Residents of Miller Bay on Lake Osakis that have been plagued by a mysterious sludge on their shoreline say it will cost at least $45,000 to clean up, and they're not sure whether to accept assistance from an agency they say is to blame.

The agency, the Sauk River Watershed District, has offered $30,000 toward cleanup, and Todd County has offered a $6,000 grant, but the rest of the cost would fall on 11 lakeshore owners along Miller Bay.

In exchange for accepting the $30,000, the lakeshore owners would have to agree not to go after the watershed district for more funds, at least for the current problem.

“I’m to the point now where, gosh, do we just take the $30,000 and try to clean our shore the best we can?” said Janice Hauri, who owns a cabin on Miller Bay and has been trying to find a solution to the sludge. The lakeshore owners sought bids for the cleanup. One company bid $45,000 to $65,000, while another bid $112,500.

Scott Henderson, watershed district administrator, said the payment offer doesn't mean that the district accepts responsibility for the sludge in Miller Bay.

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Almost 20 years ago, the district built two sediment ponds upstream from Miller Bay to divert sediment that was washing into Lake Osakis from a 38-mile-long drainage ditch known as JD2. In 2019, the district dug 17,000 cubic yards of sediment from the larger pond and spread it on a nearby farm fields. Hauri says that subsequent rains washed that sediment into their bay.

It was the first time the district had ever cleaned out the larger pond, Henderson said. It was a huge task.

“It was a learning experience for the district, to say the least," he said.

But he said that the watershed district is trying to fix the sediment problem with JD2, not cause problems. The offer of $30,000 is a good-will gesture "to help with the need of the landowners that are out there and currently experiencing issues that don’t allow them to utilize the shoreline that they would like to,” he said.

Even this one-time payment and cleaning the shoreline will not end the problem of contamination for Miller Bay.

"Sediment is still going to come down the JD2 ditch,” he said. “Will the issues be fixed just by cleaning it out? No. Lake Osakis is over a 6,000-acre lake, the 35th largest lake in Minnesota, and it will always have these issues because there is farming around the lake.”

Farming uses phosphorus and nitrogen, which spur the growth of invasive weeds like curly-leaf pondweed, which dies and washes up on the lakeshore midsummer, he said.

JD2 drains 38,000 acres of farmland, an area so vast that they have difficulty pinpointing the source of the sediment, Henderson said. The sediment could also be coming from the ditch itself through erosion.

The watershed district wants to tackle the source of the sediment by creating a working group of soil and conservation districts, resource managers, lakeshore owners and conservation groups, he said. Through a series of meetings and field trips, they would come up with a series of recommendations. One possibility is reducing the flow of water through the ditch by converting marginal farmland back into wetlands, Henderson said.

Hauri said the problem could spread through Lake Osakis, and that a lakeshore owner close to Miller Bay showed her where sludge is washing into the bulrushes near shore. Neighbors say Miller Bay, too, had quite a few bulrushes before the sludge arrived. Bulrushes provide excellent fish habitat and provide spawning areas for northern pike and, in early spring, nesting cover for largemouth bass and bluegills, according to the DNR. Bulrushes also attract marsh birds and songbirds and provide food for ducks, geese, and swans, the agency says.

“They’ll probably lose all their bulrushes just like we did," Hauri said.

Hauri said she plans to ask her neighbors this weekend whether they want to accept the $30,000 from the Sauk River. They face time pressure, as it will be cheaper to get the work done before water levels rise.

“We want to get this done now,” she said.