The Valley Signal

Government & Accountability

Victor v. Driggs: Inside Teton Valley's $65 Million Wastewater Breakdown

For more than 25 years, the cities of Victor and Driggs have shared the Driggs wastewater treatment system. That partnership is now the subject of a major lawsuit, a mayoral recall effort, and more than $65 million in proposed infrastructure spending between the two cities. This is how it happened, what the lawsuit says, and what comes next.

How we got here

Before 1999, Victor residents relied on individual septic systems. On October 13, 1999, the two cities executed an agreement under which Driggs would treat Victor's wastewater at its facility, a sensible regional solution for two small towns sharing a valley (Complaint, ¶6).

The arrangement worked well enough through the early 2000s. But as regulatory pressure on the Driggs wastewater plant increased due to repeated permit violations, the cities formalized their relationship with a new Inter-City Agreement in 2011. The agreement, attached to the complaint as Exhibit A, states that Driggs' wastewater facilities "are presently being improved and will be of sufficient size and capable of receiving and treating the anticipated wastewater from Victor and the surrounding regional area." Victor agreed to pay a proportional share, roughly 44.1% based on its share of total wastewater flow, of the plant's debt service and operating costs (Complaint, ¶¶21-27).

The centerpiece of the upgrade was a new mechanical treatment system called a Multi-Stage Activated Biological Process (MSABP), which replaced the old lagoon system. The complaint alleges that this technology "was not utilized and also untested in cold weather climates" at the time Driggs commissioned it, that Victor raised concerns, and that Driggs "unilaterally decided, without the consent of Victor" to proceed with the design (Complaint, ¶¶9-12). Construction was completed during 2016 (Complaint, ¶15).

The problem, as the complaint alleges: "The upgraded WWTP was never capable of treating the wastewater to Legal Standards" (Complaint, ¶32).

A decade of pollution

The complaint details a staggering record of environmental violations. The upgraded plant "racked up over 3,700 EPA violations between November 2012 and June 2017 alone and has continued to rack up violations to present day" (Complaint, ¶40). Citing Idaho Conservation League data, the complaint alleges the Driggs wastewater plant was ranked among the worst-polluting wastewater facilities in Idaho across multiple reporting periods: second-worst from 2014-2016, third-worst from 2015-2018, the single worst from 2017-2019, and again the worst from 2021-2023 (Complaint, ¶¶41-43, 50). As of 2024, it was ranked second-worst in the state (Complaint, ¶54).

The discharge flows into Woods Creek, which the complaint traces downstream through "the Teton River, Henry's Fork, the Snake River, the Columbia River, and ultimately ends in the Pacific Ocean" (Complaint, ¶35).

The core issue is ammonia. The plant's federal discharge permit sets strict limits on how much ammonia can be released. According to the Idaho Conservation League's annual wastewater report, the facility discharged approximately 36,000 pounds of ammonia over its permit limits in both 2022 and 2023.

In 2018, the EPA issued a consent agreement requiring Driggs to fix the problems, along with a $13,500 penalty. Under that agreement, Driggs was required to identify corrective actions within 12 months, complete modifications within 24 months, and achieve full compliance within 24 months. The complaint alleges "Driggs ultimately failed to perform all of these obligations" (Complaint, ¶¶44-46).

When Driggs failed to meet those deadlines, the U.S. Department of Justice filed a complaint in October 2022 "seeking over $160 Million in damages" (Complaint, ¶51). That case was resolved in January 2025 with a federal consent decree: Driggs agreed to pay a $400,000 penalty and rebuild the plant, with a hard deadline of December 2028 for the new facility to be operational.

Victor's complaint further alleges that Driggs has already violated the 2025 consent decree by missing sampling requirements, submitting incorrect composite samples, and continuing to exceed ammonia limits as recently as October 2025 (Complaint, ¶¶59-63).

The financial disputes

The pollution problems alone might have been manageable if the financial side of the partnership had stayed clean. According to the complaint, it didn't.

Never conducted required annual audits. Section 8(D) of the Inter-City Agreement required that "on at least an annual basis" the books and records of the wastewater facilities "shall be audited by an independent auditor." The complaint alleges that "the only year Driggs had its independent auditor perform an audit was 2024," the first in the entire 13-year history of the agreement. When that audit finally happened, Victor alleges Driggs did not fully cooperate, "refusing and/or failing to provide necessary documents to conduct the audit at the request of the auditor" (Complaint, ¶¶77-79).

