Midland-area dam buyer: 'We know for sure the system failed'

Correction: The Sanford Dam is the farthest downstream of the four Midland-area dams owned by Boyce Hydro. An earlier version of this story identified the wrong dam. 

Lansing — The potential buyers of four Midland-area dams affected by widespread flooding told state senators Tuesday that the state had much to learn from the May 19 disaster about the perils of private dam ownership. 

Four Lakes Task Force is now seeking to take the dams by eminent domain rather than cash purchase after the Edenville Dam failed in historic rain and flooding. Minor damage also was sustained by the other three dams: Sanford, Smallwood and Secord. 

The dam owners, Boyce Hydro, have vowed to fight the effort by Four Lakes Task Force, an authority that was buying the dams on behalf of Midland and Gladwin counties.

Four Lakes Task Force estimates the immediate stabilization of the dams will cost upward of $30 million while the dams' rehabilitation and repair over the next four to six years would cost $250 million to $400 million. 

"We know for sure the system failed," Dave Kepler, chairman for the Four Lakes Task Force, told the Senate Energy and Technology, Environmental Quality joint committee. "These dams should have survived the storm. Our belief is that it has been apparent for many years the private ownership was not covering the long-term costs required for investment in these dams.”

The joint committee has heard from a series of witnesses, including state and federal regulators, in its review of the floods and dam failure in Midland. 

Kepler testified for roughly an hour and suggested lawmakers create clear requirements for dam owners to inform the community and state of their long-term financial viability. Protections around critical infrastructure information compounds the difficulties of knowing and addressing problems with dams, he said. 

"Operators ought to be working with communities saying, 'Here’s how my cash flow works, here’s what I need in investment,'" Kepler said. 

Lawrence Kogan, a lawyer for Boyce Hydro, said he wouldn't be opposed to such a requirement so long as it was "imposed on anyone owning a dam no matter the form of ownership."

Kepler also argued for a better hand-off between the state and the Federal Energy Regulatory Commission, which has been criticized for its abandonment of the Edenville Dam to state regulators in 2018 after years of alleged non-compliance by dam owners Boyce Hydro. Federal regulators left the dam to state oversight after revoking its hydropower generation license.

Kepler said there might also be a need for more grant funding to supplement the cost homeowners in special assessment districts take on after a private dam failure or after the revocation of a dam's hydropower generating license. 

"A lot of these communities are sitting on this false entitlement that they get a lake because of the hydro-dam, but as soon as that hydro-dam no longer operates their entitlement goes away and they need to go buy into this lake program," Kepler said. 

Kogan agreed that more public financing should be made available, not just to communities seeking to purchase dams but also to the owners operating private ones.

In addition to the private good a power-generating dam might produce, the structure also produces public goods in the form of recreation and increase property values around the reservoir, he said. 

"The state should have a mechanism to maintain these public benefits," he said. 

eleblanc@detroitnews.com