Tucked away in a thicket of trees a mile south of Goldsboro, MD, Lake Bonnie played a central role in the rural Eastern Shore communities of northern Caroline County.

It was the place where the neighborhood kids ice-skated during cold winters and enjoyed a swim and a swing on a rope line when school let out in summer. Tourists from Dover and Baltimore drove over in RVs or with kayaks on the roofs of their cars, ready to catch their share of bass and bluegill and grill them for dinner with a side of local corn. There were weddings and potluck dinners, fund-raisers and Christmas light displays. People came back year after year.

But nobody goes to Lake Bonnie anymore. Seventeen years ago, the county health department declared the 28-acre freshwater lake unsafe for swimming, saying it had been contaminated by Goldsboro's failing septic systems. A year later, in 1996, the Maryland Department of the Environment ordered Goldsboro to put in a public sewage treatment plant to replace its failing septic systems. The town, which has 100 homes, was to face fines of $100 a day if it did not comply.

Gail Litz, whose family owned Lake Bonnie since the 1950s, assumed the town would make good on its agreement to fix the problems, and that the state would bring down the hammer if the town balked. Yet today, 16 years later, Goldsboro still does not have a sewage treatment system.

The town's septic systems continue to fail, sending untreated human waste as well as gray water from laundry and dishwashing through the town's drainage ditches and into Lake Bonnie, which feeds into the Choptank River near its headwaters in Greensboro. The Maryland Department of the Environment has never fined the town, nor does it intend to. And two years ago, Litz lost Lake Bonnie to foreclosure; even her most loyal regulars no longer wanted to visit a polluted lake.

Now Litz, 64, is suing the town and the state, alleging that their failure to fix Goldsboro's sewage problem condemned her property and robbed her of her livelihood. She has asked for $7 million in damages — enough, she hopes, to leave something for her children and grandchildren.

Litz has already lost twice in court, with the state and the town arguing, successfully, that she waited too long to file her claim. But Chestertown attorney Phil Hoon, who famously prevailed in court against Wal-Mart a decade ago when the chain tried to come to Kent County, is not giving up. He has appealed to Maryland's highest court, the Court of Appeals.

"To think that the state can put in place a consent order and not enforce it, that's just beyond me," Hoon said. "This is all on MDE, make no mistake about it. It's their unwillingness to enforce their own consent order, and it's just a tragedy."

But MDE attorney Steven Johnson said the state has discretion as to which of the hundreds of consent decrees it chooses to enforce. When asked if the department enforced the one in Goldsboro's case, Johnson said: "That is not a relevant question. MDE considered the options available to it, and concluded that enforcing the consent order was not going to get the result it wanted."

The issue around Lake Bonnie is, in a sense, a microcosm of some of the issues that beset the Chesapeake Bay cleanup as a whole. Pollution has fouled a waterbody and caused economic harm. But the multimillion-dollar cost of fixing the problem also appears to be staggering for such a tiny town, raising the question of who should pay to fix the problem.

For a town like Goldsboro, a new plant could have meant hundreds or even thousands of dollars more each year for water and sewer. In the Shenandoah Valley towns of Woodstock and Berryville, water and sewer rates quadrupled when those towns needed new treatment plants. Indeed, after Goldsboro did a study, and determined it couldn't pay for a sewage treatment plant, Johnson said, the department concluded it would be better to work with the town to find funding for a solution than drag the town through court and try to collect the fines.

"There isn't a judge in Maryland that would make Goldsboro pay," Johnson said, calling the order "meaningless" once the town declared it could not fund the system.

He added: "It would have been malpractice for me to say that they should enforce this agreement."

Suds in the lake

Lake Bonnie began life in the post-Civil War years when the Pennsylvania Railroad began stopping in Goldsboro. Back then, the town was only three houses and nine people where Routes 313 and 287 now intersect.

With traffic increasing, some enterprising people built a three-story grist mill on a small stream near the tracks. The lake formed at the mill site behind a small floodgate in a dirt bank. Workers built a larger dam in the 1930s to improve flood control. It stood until 1949, when a thunderstorm washed it out.

In the 1950s, Litz' father, William Councell Jr., bought Lake Bonnie and the property around it. He rebuilt the dam and the lake, which he used to irrigate his fields. He named the lake after one of his business associates, Bonnie M. Walson.

In 1961, Councell and his family opened the lake to camping, wanting to share its beauty with others and supplement the income from their sod business. Two years later, news accounts praised the Lake Bonnie experience for "exceptionally fine fishing and boating, and an opportunity to reach nature at its best." It was affordable, too: In August 1969, a week's vacation there would cost a family $16, far less than a week in one of the new seaside palaces at Ocean City.

Litz said her father had some idea by the 1980s that waste from Goldsboro sometimes reached Lake Bonnie. Occasionally, the lake would smell, Litz said, and the health department kept a watch over it.

"You could see the suds coming from town, from the local ditch," Litz said.

Councell was one of several people in town to begin advocating for a public water and sewage system. It wasn't long before the Caroline County Health Department joined the push.

But in 1985, and again in 1988, the townspeople rejected plans for such a system. Even though federal and state grants would have paid close to 90 percent of the costs, townspeople maintained they couldn't afford it.

After the second vote, in 1988, Caroline County health director Lester W. Coble Jr. wrote to the MDE secretary, expressing concern that nitrate was increasing in both groundwater and the shallow wells.

"Community sewage and community water are needed for this town," Coble declared.

In 1995, Coble wrote to the MDE secretary again, saying the problem in Goldsboro had reached "crisis proportions." He urged the state to enter into a consent order that would force the town to hook up to public water and sewer.

