Corrected: Michigan knew of Edenville dam issues in August 2019

CORRECTION: A Bridge article published Tuesday on the Edenville dam inaccurately characterized a report on the dam’s condition. The article, and its headline, indicated that the Michigan Department of Environment, Great Lakes, and Energy was informed in January 2019 that the Edenville dam didn’t meet state safety standards. Bridge misread a document referencing the report. The document actually noted that the dam did meet state standards at that time, citing the report. It was in August 2019 that EGLE received a report that the dam did not meet those standards. The article has been updated.

State regulators knew as early as August 2019 that the Edenville dam likely did not meet state flood control standards, public records released Tuesday to Bridge indicate.

But according to newly filed court documents, as regulators awaited more information before acting on safety concerns, state lawyers were seeking millions of dollars earlier this year from Boyce Hydro, the dam’s owner, for dead mussels.

“Boyce really needs to get into seven figures if it wants to get the State’s attention,” Assistant Attorney General Nathan Gambill told an attorney for Boyce in an April 22 email, rejecting Boyce’s offer of $200,000. 

“Keep in mind that this is essentially a business decision for the State — why settle for $200,000,” Gambill wrote, “if it can collect substantially more than that by getting a judgment, even taking the costs of litigation into account.”

• Two heirs bought Midland dams as a tax shelter. Tragedy followed.
• Mid-Michigan dam that failed was cited for years for safety violations
• Michigan regulators moved fast on dangerous dam. To protect mussels.

Three months later, the Edenville dam collapsed following days of heavy rains. Federal regulators had sought for decades to get Boyce and earlier owners to add capacity to ensure the dam could handle historic rainfall.

The documents — filed in federal court in Grand Rapids, which is handling litigation between the state and Boyce — raise fresh questions about whether Michigan regulators were more focused on extracting money from a troubled dam regulator for environmental violations than in forcing the company to invest instead in fixing safety deficiencies.   

In a Tuesday interview with Bridge, Boyce Hydro lawyer Lawrence Kogan called the state’s settlement demands earlier this year “extortion.”

A spokesman for Michigan Attorney General Dana Nessel slammed Kogan for releasing the emails by publicly filing them in a federal court case.

“Settlement negotiations are confidential and information regarding the parties’ settlement positions is not admissible in court,” spokesman Ryan Jarvi wrote Bridge in an email. “Beyond that, Boyce’s one-sided recitation of the negotiations in its lawsuit is inaccurate and misleading.”

Jarvi added that negotiations between Boyce and the state over mussel losses would not have interfered with plans to fix the dams.

At that point, he said, the Four Lakes Task Force, an association of property owners around lakes created by the Edenville dam and three others, was in the process of buying the dams from Boyce and had crafted plans to undertake major repairs.

Claims of poverty met with skepticism

The lawyers argued over the cost of dead mussels between February and late April, with the state estimating they had a value of $300 million. The Edenville dam failed in May after three days of rain filled the Tittabawassee River watershed. Rising waters punched a hole through the dam’s earthen embankment on May 19, draining its reservoir, triggering the failure of another dam downstream and causing an estimated $200 million in damage and the evacuation of more than 10,000 people.

The dam’s failure came after the Federal Energy Regulatory Commission had spent decades trying to get Boyce and prior owners to expand its capacity to handle catastrophic storms.

Boyce Hydro had long argued that it didn’t have enough money to finance the repairs, though documents indicate federal officials were skeptical of the claim.

Records show Boyce enjoyed a sizable profit from its four mid-Michigan dams: Collectively, the business generated nearly $2 million annually in payments from Consumers Power, with expenses of about $1.2 million.

The Edenville dam, the largest of the four, generated just over half of all revenue — money Boyce lost when FERC revoked its license to generate power in September 2018, acting on a long-held threat that was designed to prompt the company to make safety repairs.

As the feds washed their hands of Boyce, Michigan took over dam safety oversight.

But after assuming oversight, the state did not spell out what Boyce would need to do to meet Michigan safety standards, which are less rigorous than federal standards. The state did, however, continue to seek compensation for the loss of millions of mussels that state scientists say likely died when the water level of the lakes was lowered in 2018 and 2019. (Boyce said it had approval from FERC to lower the lakes in 2018.)

EGLE spokesman Hugh McDiarmid on Tuesday called Boyce’s focus on the mussel lawsuit a “red herring” intended to shift blame for the company’s long standing refusal to adequately maintain its dam.

“We don’t believe that giving them a pass on restoring public natural resources they damaged would have compelled them to suddenly change their tune and embrace the safety improvement they’d stiff-armed (the federal government on) for a decade and a half,” McDiarmid said.

Deficiencies known, but action delayed

Records released Tuesday show the state suspected as early as August 2019 that the dam didn’t meet the state’s lower standards, which are half as stringent as FERC’s and some of the least strict in the country.

In a letter submitted late Monday to a U.S. House committee investigating state and federal oversight leading up to the dam failure, EGLE Director Liesl Clark acknowledged the state received information from Spicer Group, a consultant working for the Four Lakes Task Force, indicating the dam could not meet Michigan's standards.

But officials did not order repairs or safety precautions such as lowering water levels in the Wixom Lake reservoir, choosing instead to wait on an inspection report the state would provide conclusive information necessary to take action.

As the state awaited additional details, the Four Lakes Task Force was preparing to buy Edenville and three neighboring dams and pay for needed safety upgrades.

McDiarmid said Tuesday that state officials believed helping facilitate the purchase would be “a much faster route to improvements” than leveling enforcement orders against Boyce, “which would almost surely be challenged and take years to force compliance.”

Dam safety experts have said the state should have acted sooner, even without definitive answers about the dam’s ability to meet Michigan’s lower standard. 

“When there's public safety at stake, you don't have conversations. You actually do something about it,” said Hiba Baroud, a professor of civil and environmental engineering at Vanderbilt University who specializes in risk analysis of critical infrastructure, told Bridge in May. 

Monday’s eight-page letter to the House committee repeats the state’s defense that regulators couldn’t act earlier because they were hampered by a lack of communication from FERC that delayed their access to federal inspection reports and other documents that would have provided a clearer understanding of the dam’s condition.

“No formal consultation regarding the revocation and transition to state jurisdiction occurred,” Clark wrote.

In the wake of the May 19 disaster, a federal judge warned Monday that what remains of the Edenville Dam continues to pose a “grave risk” to the public.