Feds threaten licensee of ‘high hazard’ Cranberry Lake dam with $600k penalty 

Former operator pursued after failing to make repairs, allegedly violating license 

By Zachary Matson

A private company with a federal license to operate the dam at Cranberry Lake faces a potential civil penalty of $600,000 after it allegedly failed to make certain safety upgrades and recently agreed to terminate its lease with the local authority that owns the dam.

The Federal Energy Regulatory Commission on Oct. 21 issued notice of the proposed penalty against Ampersand Cranberry Lake Hydro, an entity tied to a Boston-based firm, according to documents. The company, licensed to operate the dam as a power-generating facility since 2015, has 30 days to respond. 

Ampersand over the summer resolved a separate legal dispute with the dam’s owner, the Oswegatchie River-Cranberry Reservoir Regulating District Corporation, agreeing to terminate its lease agreement and vacate the property after it failed to make rent payments. While Ampersand had used the dam to generate hydroelectric power, the regulating district worked with National Grid to de-energize the dam powerhouse after Ampersand vacated the property.

That settlement agreement, though, allegedly placed the company in violation of its federal license, which required the company to “retain the necessary property rights” to complete repairs required under the license.

The dam on the Oswegatchie River is located at the northern reach of Cranberry Lake, near state Route 3 across the lake from the state’s Cranberry Lake Campground.

The local regulating district corporation initiated legal action against Ampersand in January 2019, seeking to potentially evict the company from the dam. FERC officials repeatedly warned Ampersand that its license required it to maintain access to the dam and that it was responsible for specific safety improvements at the site.  

‘High hazard potential’

The Oct. 21 FERC filing, an order to show cause that gives Ampersand a chance to argue why it has not violated the license, indicates that the dam poses a potential risk to people living near it. FERC classified the dam as having “high hazard potential,” noting “a failure of the project works would result in a probable loss of human life.” 

When Ampersand took over the FERC license from a previous operator in 2015, the company agreed to address the various safety concerns. The company was required to repair the project’s so-called fuse plug spillway in the dam’s embankment, which is designed to “provide a controlled release in an effort to avoid a full breach and subsequent uncontrolled release” in the event of very high flows, according to FERC. The company never made the improvements to the fuse plug.

“Before it acquired the license, Ampersand Cranberry Lake committed to complete this work by the second calendar quarter of 2017, but it has failed to do so,” according to the FERC filing last week. “Instead, Ampersand Cranberry Lake has submitted a lengthy series of extension requests covering nearly the entire time that it has held the license for the project.”

Celeste Miller, a spokesperson with the federal commission, in response to emailed questions on Tuesday said the fact that the dam was no longer in use generating power did not resolve the safety concerns.

“The operating status of the project has no impact on the hazard potential rating,” Miller said.

Less concerned

Local officials and a representative for the regulating district corporation that owns the dam, though, said they aren’t as alarmed as FERC.

“I’m not concerned about the safety of the dam whatsoever,” said Charles Hooven, supervisor of the Town of Clinton, which includes the hamlet of Cranberry Lake. “I don’t have any concerns about it, and I don’t think anyone locally has any concerns.”

Lori Severino, a spokesperson for the state Department of Environmental Conservation, Tuesday noted that the “high hazard” classification “refers to the potential for damage upon a dam’s failure, not its likelihood of failure.” The classification applies to dams where “failure may result in widespread or serious damage to homes, main highways, industrial or commercial buildings, railroads” and more, but Severino noted DEC was not aware of any “immediate danger” at the dam.

“DEC works closely with FERC in the event any immediate danger is noted and none has been reported to DEC,” Severino said.

Severino said that FERC’s license still supersedes the state’s dam safety jurisdiction, but that DEC dam safety staff plans to accompany FERC on the federal commission’s next inspection of the dam. Severino added that DEC has had several conversations with FERC regarding the status of the dam.

Charles Gardner, a Gouverneur-based attorney representing the dam’s regulating district corporation, on Tuesday confirmed that Ampersand agreed to terminate the lease and had vacated the dam premises this summer. He said the dam was not currently in operation generating power and that the regulating district was not actively seeking a new operator to lease the facility.

Gardner also said the regulating district’s board does not share the safety concerns cited by FERC. “They do not,” he said. 

He said Ampersand initially made its lease payments but then stopped, suggesting that operating the dam was not working out economically for the private company. He said the regulating district pursued litigation after the company failed to make the lease payments, agreeing to a settlement that resulted in Ampersand vacating the dam and turning over any equipment to the regulating district.

“I don’t think it was ever economically feasible for (Ampersand), and they didn’t pay their lease agreement,” Gardner said Tuesday. “It wasn’t economically feasible for the (regulating) corporation to have a lessee that didn’t pay.”

Gardner noted that historically the dam was not operated as a power-generating facility, but a private company started operating it as a hydroelectric dam in the late-1980s. Ampersand purchased the dam license during the previous operator’s bankruptcy proceeding, he said.

“The purpose of the dam is to make Cranberry Lake,” he said. “That’s what (the dam) is there for, not to generate power.”

Reached by phone, Sayad Moudachirou, whose name appears in FERC paperwork as a representative of Ampersand, on Monday did not comment about the dam license or proposed penalty.

Miller, the FERC spokesperson, on Tuesday said that Ampersand could file an application with the commission to surrender its license. That application would initiate a separate process but would not necessarily free the company from the threat of the penalty. 

“License surrender would not necessarily affect the show cause proceeding,” Miller said.