WASHINGTON, DC – Federal Energy Regulatory Commission (FERC) investigative and law enforcement officials urge agency to act on proposed $ 15 million fine against former dam owner from mid-Michigan that collapsed last spring and triggered catastrophic flooding.
In a February 3 filing, five senior FERC officials, including Larry Parkinson, director of the Office of Law Enforcement, argues that former dam owner Lee Mueller and his company, Boyce Hydro, deserve the huge fine and that complications caused by a bankruptcy case can be easily bypassed.
“There is no excuse for Boyce Hydro’s long disregard of its obligations to keep dams safe and the safety of its dam neighbors,” they wrote, adding that the arguments raised by Boyce’s lawyers against the January fine are “either unrelated to this procedure or completely without merit.”
Besides Parkinson’s, the case was signed by Deputy Director of Law Enforcement Janel Burdick, Deputy Director of Investigations Division Jeremey Medovoy and Investigations Division attorneys Todd Hettenbach and Colin Chazen.
The filing follows a Dec. 9, 2020 FERC order proposing a $ 15 million fine against Boyce, which would rival the civil fine issued after the 2005 Taum Sauk Reservoir collapse in Missouri – the most big sanction of this type that the FERC imposed for a safety failure of a hydroelectric dam.
The fine is based on Boyce’s inability to follow federal orders after the May 19, 2020 dam collapse at Edenville, which triggered flooding that passed the Sanford dam, almost wiped out the village of Sanford, Midland flooded town center and left a trail of destruction across several counties. About 10,000 people were forced to evacuate during the flooding, which caused more than $ 200 million in estimated damage.
According to the order, Boyce has not formed an independent forensic investigation team to investigate the failures or asses of the company’s Secord and Smallwood dams upstream of Edenville, as ordered by the commission. Boyce did not perform follow-up safety inspections at his dams, nor did he study the stability of the Sanford Lake shoreline after the reservoir drained.
The lack of work after the flooding was also a major point of contention between Boyce and state regulators, who issued a emergency order last fall to stabilize the remaining sections of the dam.
In January, Boyce’s lawyers and the bankruptcy trustee pushed back the proposed fine, arguing it would complicate payments to creditors and jeopardize a settlement fund for flood victims. A final confirmation decision by federal bankruptcy judge Daniel Opperman in Bay City has been pushed back. A hearing is scheduled for February 19.
The working group on the four lakes, which paid $ 1.5 million acquiring the Boyce Hydro dams by conviction, also opposed the fine on the grounds that Mueller is insolvent and said FERC should instead focus on transferring the dam oversight authority from Sanford, Secord and Smallwood at the Michigan Department of the Environment, Great Lakes and Energy. (EGLE).
The task force did not receive Boyce’s licenses to generate hydroelectric power, but Boyce’s lawyers argued their cession was implied when the company lost the dams. Regulators cannot impose a fine unless Boyce holds the licenses.
In a January 8 letter, Boyce’s attorney, Michael Swiger, argued that FERC should impose a “nominal” fine and “not maintain a fiction that project licenses exist in a vacuum or attempt to maintain its jurisdiction over Boyce Hydro for the sole purpose of imposing a civil fine. penalty. “
In the February 3 filing, FERC law enforcement and investigative staff dismissed the licensing issues as “superfluous excuses and arguments in an attempt to evade, or at least significantly limit, its responsibility for the many violations ”listed in the FERC order proposing the fine.
Staff members argue that FERC can simply avoid complicating payments and creditors’ settlements for flood victims in bankruptcy by asking that its sanction be given lower priority than other claims.
Staff argued for a penalty “commensurate with the seriousness” of Boyce’s violations and noted that Mueller continued to receive a bi-weekly $ 3,000 paycheck from Boyce throughout the case. bankruptcy while claiming the company lacked funds to pay an engineer to follow up. security work ordered by the FERC after the flood.
“Boyce Hydro should be penalized for his prolonged and blatant disregard of FERC staff dam safety orders during the time he held the licenses, regardless of whether the project licenses have since been terminated,” they wrote. .
Legal confusion over Boyce licenses was briefly mentioned at the State Dam Safety Working Group meeting on Wednesday by the director of the Department of Environment, Great Lakes and Energy (EGLE) from Michigan (EGLE), Liesl Clark, who touched on the topic while recapping past discussions about the state and federal government. monitoring and responsibility of dams.
“Those regulatory eyes are important right now, especially with some of the dams that are in play in the Midland area and the regulatory limbo that currently exists due to what’s going on there,” said Clark, whose department was criticized last year. on pre-flood disputes with Boyce, who tried to blame state regulators for the disaster.
Obtaining state access to inspection reports and other records for FERC-regulated dams, which are classified by federal law to protect critical infrastructure, is a draft recommendation of the task force. , which is expected to advance its final report this week.
The state, which is in dispute with Boyce in a case suspended by bankruptcy proceedings, said lack of access to FERC reports hampered the regulatory transfer of oversight to Edenville after the federal agency revoked the dam’s license to generate electricity in 2018.