Overbilled Victor for debt service. The independent auditor found that Victor "has been overpaying on the debt related to the DEQ Loan for improvements made to the Wastewater Treatment Facility and trunk line upgrades" (Complaint, ¶80). The complaint alleges specific numbers: the starting principal on the trunk line portion of the loan was $1,180,594.65 after forgiveness, meaning Victor's 44.1% share should have been $520,642.24. Driggs billed Victor for more than that amount (Complaint, ¶¶82-85). The complaint further alleges that between 2014 and 2016, "Driggs invoiced Victor and Victor paid Driggs over $300,000 for debt service reimbursements" that Driggs "did not use … to pay the debt service but instead kept the money" (Complaint, ¶91).

Overbilled Victor for operations and maintenance. The complaint alleges that Driggs "allocated non-O&M expenses to the WWTP account; inflating the O&M cost" and "does not keep a ledger tracking Victor's debt service repayments" (Complaint, ¶¶94-95). The auditor was unable to reconcile all billed amounts for the quarters it reviewed (Complaint, ¶86).

Declined a $20 million forgivable loan. Perhaps the most striking allegation: Victor claims that "sometime in 2020 or 2021, IDEQ informally offered Driggs an approximately $20,000,000 loan to upgrade its WWTP to comply with the NPDES permit, of which the total amount of the loan was to be forgiven." The complaint alleges that Driggs "did not notify or otherwise consult with Victor" about the offer, and "inexplicably declined to apply for the loan, refused to upgrade the WWTP, and recklessly and intentionally continued to pollute Woods Creek and the Teton River" (Complaint, ¶¶47-49).

Driggs has not publicly responded to the specific financial allegations.

Victor decides to go it alone

The complaint alleges that Driggs did not formally notify Victor of its inability to comply with its discharge permit or the 2018 EPA consent agreement "until April 2024," years after the problems began (Complaint, ¶64). In a March 14, 2024 letter, Driggs transmitted the 2022 DOJ complaint to Victor and gave the city three options: share in the cost of plant upgrades, have costs passed through to Victor's users, or terminate the agreement and build its own plant (Complaint, ¶104). The complaint alleges, Driggs "did not acknowledge that it was obligated to provide a WWTP capable of treating Victor's and Driggs' wastewater, or that failure to meet such obligation is a breach of its duties" (Complaint, ¶105).

Victor chose to stay. In a July 1, 2024 letter, Victor told Driggs it "decided not to proceed with the construction of a separate wastewater treatment plant" and said it was "eager to discuss terms that will be mutually beneficial" (Complaint, ¶¶110-111). Driggs agreed to draft a new proposed contract.

After multiple requests from Victor, Driggs transmitted the proposed new agreement on February 12, 2025, over seven months later. The complaint alleges the proposal was incomplete, missing key cost terms, and set Victor's treatment flow rate at "1.5 times the rate that Driggs would pay." Victor alleges the proposed deal "would have passed the cost of its EPA violations, the resulting fines, and required costs to upgrade Driggs' WWTP disproportionately to Victor" (Complaint, ¶¶113-121).

Neither side accepted the other's terms.

In March 2025, the Victor City Council voted unanimously to end the 26-year partnership and build its own independent wastewater treatment plant, estimated at approximately $35 million (Complaint, ¶151). Victor contracted to purchase 40 acres on 7000 South to house the new facility.

Since then, the complaint alleges, Driggs' mayor demanded that Victor be disconnected from the plant by January 10, 2029 and "threatened Victor that if it was not disconnected from Driggs' plant by January 10, 2029, that Driggs' bill to Victor would be 'extremely expensive'" (Complaint, ¶130). Victor argues that under Section 3(B) of the Inter-City Agreement, it is entitled to "ample time to create a solution for their wastewater needs" and that three years is not sufficient to purchase land, design, construct, and commission a new plant (Complaint, ¶¶128-132).

A brief window of reconciliation opened in late 2025. In December, a Victor council member floated the idea of a joint powers agreement, and Driggs officials discussed the possibility. The complaint alleges Victor offered "various arrangements where the Cities could share a common single WWTP" but that "Driggs refused any kind of joint partnership agreement, fair customer agreement, or any shared use arrangement with Victor" (Complaint, ¶¶133-134).

Mediation between the two cities took place on January 21, 2026. No agreement was reached.

The lawsuit

On March 5, 2026, Victor filed suit against Driggs in Teton County District Court (Case No. CV41-26-0062), demanding a jury trial. The complaint was filed by attorneys Jeffrey D. Brunson and Robert B. Knudsen of Beard St. Clair Gaffney PA in Idaho Falls.

