Bay Harbor: Beauty & the Hidden Beast

Sept. 21, 2008

The late David Hacker, a hard-nosed reporter for the Detroit Free Press, used to say, “Be careful of what you wish for. You might just get it.”
So, perhaps, it is with the developers of the posh Bay Harbor Resort. In the early 1990s, a plan was hatched by developer David Johnson and the CMS Land Company to turn a 1,200-acre moonscape—the former site of a cement plant near Petoskey—into a posh resort. They sought permission to treat the cement dust like dirt since the DEQ had earlier ruled the dust inert.
Their timing was right. Governor John Engler was in power, and so was his policy of minimal environmental oversight. Those in the DNR and DEQ who pushed too hard to apply the rules were often fired or quietly put into a small corner office.
In July of 1994, the state Department of Natural Resources signed a “Covenant of Not to Sue” with Boyne USA and the CMS Land Company, a common practice to encourage development of polluted industrial sites. Soon the five miles of Lake Michigan shoreline became America’s most astonishing makeover.
On the surface, Bay Harbor Resort is a jewel. You’ll see enough yachts and opulent mansions to make your jaw drop, especially considering most of the mansions are second or third homes. The $1 billion resort boasts an exquisite little downtown of shops, an equestrian center, and the 27-hole Bay Harbor Golf Club, described as “The Pebble Beach of the Midwest,” by Golf Digest.
But the agreement to treat dust like dirt has changed lives.
It’s well known by now, that when water runs over cement kiln dust, it turns into a leachate that burns like bleach. Leachate is now captured at the surface in collection pipes, but an unknown amount flows underneath the surface into Little Traverse Bay. On the way to the bay, the leachate picks up traces of heavy metals, including mercury, arsenic and lead.
How much mercury is a point of fierce debate right now.
Just four years ago, 4,600 feet of shoreline south of Petoskey—including the public beach in East Park—were closed due to this leachate. CMS invested millions to protect the lake. Most of the shoreline—except for 930 feet—has been re-opened.
This article will examine the fall-out of the 1994 covenant of “not to sue” and how a community is trying to grapple with the intensely complex toxic mess.

BACKGROUND
Back in 1917, the Petoskey Portland Cement Company found limestone in an area off the Lake Michigan shoreline just south of Petoskey. It was a lucky find because limestone is essential for making cement. The company mixed it in a liquid slurry with shale and clay and heated it in a kiln with coal (which is mixed right in), to get black marbles called clinker. (Interestingly, a key activist in all this is named David Clink.) The company crushed the marbles to get cement. They dumped the left-over dust from the grinding—totaling 2.5 million cubic yards—into five main areas.
Tip of the Mitt, an environmental group, described the amount of kiln dust as equal to 2,343 football fields covered with six inches of snow. Close your eyes for a minute and imagine that.
There were early concerns of toxic run-off from the site. People would sometimes sight rust-colored plumes fingering into the lake from the shore. DEQ samples taken in 1989 showed that “seep” from the site contained heavy metals, and concluded that the metals and high alkalinity were likely due to the influence of cement kiln dust. Even so, the DEQ asserted that the dust was “inert” because it passed a required lab test.
Four years later, after the proposed Three Fires Point development fell through, CMS and David Johnson teamed up to develop the site and bought the remaining property from Holnam, a huge cement conglomerate.
The covenant of “not to sue” smoothed the way for financing. With permission to treat the dust like dirt, the developers consolidated the dust and moved it around with rubble to shape a golf course and planted it with grass. They also removed abandoned buildings and industrial garbage dumped over the years.
JoAnne Beemon, an activist from Charlevoix, said the politics were evident in the John Engler era of de-regulation. She pulls out a letter from the DNR to Peter Byland, chief executive of Holnam, Inc., which used the site for receiving and shipping cement.
The December 14, 1994 letter was sternly worded, saying the site contained elevated levels of heavy metals in groundwater that was seeping beneath the eastern and western kiln dust piles. It cited an EPA Congressional report that said the EPA had collected samples from 11 cement production facilities—including sites similar to Holnam’s. Those samples contained low levels of highly toxic furans and dioxins.
Eight days later, the DNR sent another letter to Holnam, which retracted what was said in the December 14 letter and “apologized for any inconvenience the first letter might have caused.”

