IDEM orders dissolution of Marshall County Regional Sewer District; council weighs options to limit county exposure

The Indiana Department of Environmental Management has issued an order dissolving the Marshall County Regional Sewer District, prompting the county to consider legal and financial responses.

Sam Harmon, president of the Marshall County Council, told commissioners the IDEM order was “a pretty strong rebuke” of the district’s management and said the county faces roughly $1.3 million to retire outstanding debt tied to the project. “Every day that the debt is not paid, about a $500 accumulation of interest to the bank occurs,” Harmon said, urging quick action to limit additional costs.

An IDEM summary read aloud by a commissioner and discussed at the meeting noted the department’s finding that the district failed to file required updates and that the project was not “economically fair or reasonable,” citing Indiana Code 13-26-6-4. A county attorney present said that the appeal process would move first to a trial court and that administrative decisions are typically reviewed deferentially, making an IDEM reversal unlikely.

Commissioners discussed several options: encouraging the sewer board to decline judicial review and immediately wind up affairs; having the county take responsibility for dissolution and asset distribution; or investigating insurance or contractual remedies tied to consultant and financial-advisor work that preceded the debt. Harmon and others said consultants’ advice and the district’s borrowing decisions contributed to the problem.

“We would probably incur maybe the insurance…we'd have to look at the details,” Harmon said, adding that legal counsel will review the debt instrument and related documents. County counsel noted that, if the district pursues judicial review, the process could be protracted and would accrue further legal costs and interest.

Commissioners agreed to authorize outreach to the sewer board and to have the county attorney evaluate immediate options, including whether the county could assume winding-up duties if the board declines appeal. A next public meeting of the Sewer Board was scheduled the following Wednesday; commissioners said they would seek to learn whether the board planned to seek judicial review before taking further action.

The IDEM order and the county’s possible assumption of dissolution responsibilities could have short-term budget impacts and may require the council to consider appropriations if the county ends up covering remaining liabilities. Commissioners said they will report back as counsel provides more detail on potential insurance or legal remedies.