The Lake Herman Sanitary District sets rules for wastewater management on property in the immediate vicinity of Lake Herman. Many sanitary districts build centralized systems. A 1998 feasibility study by Banner Associates of Brookings placed the cost of a centralized sewer system for Lake Herman with five lift stations and a connection to Madison's wastewater treatment plant at just over two million dollars. Hook-up fees, mandatory for every property in the District, could range from $1000 to $5000, depending on the amount of debt the District chose to carry. The 1998 study estimated monthly fees between $30 and $70, although the city of Madison ultimately sets fees for all users hooked into its system. (One may conservatively update those 1998 cost estimates by 30%-50%.)

The Lake Herman Sanitary District lacks the population and tax base to build such a centralized system. All wastewater treatment in the District is thus handled by on-site systems—septic tanks, holding tanks, and one holding pond—maintained by individual property owners. The District focuses on inspecting new and existing systems.

Preliminary data from a volunteer bacteria monitoring project sponsored by the East Dakota Water Development District showed high coliform bacteria counts during April and May. Those counts declined through June, July, and August. These data suggest that any contamination present in the lake comes not from regular seepage of human waste from septic systems but from spring run-off from agricultural operations in the Lake Herman watershed. As many possible sources of contamination—feed lots, cattle grazing in or near waterways, manure spread as fertilizer—lie outside the Lake Herman Sanitary District, it is possible that a centralized sewer system would produce little to no improvement in water quality in Lake Herman.

Each year one seat on the sanitary district board comes up for election. Nominating petitions are made available for circulation each June. Elections, if necessary, are held in mid-July. Residents of the district interested in serving on the board are encouraged to keep an eye on the Madison Daily Leader and this website for notices of vacancies and elections.