaches.

But other residents argued it would be unfair to have sewer lines on their property that they could not use. "If you were having problems with your septic tank and the state was running a sewage line through your property, wouldn't you ask to use it?" Aud said.

State environmental services officials, who are responsible for building the sewer system, responded to the furor by conducting a series of studies to determine the feasibility of allowing private residents to use the lines, McDonagh said.

But to determine the feasibility, another plan had to be made to determine the alignment of waste-collection systems and the cost and how that cost would be spread to potential users, he said.

A special committee appointed by the metropolitan commission that included several residents could not resolve the differences. Finally, the commission approved the state's plan that called for only the District's camps to be connected to the park's sewage plant.

Now the last remaining hurdle appears to be getting the U.S. Environmental Protecton Agency to pay 75 percent of the $608,000 cost to build the new lines. Maryland officials will apply for the grant funds once the final plans for the lines are complete.

Since the new sewage lines for the camps could be built within a year, county health official Dr. William Marek said a little more patience is all that's needed now.

"I'm enthused by the fact that we are where we are," he said. "It was a major accomplishment for us to get this far."