A perceived scarcity of land in the District of Columbia is being cited by the city government as reason to permit use of vast quantities of odorous, claylike, chemically treated sewage sludge as landfill within the District's boundaries.

The prospect of such a massive "land reclamation" effort appears extremely likely if Prince George's County does not issue a permit in the next week or two that would allow the material to be dumped there. And it all hinges on a new city government policy that many officials weren't even aware of. The new policy was first hinted at by William Johnson, director of the Department of Environmental Services, in a memo he circulated to his top aides on May 18, 1982. "Land is a scarce resource in the District and it is a function of this government to fully utilize all vacant and/or abandoned real property in a manner that best serves the interests of the citizens and businesses of the District," Johnson wrote. " . . . Where landfilling is necessary, the material to be used . . . should include clean construction spoils, incinerator ash mixed with a stabilizing material and other similar product."

This summer, Johnson's department decreed that the chemically treated sludge, called Chemfix, that is produced at Blue Plains by city contractor Jones & Artis Construction Co./National Environmental Controls Inc., would be "fully compatible" with District reclamation projects.

The D.C. government's plan would mark a major departure from the past practice of requiring sludge disposal contractors to dispose of treated Blue Plains sludge outside the city limits. The plan could have major environmental and political repercussions, and yet Mayor Marion Barry's administration has yet to explain it in any detail to the City Council or to District residents who might be affected by it.

"I'm familiar with the Chemfix process to a limited degree," City Council member Jerry A. Moore Jr., chairman of the Transportation and Environmental Affairs Committee, said this week. "I have not had a full-scale briefing on the question of landfill by using a product that has been Chemfixed."

Neither Moore, whose committee oversees the Blue Plains operation, nor council member Wilhelmina J. Rolark (D-Ward 8), who represents residents near St. Elizabeths Hospital, was given advance warning before the contractor began dumping the smelly Chemfix on the hospital grounds last summer. Theodore Hagans, the Fort Lincoln developer, reportedly was caught by surprise by the extent of the city's summer dumping operation near his development, southeast of the intersection of New York and South Dakota Avenues NE. Both those dumping operations have been halted, but Fort Lincoln has been cited by officials as having the potential to take much more of the material.

City Administrator Thomas Downs denied last week that the administration is trying to slip anything by the council or District residents. Rather, he and Johnson argue that the city is struggling to find a long-term solution to its sludge disposal problems and that it's high time the city assumes its full share of the responsibility.

"The counties don't want to take District sludge unless the District is willing to take some of its own sludge," Johnson said.

Few problems have baffled the Barry administration more than how to get rid of the 800 to 900 tons of city sludge that builds up daily at the regional Blue Plains plant. The simplest method is to incinerate it, but the U.S. Environmental Protection Agency won't allow that alternative. Ultimately, officials said, the city may join with other members of the Council of Governments in developing an area-wide approach to sludge disposal.

But meanwhile, the city officials insist there is no danger in using large amounts of Chemfix as landfill in the District, in the event the material can't be disposed of elsewhere. They note that the material has been used successfully as grass fertilizer and that its ammonia odor can be reduced by covering it with top soil.

However, a recent DES departmental memorandum raised the possibility that the Chemfix used near Fort Lincoln could pollute nearby streams and rivers unless it is properly maintained. And experts in the field warn that the city may be making a serious mistake if it makes a long-term commitment to the Chemfix process without examining more carefully alternate disposal methods.