On Thursday, the Michigan Department of Attorney General filed a motion for summary judgment on behalf of the Department of Environment, Great Lakes, and Energy (EGLE) and the Department of Natural Resources (DNR) in the U.S. District Court for the Western District of Michigan as part of the state’s ongoing enforcement action against the former owners of the Edenville Dam. The east embankment of the dam failed on May 19, 2020, sending a surge of water downstream that resulted in catastrophe for the surrounding communities.
Through the discovery process, the state uncovered key facts previously unknown to the public. In 2010, Boyce Hydro determined that the east embankment of its dam might fail if Wixom Lake rose too high. Boyce Hydro could have fixed the defect, and even made preliminary plans to do so, but neglected to ever follow through. It was that precise part of the embankment that failed in May 2020, just as the new evidence shows Boyce Hydro had predicted internally back in 2010. There is no indication Boyce Hydro divulged the defect to the federal government, which regulated the dam at the time, and it never divulged the defect to the state after the federal government passed regulation to the State in September 2018.
Additionally, Boyce Hydro’s former dam safety engineer and chief operator resigned in protest in May 2017 because Lee Mueller—the person managing Boyce Hydro from his home in Las Vegas—routinely neglected basic dam safety priorities. Mueller instead prioritized expensive and unproductive side projects, such as trying to hold a music festival at the dam, trying to transform the dam into a marina or RV park, purchasing a sawmill and large amount of unnecessary heavy equipment, and trying to develop a residential neighborhood. The chief operator finally left when Boyce Hydro used its staff and resources to try to dig a pond off-site rather than repair a major safety defect inside the Sanford Dam. The chief operator testified that he tried to persuade Mueller that he was “in the hydro business now, you got to pay attention,” but Mueller responded that “I’m not in the hydro business ... I’m in the money-making business.”
“The Edenville Dam failure was a devastating tragedy for thousands in that community, and these new revelations clearly show that failure began at the very top of Boyce Hydro,” said Michigan Attorney General Dana Nessel. “We discovered an unconscionable disregard for safety and dam integrity that cost the community that relied on the security of that dam immeasurably, and it’s important we share this with the court today.”
“This filing makes clear that Boyce Hydro knew of critical safety issues at the Edenville Dam but failed to take even the most cursory actions to fix the deficiencies or alert regulators to the problem,” said Aaron Keatley, EGLE acting director. “This fits with the company’s decades-long history of violations and antagonism toward federal and state regulators and illustrates the owners’ culpability in this catastrophic dam failure.”
Boyce Hydro made a vigorous attempt to keep this enforcement action from moving forward. It waged an aggressive, months-long effort to persuade the U.S. Bankruptcy Court for the Eastern District of Michigan to prevent the state from pursuing Boyce Hydro in court. But Boyce Hydro was unsuccessful. And once the enforcement action was underway, Mueller fought the discovery process at every turn, going to great efforts to keep evidence of Boyce Hydro’s 2010 evaluation of the east embankment a secret. His refusal to obey the federal court’s discovery orders was so brazen that it “astonished” the judge and lead that court to default Mueller for his “bad faith” and “contumacious conduct.”
If the court grants the state’s motion filed Thursday, Boyce Hydro will be dismissed from the case. That is because the bankruptcy process Boyce Hydro initiated allows the state to establish the culpability of Boyce Hydro for the failure of its dam, but correctly channels any funds left in Boyce Hydro’s estate to the flood survivors whose homes and businesses were destroyed due to Boyce Hydro’s mismanagement of its dam. The state will then pursue a default judgment against Lee Mueller personally, whom the court has already determined is at fault for the dam’s failure.
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