The complaint lays out six counts:

Count One Breach of contract for failing to provide a plant capable of treating wastewater to legal standards. Victor alleges that Driggs was "solely responsible for conveying said wastewater to the Driggs Wastewater Facilities and for the treatment and disposal of said wastewater" under Section 7 of the Inter-City Agreement, and that this breach "destroyed the purpose of the Inter-City Agreement" (Complaint, ¶¶140-150).

Count Two Breach of contract for failing to conduct required annual audits (Complaint, ¶¶154-164).

Count Three Breach of contract for overbilling Victor on both debt service and O&M costs (Complaint, ¶¶165-175).

Count Four Breach of the implied covenant of good faith and fair dealing. This is the broadest count, alleging a pattern of bad faith including: declining the $20 million forgivable loan without consulting Victor, employing staff "incapable of performing duties required by the NPDES Permit," failing to maintain the plant, not notifying Victor of violations, excluding Victor from DOJ settlement negotiations, and threatening "extremely expensive" fees (Complaint, ¶¶176-200).

Count Five Unjust enrichment. Victor argues it conferred a financial benefit on Driggs by paying its share of debt service and O&M costs for a plant that never worked as promised, and that Driggs' rebuilt facility will cost less because it retains existing infrastructure that Victor helped fund (Complaint, ¶¶201-208).

Count Six Breach of the mediation agreement. This count alleges that Driggs violated the confidentiality provisions of the January 21 mediation on at least two occasions. First, Driggs' mayor was quoted in the Jackson Hole News & Guide on January 28, 2026 discussing mediation details. Second, on February 17, Driggs' mayor notified a Victor council member that the city had released mediation communications in response to a public records request. Those documents were subsequently published by the Teton Valley Wire on February 21 and the Jackson Hole News & Guide on February 25. Victor alleges the disclosures were "for the purpose of disparaging Victor" and included "false information used to justify Driggs' offer" (Complaint, ¶¶209-240).

In its prayer for relief, Victor asks for compensatory damages to be determined at trial, disgorgement of all amounts Victor paid to Driggs, pre- and post-judgment interest, attorney fees, and "any other relief deemed just and equitable." The complaint does not name a specific dollar figure, but the cost of Victor's planned plant ($35 million), past overcharges, and legal fees establish the scale of what may be sought (Complaint, Prayer for Relief, ¶¶1-6).

Victor has also asked the court to move the case to Bonneville County, arguing that many potential jurors are ratepayers in one city or the other and that media coverage has been extensive enough to compromise jury impartiality (Complaint, ¶4).

Driggs responds

Driggs Mayor August Christensen expressed disappointment. In a statement to the Jackson Hole Daily, she characterized the lawsuit as a strategy for funding Victor's new plant and said the suit "severs a longstanding partnership" between the cities. In a statement to KIFI LocalNews8, Christensen said Driggs "is confident with our legal position and will let the case play out in the court, which will likely take multiple years." Driggs confirmed it will continue treating Victor's wastewater for the near term while proceeding with its own plant rebuild under the federal consent decree.

What happens next

Several major milestones are approaching:

  • April 7, 2026: District Court Judge Steven Boyce, the same judge assigned to the lawsuit, will hear Victor's petition for judicial confirmation of $35 million in borrowing authority. If approved, Victor can take on long-term debt to build its plant without a public vote. This is the same legal mechanism Driggs used in November 2024 to authorize its own $25.5 million in borrowing. (Teton Valley News)

  • May 2026: Driggs plans to begin construction on its own plant rebuild under the consent decree timeline.

  • December 2028: The federal consent decree requires the rebuilt Driggs wastewater plant to be fully operational.

  • The recall: A petition to recall Victor Mayor Will Frohlich was filed March 10 by resident Carol Nowakowski, backed by 23 initial signers. Organizers have 75 days to collect roughly 230 signatures -- 20% of Victor's 1,151 registered voters -- to force a recall election. The petition objects to the lawsuit, the judicial confirmation process that bypasses a public vote, and the proposed plant site on agricultural land. (Teton Valley News)

The bottom line

Both cities now plan to build or rebuild their own treatment plants at a combined cost that could exceed $65 million, in a county of 13,500 people. Ratepayers in both cities will foot the bill.

Victor says it was a paying partner trapped in a broken agreement, subsidizing a polluting plant, getting overbilled, left in the dark on critical decisions, and now forced to spend $35 million to go independent. Driggs says it managed a difficult compliance situation, made significant accommodations, and that the lawsuit is an unfair attempt to make Driggs taxpayers fund Victor's new plant.

A judge and jury will weigh those claims. Victor's wastewater still flows to the Driggs wastewater plant while both sides prepare to build.

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