WINNERS AND LOSERS
The letter to Holnam, Inc., stated that in the event of the residual groundwater problem following the construction of Bay Harbor, it would evaluate the need for more action. The DEQ and EPA apparently never contacted the company again. Holnam emerged a winner.
David Johnson appears to be another winner. He’s profited handsomely from the development and escaped liability. A DNR employee said a private agreement was signed between CMS and Johnson in which CMS agreed to assume any and all responsibility for clean-up.
CMS netted a profit of $7.8 million from the deal, but has paid out an estimated $60 to $70 million in clean-up costs, not to mention enduring the negative public relations. CMS estimates it might have to spend up to $140 million.
The politics were thick in this story, with developer David Johnson contributing more than $100,000 to GOP candidates and the party since 1987, according to a Michigan Land Use Institute report. His company, Victor International, later hired K.L. Cool, who served as DNR director from 1996 to 2004. He is no longer with the company.
Residents of Bay Harbor have hung tight. Residential lots were tested for heavy metals prior to construction, but a few owners had problems with leachate or were in the way of clean-up efforts. The few lawsuits filed were settled out of court, with CMS buying the affected properties, according to the DEQ and CMS spokesman Tim Petroskey.

LOSING A BUSINESS
In the spring of 2004, Randy Stewart was doing underwater work for Bay Harbor Resort when he noticed problems.
Outfitted in scuba gear, he was putting up the navigational signals in the harbor of the posh resort just as he did every year. He noticed his eyes were burning and his assistants in the boat overhead couldn’t hand him his tools fast enough.
Later, in the summertime, his ears began burning, feeling like an ear infection. His diving mate had the same problem, and they both observed the “infections” took two weeks to heal. Stewart got another ear infection—or so he thought. “It was crazy. I never get ear infections, and now it happened twice in a year.” Later, while scuba diving, he felt his legs burning.
At the time, Stewart ran the Diver’s Cove dive shop, which oversaw Bay Harbor Lake, the stretch of water where the yachts are docked. Later in the summer, one of the residents closely questioned him about where he planned to conduct his scuba lessons. When he said Bar Harbor Lake, the man told him that he’d heard the water wasn’t safe. “He said, ‘Randy, I’m sorry, but you’re not going to teach our children. Not here.’”
Stewart had worked for 10 years for Bay Harbor Resort, but this was the first time he heard about any problems. He talked to the harbor master, who said the reports of leachate were a lie and some people had it in for the resort.
In fact, tribal fishermen had noticed a rust-colored plume in the lake that summer and alerted officials at the Northwest Michigan Community Health Agency. The agency then issued an advisory on September 3 not to swim on the shoreline that was about three miles west of the village and marina.
The leachate has high alkalinity levels and can kill fish instantly and irreparably burn skin, eyes, and mucous membranes. As it turns out, leachate had flowed directly into Little Traverse Bay for eight months beginning in January of 2004.
Stewart didn’t hear about the health advisory, and believed the harbor master, whom he had trusted for years. But he had a change of heart after watching a TV news report in January. In retrospect, he believes the leachate had burned his inner ears and legs.
Stewart said he feels betrayed that management never gave him a heads-up. “There is just so much that is deceitful about this whole thing,” he said.
After the health advisory was issued, the EPA began regulating the site using what’s known as the Superfund law or Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). CMS was ordered to “isolate, contain, or remove” the cement kiln dust to prevent further contamination of the bay.
Stewart decided to write Bay Harbor to break his two-year contract because he couldn’t—in good conscience—take divers into the water. But the resort refused to release him from the contract and kept sending him bills over the next summer. Stewart has since opened Indian River Outfitters, which offers classes on wild edible plants and outdoor skills.
Bay Harbor responded to Stewart’s allegations, saying his company filed a lawsuit last year against Bay Harbor “asserting the same baseless claims … That lawsuit was dismissed with prejudice meaning he can never file similar claims in any court in the future. Bay Harbor Lake has been repeatedly tested by government agencies and independent third parties and uniformly found to be clean and having normal water quality.”
Stewart believes the DEQ study wasn’t accurate, in part, because leachate quickly moves in and out of an area. He wanted the DEQ to take soil samples, which would indicate the historical presence of the leachate. The DEQ refused, saying that heavy metals, if found, couldn’t conclusively be traced to cement kiln dust.
The report prepared by the EPA and DEQ, disputing Stewart’s claims, can be found on the EPA Region 5 website.
Stewart, who said he lost $125,000 from the business loss, said the suit was dismissed because the statute of limitations had run out, not because of the merits of the case.

