The District is spending 70 percent more than the Maryland suburbs to haul sludge from the Blue Plains sewage treatment plant, and paid nearly $3 million in the past five years for removing sludge the plant didn't produce, D.C. Auditor Otis H. Troupe reported yesterday.

Betty Ann Kane (D-At Large), chairwoman of the D.C. Council's Government Operations Committee, which oversees contracting, said yesterday the difference in hauling rates is "inexcusable. They don't have to accept a bid so high, and they could get the same price as the suburbs."

Troupe's audit brought into the open a costly problem that suburban officials have been pressing Blue Plains to resolve. Sludge is expected to be a prime topic at a meeting next week of officials from the jurisdictions that use Blue Plains.

Blue Plains, at Washington's southern tip, is the region's largest sewage treatment plant, handling 70 percent of the area's waste. It treats sewage from the city and parts of Arlington, Fairfax, Loudoun, Mongtomery and Prince George's counties, with the suburbs paying the city to run the plant.

Sludge, the final byproduct of sewage treatment, is either hauled away for composting or application on farmland, or turned into compost at the plant. Last year, more than a million tons were hauled away.

Sludge has long been an unpleasant issue for the region, which settled its sludge wars only six years ago with an agreement parceling out responsibility for its disposal. Local officials are fighting with the Environmental Protection Agency, which denied federal financing for a proposed sludge incinerator.

The EPA also is investigating reports of cost overruns and delays in construction of a sludge processing facility.

Troupe's audit said the District pays $39 a ton to have sludge hauled from Blue Plains, while the Washington Suburban Sanitary Commission, which represents suburban Maryland, pays $23 a ton. That 70 percent difference could amount to as much as $40 million over the course of the five-year, $98 million District sludge contracts.

The difference "represents an area of potential cost saving for the District," the audit said.

District sludge is hauled by two joint ventures of three contractors each, and Maryland sludge is trucked by several of the same contractors.

Because the cost is averaged out when the bills are sent, Maryland users subsidize the District's higher expenses. "There has been some concern over that," said Charles M. Murray, head of the sanitary commission's sludge operations division.

In a memo to Troupe last month, D.C. Public Works Director John E. Touchstone said he could not explain the wide difference in the two competitive-bid contracts.

"Generally speaking, for some unknown reason, municipalities outside the D.C. area get lower prices," Touchstone wrote.

The D.C. sludge-hauling contract, awarded in 1984, was the target of criticism over political favoritism because the president of one of the companies, Jones & Artis Construction, was Carlton D. Jones, a campaign fund-raiser for Mayor Marion Barry. A losing bidder unsuccessfully challenged the award, but not before the Government Accounting Office said the city unfairly applied its minority contracting rules in the case.

The city sludge contracts expired Sept. 30 but have been extended while the city prepares new bid proposals, expected to be out within a few weeks.

Troupe's audit also said the District cannot explain why 85,000 more tons of sludge had to be hauled away between 1985 and 1989 than the plant actually produced. The sludge grew during the two or three days it was stored before being trucked away. One possible explanation is that water is added to the sludge while it is stored, said Tara Hamilton, D.C. Public Works Department spokeswoman.

District officials said they are trying several new approaches to the problem, and will hire a consultant if those do not work.