Staying afloat without swimming

A few months later, with no plan in place and fecal coliform levels climbing in Lake Bonnie, Coble had no choice but to order Lake Bonnie closed for swimming.

"A permit to operate the beach would be denied under section 06e due to the use of the town of Goldsboro's stormwater management system by the residents as a sewerage system," Coble wrote to Litz in 1995. "Fecal contamination in the wastewater would be a concern to this department."

Even without the campground's crown jewel, Litz tried to keep her business going. She applied for a water park, but the lender wouldn't allow it. She tried to put in a swimming pool, but the county zoning wouldn't permit it.

Then, in the summer of 1996, Litz thought she had turned a corner. The town entered into the consent order with MDE. It agreed to a schedule for constructing a public water and sewer system. Litz got herself on the sewer planning committee.

But a lack of money and political infighting continued to delay progress. At one point, Goldsboro found a developer willing to build a system in exchange for the right to build 500 homes. But county commissioners were against the move. They wanted any new system to also fix the failing septic problems in the surrounding towns of Henderson, Marydel and Templeville, all small and relatively poor rural communities. As the meetings dragged on, Litz continued to lose business.

Frustrated, she wrote to the county in 2003. "I want to know how long these residents will be allowed to contaminate the streams, lake, river, and Chesapeake Bay? How long is the county going to take a chance on the health and safety of its citizens?"

Litz said she considered filing a lawsuit then, but felt the state would eventually enforce their decree. Besides, she said, she felt it would be "biblically wrong" to sue. She changed her mind in 2010, when she lost the lake to foreclosure. Broke, and living with her son and grandchildren in Florida, she was relieved to find Hoon, who was willing to take her case on a pro bono basis.

"I'm an easygoing person who doesn't do confrontation very well," Litz said. "I really felt all along that there wasn't anything I could do to speed it up."

Money, money everywhere

Litz also thought change was coming. In 2003, the same year she wrote her letter, the Maryland State Legislature passed the so-called "flush tax" to upgrade sewage treatment systems and keep nitrogen and phosphorus out of the state's impaired rivers, including the Choptank. Homeowners pay $30 a year, which was expected to generate $65 million a year. Last year, the legislature increased the fee. Septic users also pay the fee, and their money goes into a separate fund for upgrading septic systems and other pollution-reduction efforts in rural areas, including cover crops.

But Goldsboro wasn't eligible for any flush fee money, MDE officials say, because those dollars were earmarked for upgrading existing sewage-treatment systems, not building and managing new ones. Nor could it tap into money for denitrifying septic systems. Those were reserved for homeowners in critical areas near streams and rivers. And even if Goldsboro residents installed denitrifying septics, they wouldn't do much good. The homes lacked enough square footage for adequate drain fields, and the poor drainage meant waste would continue to seep into the groundwater and ditches.

Over the last decade, environmental activism has swelled as riverkeeper groups, the Chesapeake Bay Foundation and a new group, the Chesapeake Legal Alliance, have sued industry for polluting waterways and the EPA and MDE for not doing enough to prevent it. But none of those groups were interested in taking on Litz's case against Goldsboro and the state.

"It just boggles my mind that nobody wants to do anything about it," said Douglas Lashley, a former Washington litigator who now runs Greenvest, a mitigation company. "If this was private industry, there are people who would have been fired. There are people who should be fired at MDE, there are people who should be fired at EPA. Trust me, if this were in Oxford, or St. Michaels, it would be corrected tomorrow."

Hoon asked Lashley to help him come up with some mitigation solutions. Two years ago, Lashley said, he wrote to Goldsboro, offering his assistance with the cleanup. The town didn't respond.

Town officials also didn't respond to the Bay Journal's request for interviews.

Wilbur Levengood, a county farmer and vice president of the Caroline County board of commissioners, said he's known about Goldsboro's septic problems since his senior year in high school. Now pushing 60, Levengood has devoted his golden years to fixing the problem. Goldsboro is now in the design stages of a $32 million project to tap into an upgraded sewage treatment plant in nearby Greensboro. The budget for the new system is almost equal to the county's entire budget for all services — including its roads, schools and medical system.

Levengood, who grew up playing at the lake with Litz, says it's a shame the lake was lost the way it was. But, he said, the state should have helped Goldsboro pay for the upgrades.

"This is typical of our state, our federal government. They're telling them, 'you gotta do this.' But you got no resources to work with. So what do the local people do? They do nothing," he said. "If a state agency comes on and says, 'this has to be done,' then their budget has to be able to absorb it."

The state is not disputing that Goldsboro's failing septic systems polluted Litz's lake. In fact, two years ago, Gov. Martin O'Malley waded into the lake to draw attention to the problem of failing septics in the hope of getting a septic bill passed to limit such systems on new developments. Litz and Hoon tried to attend the event and speak to the governor, but the lake's new owner, a local resident named Johnathan Merson, asked them to leave. Merson also did not return calls seeking comment.

MDE's Johnson said he feels sorry for Gail Litz, just as he does for the children in Baltimore City who suffer from lead poisoning and the fishermen who have lost their livelihood because of contaminated rivers. But that doesn't mean the state can, or should, compensate her.

"MDE can't be held responsible to make anyone whole, especially when it didn't cause the pollution," he said. "Unfortunately, there's no remedy for that, and there can't possibly be one."

Litz is hoping the highest court's judges will disagree.

"That lake was my children's inheritance, and now I'm not going to be able to leave them anything," she said. "I just want my day in court. I think every person should have a right to be heard."