Michigan flood puts privately owned dams in harsh spotlight

(Bloomberg) — The dams that breached after days of heavy rain in central Michigan are privately owned and had been the center of controversy for several years. Now Governor Gretchen Whitmer is saying these critical facilities should not be in private hands.

“We need to be very clear,” Whitmer said at a news conference Thursday (May 21). “This is a privately owned dam. We can talk about the merits of whether private companies should own critical infrastructure. I don’t think that they should.”

Entire communities in Midland County were flooded by the failure of two dams, escalating tensions with their owner, Boyce Hydro Power LLC. The collapse also renewed debate about whether private ownership of such structures pits the quest for profit against the public good.

During a visit to a Ford Motor Co. plant in Michigan on Thursday, President Donald Trump said the dams involved were old and that “perhaps there was a mistake” made. “Our prayers” are with the flood’s victims, he said. The president on Thursday approved a declaration of emergency for the state, setting federal assistance in motion.

The U.S. Army Corps of Engineers says more than half of the nation’s 91,458 dams are privately owned, some by power utilities and large corporations and others by private landowners.

Boyce’s Edenville Dam was breached May 19, releasing water that overpowered a second dam the company owns. As waters rushed from lakes and over the banks of the Tittabawassee River, more than 10,000 people were evacuated from the city of Midland and the surrounding area, and Dow Inc. was forced to shut a chemical production complex.

Nearby Wixom Lake drained, leaving marinas and pleasure boats high and dry, while thousands of homes and businesses downstream were inundated with floodwater.

The wrestling match among four communities in Michigan’s heavily flooded areas, state and federal officials, and Boyce goes back several years. The company and the community have been trying to get the other to pay for improvements as far back as 2012.

Boyce put out a statement laying some blame on the state and the communities near the dams. The company, which bought the 95-year-old dams in 2006, said it spent hundreds of thousands of dollars putting together an $8 million plan to upgrade the structures to meet the Federal Energy Regulatory Commission’s maximum spillwater requirements, which would enable the Edenville Dam to withstand more water. Boyce said it couldn’t finance the improvements, and the surrounding communities rejected its request for funding.

Years of dispute

For several years, Boyce tried to come up with an affordable plan to meet the heavier flood requirements. With none deemed satisfactory, FERC revoked Boyce’s license to produce power at the 4.8-megawatt facility, saying that it wouldn’t handle a major flood.

“Of particular concern is the project’s inability to pass the Probable Maximum Flood due to inadequate spillway capacity,” the report said. “The Commission’s Dam Safety Guidelines require the project works to be designed to safely handle a flood up to the PMF either by withstanding overtopping of the loading condition during such a flood or alleviating the risk such that dam failure would no longer constitute a hazard to downstream life or property.”

Boyce appealed the ruling and was denied in 2019.

When Boyce stopped generating power at the Edenville Dam, which is on the border of Midland and Gladwin counties, the company let the water level on Wixom Lake fall. Four area homeowners associations that had banded together to form the Four Lakes Task Force crafted a plan to have the two counties buy out Boyce and give oversight of the dams to the task force.

Buying dams

“People were upset because they couldn’t use the lake the way they wanted to,” said Stacy Trapani, a spokeswoman for Four Lakes.

In December, they reached an agreement with Boyce to buy out the Edenville Dam and three others, including the now-breached Sanford Dam, for $9.4 million. The deal would take two years to complete. Four Lakes wanted time to do due diligence to examine the condition of the dam before completing a deal.

The motivation was to wrest control of the dams from a private enterprise, whose main motivation was profit, and run the dams to preserve home values, manage the lakes for recreational purposes and make sure the dams were upgraded for maximum safety, Trapani said.

Last year, she said, Four Lakes hired a firm called Spicer Group Inc. to examine the dams. The firm reported back that there was no structural damage, but the dams would need maintenance and upgrades to prepare for Maximum Flood Spillway capacity, she said. That would have ensured that they could withstand a flood like the one that just occurred.

The other idea was to give the counties ownership. That way, officials could levy taxes or assessments to raise money to upgrade the dams, said Bridgette Gransden, administrator and controller of Midland County.

“In this situation, public ownership has an advantage,” Gransden said. “We’d have more impact on funding. It’s easier to maintain the dams.”

Boat owners complain

When FERC revoked the power-generation license, Boyce said it lowered lake-water levels as a safety move in October 2018. The following spring, boaters complained about low water levels, so Boyce raised them.

The company did the same thing last month, under pressure from lakeshore residents and Michigan’s Department of Environment, Great Lakes & Energy (GLE), which governs the dams for the state, and from Michigan’s Department of Natural Resources (MDNR), the statement said.

“In April 2020, again under pressure from the shoreline residents of Wixom Lake, the EGLE and the MDNR, Boyce began to raise the level of the Wixom impoundment and normal pond level was reached during the first week of May,” the company said in the statement. “Before Boyce did so, the EGLE issued it a permit to raise the impoundment, despite the fact that the EGLE Dam Safety division was well aware of the Edenville Dam’s inability to meet even 50% of the PMF standard.”

The company said the state threatened it with litigation because lower water levels were killing fresh-water mussels even though higher pond levels risked a breach of the dam.

“The state agencies clearly care more about mussels living in the impoundment than they do about the people living downstream of the dams,” said Lee Mueller, co-member manager of Boyce Hydro, in a statement.

Ryan Jarvi, a spokesman for the Michigan attorney general’s office, said it was Boyce’s decision to raise water levels in 2019 and recently in 2020.

“The company has a troubling track record of noncompliance and neglect, which led the State to file its suit for compensation for damages caused to Wixom Lake by Boyce’s unauthorized actions,” Jarvi said in an email.

Dams burst

After the years of tussling, everyone’s feared scenario came true this week. The dams gave way after the more than 4 inches of rainfall over 48 hours, driving the Tittabawassee’s level to a record 35 feet — 10 feet above flood stage. At 10 a.m. Thursday, the level had receded to just under 31 feet, according to the National Weather Service website.

While fingers are pointing in all directions, FERC has ordered Boyce to examine the dams and give a report, according to a spokeswoman for the commission. The company owns four dams in central Michigan.

Going forward, it’s not clear what will happen with the acquisition of the dams and upgrades, Trapani said.

What is clear is that Whitmer doesn’t like private ownership of the dams and says they need more investment, just like much of the state’s crumbling roads and bridges.

“I ran on and have been introducing solution after solution to fix infrastructure in Michigan,” said Whitmer, whose campaign used “Fix the Damn Roads” as its slogan in 2018. “We have underinvested over a period of decades in this state. When you have 500-year events, 100-year events, happening with more frequency, we know that this underinvestment will come with a very big cost if we don’t take this seriously.”

— With assistance from David R. Baker and Mario Parker.

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