PSC Orders Gary to Transfer Sewer Operations to McDowell County PSD

The Public Service Commission of West Virginia ordered the Town of Gary to enter into a standard operations-and-maintenance agreement with McDowell County Public Service District to operate Gary’s sewer system and directed both parties to file the agreement with the commission within 20 days, the commission said. The order directs Gary to take immediate steps to correct long-running compliance and service problems and sets near-term deadlines for rate proceedings and cost recovery.

The commission declared Gary’s sewer system a distressed utility in 2024 under the authority created by Senate Bill 739 of 2020, which allows the PSC to transfer failing water or wastewater systems to a capable proximate utility. The PSC rejected an alternative O&M proposal Gary filed in July 2025, finding that the town’s plan “is inadequate and fails to convey operational and managerial control to McDowell PSD sufficient to address the deficiencies in the city’s sewer system.” The commission specifically found the July proposal did not address rates, meter reading, billing and payments or the collection of customer fees.

Alongside the 20-day filing deadline for the O&M agreement, the PSC ordered McDowell County PSD to propose a surcharge within 30 days to offset costs of operating Gary’s sewer system and directed the Town of Gary to initiate rate-increase proceedings within 35 days. The commission used the word “posthaste” to describe how quickly the parties must execute the standard agreement, and it noted that Gary “has failed to comply” with prior directives related to its utility operations.

McDowell PSD officials have warned that taking on Gary’s system would present financial and operational risks. Jerry Stepp, McDowell PSD board president, said the district already pays $33,000 per month toward debt on 30-to-40-year loans and “We would [have to] do all the repairs, more or less be a maintenance [provider] for them.” Stepp added, “But we cannot do that because if the money was not collected and turned over to the PSD, we’re sitting there in a situation where we cannot get paid.” Gary Mayor Robert Little has warned that surrendering both water and sewer service could imperil municipal functions: “You won’t have [any] law enforcement here.”

Separately, the PSC has pursued enforcement over Gary’s failure to file required reports. In Case No. 25-0146-S-SC the commission issued a Procedural Order on February 20, 2025 directing Gary to file its 2024 Annual Report and entered a Final Order on July 2, 2025 imposing a civil monetary penalty. The commission ordered the report filed on or before August 1, 2025 and said the penalty would increase by $50 per month for each month the report remained missing beyond that date. The docket warns that “continued disregard for Commission Rules may result in the institution of proceedings to remove board members, to place the Respondent into receivership, or to revoke authority to operate as a utility, as applicable. Any one of these actions may occur in addition to, or instead of, the imposition of civil penalties.”

For Gary residents, the PSC action could mean a change in who bills and maintains sewer lines, possible short-term surcharges to cover operating costs, and faster movement on repairs and rate adjustments. Watch for the filed O&M agreement, McDowell PSD’s surcharge proposal and Gary’s rate filing over the coming weeks; those documents will determine how costs, collections and day-to-day operations are handled going forward.