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As part of the agreement announced Monday, the sewerage district will pay the state $500,000 following more than 60 incidents.
The state filed the civil lawsuit asking for penalties for past violations and a court order requiring the district to take corrective actions. It also wanted the district to improve monitoring and make overdue repairs and upgrades.
The Justice Department on Monday said the sewerage district was making progress toward a plan to ensure compliance with pollution-control laws.
The state sued in 2005 claiming that the district allowed two billion gallons of sewage overflows the previous year.
The dumps came in the springtime after heavy rains overwhelmed Milwaukee's sewer system, releasing a mix of storm runoff and untreated and partially treated sewage into Lake Michigan and other waterways. The state blamed the district's poor management for the incident, but the district claimed it had no other option.
The lawsuit was brought by then-Attorney General Peg Lautenschlager, a Democrat. Her replacement, Republican J.B. Van Hollen, recused himself from participation in the matter, citing the prior involvement of a former law partner in a closely related case.
Deputy Attorney General Raymond P. Taffora approved the settlement on behalf of the state.
The Justice Department already reached settlements with 29 other municipal defendants on similar allegations.