DRINKING WATER
Stewart ultimately became a lead activist in a group called POWER (Protect Our Water and Environmental Resources). It’s an offshoot group of Friends of the Jordan River. The group has concerns about the quality of two city wells, which are located at Bay Harbor near the cement kiln dust and, potentially, other contaminants since the kiln dust piles were used by some as a dump.
Yet an environmental assessment was never done before the wells were dug. A hyrdo-geological investigation, however, was performed in 1994 at the request of a lake association after the first well was drilled and before the second.
Apparently it was ignored.
The report said that the wells were badly located and would produce poor water quality. Because the well was drilled in a bedrock aquifer that had low yields, the aquifer quickly depletes, causing the well to draw water from Lake Michigan, where samples of heavy metals have been found.
The city asserts that its water quality is within safe federal parameters, but Stewart and others have lost trust in the city.
How bad is this loss of trust?
Don Parker, a Petoskey resident who holds a doctorate in biochemistry, is skeptical —“It’s a matter of time before it goes through the cement dust.” He is urging Petoskey residents and businesses to invest in reverse osmosis machines, which filter 99.9 percent of contaminants (Grain Train has announced plans to do that).
Ted Pall, who is running for mayor, said he’s just getting his feet wet on the issue (pun intended), but promised to pursue an independent analysis of the well water, if elected.

SCIENCE
Dr. Edward Timm is the most recent personality to enter the fray of Bay Harbor Resort, inspired by the passion of John Richter who leads Friends of the Jordan River. The group is battling a proposed leachate injection well in the heart of the Jordan River watershed (that issue will be covered next week).
Timm, a chemical engineer, spent 30 years grappling with pollution issues on behalf of Dow Chemical Company. Now he’s shifted to the other side of the table and has published a “white paper” that outlines the scientific issues at Bay Harbor.
Although the relative levels of heavy metals are low in leachate, the amounts of leachate are potentially vast. No one knows how much leachate flows into the lake from groundwater, because an assessment of the entire site hasn’t been done, he said.
He believes the flow is exacerbated by the resort watering the golf course, underneath which 80% of the kiln dust is located (water plus kiln dust equals leachate). CMS believes most of the leachate is getting captured by its surface collection lines.
CMS has launched an ad campaign that describes the amount of mercury getting past the collection lines in East Park as amounting to one “paper clip” each year. Timms asserts the amount of mercury getting into the lake from the entire site is unknowable, but he estimates the amount of mercury in leachate trucked offsite ranges from 2 to 309 paperclips. He bases the figures on multiple sources of data provided to the DEQ and EPA.
Mercury is a neurotoxin and bio-accumulates, so it’s a serious issue, he said.
Timm has called on the EPA to hold a public meeting as it’s promised to do many times. He also wonders why the public hasn’t seen results of soil samples taken two years ago. He wants the EPA to begin putting in documents in the Petoskey Public Library as required by law, which it hasn’t done since 2006.
Don DeBlasio, the EPA spokesman for the project, said documents will be filed soon at the library, followed by a public meeting in a few weeks.
Another problem, said Timm, is secrecy. The CERCLA law allows polluters and the EPA to meet behind closed doors, but that “completely shuts the public away from the decision making process and denies the community significant input except at carefully staged public comment meetings.”
Timm praised CMS for its work on capturing the leachate at East Park, which required reshaping the kiln dust to minimize leakage and covering it with an impermeable liner. CMS recently gave Resort Township $390,000 to rebuild the public park.
Now CMS must present a plan for a full assessment and clean-up of the much larger site. Timm said the real challenge is capturing the leachate entering the lake underground. The task is doable, he said.
“This problem has been solved before. The conventional approach is sheet piling or slurry wall to bedrock, deep collection trenches, and much more space and expense,” Timm said.

SOLUTIONS ANYONE?
Some people are calling for removal of the kiln dust, but Petroskey said that’s logistically impossible based on the amount of transport vehicles as well as finding a landfill that could contain the massive dust volume.
“In addition to that, it would dramatically increase the safety risk. You’d be breaking up the cement kiln dust and kicking up the contaminants.”
CMS has installed 2,800 feet of collections lines and is beefing up the system along the shoreline where pH readings are above 9 (indicating acid).
Petroskey wants to treat the water at Bay Harbor Resort with the best available proven technology, but said that process can’t get mercury below 1.3 parts per trillion. By comparison, the standard for drinking water is 2,000 parts per trillion, he said.
Timm suggested evaporating the water in a small power plant, collecting the heavy sludge that’s left, and putting it in a landfill. Or he’d bio-treat it in a big wetland and let the plants suck up the contaminants, die, and return to fossil fuels. That would complete the circle back to the kiln dust’s original source of contamination, which was coal.
Petroskey said CMS is moving as quickly as it can, given the project’s enormous complexity, the amount of scientific data and public input required, and the required review and approval of the EPA and DEQ.
“The answers are going to be complicated, and they won’t please everyone,” he said.

Editor’s note: Next week, Northern Express will report on the controversy over the proposed Alba injection well, where CMS wants to pour one million gallons of leachate each week.