CMS Energy Expects Costly Toxic cleanup at Petoskey, Mich., Development

Dangerous toxics seeping into Lake Michigan at the Bay Harbor development near Petoskey could cost CMS Energy Corp. more than $45 million to clean up.

Jan. 19—Dangerous toxics seeping into Lake Michigan at the Bay Harbor development near Petoskey could cost CMS Energy Corp. more than $45 million to clean up.

The Jackson-based owner of Consumers Energy disclosed the liability last week in a filing with the U.S. Securities and Exchange Commission because it was a partner in the upscale Bay Harbor development.

"CMS Energy cannot predict the ultimate cost or outcome of this matter" and the problem could "have a potentially significant adverse effect on CMS Energy's financial condition and liquidity," the filing said.

"We recognize our potential liability and, along with Bay Harbor, are committed to meeting our environmental obligations," said spokesman Jeff Holyfield.

The disclosure underscores assertions by regulators and environmentalists who say bleach-like alkaline drainage from cement kiln dust piles is a threat to the Little Traverse Bay ecosystem.

"It will completely obliterate all living organisms it comes in contact with," said Kevin Cronk of the Tip of the Mitt Watershed Council. "It dissipates rather quickly, so it may only be a matter of 100 feet from shore, but there also is mercury, which does not dissipate and will work its way up the food chain."

The owners of an old cement plant abandoned the toxic piles. When CMS teamed with Clarkston developer David V. Johnson to build the Bay Harbor resort in the 1990s, the piles were capped with rock and soil. A collection system was constructed to pipe contaminated water runoff, called leachate, to a treatment plant.

"We went way beyond what was required at the time," Johnson said Tuesday. "The place looked like the moon; kiln dust was spilling into Lake Michigan. When we built the golf course on the piles, it was the first time anything like that had been done."

Cronk agrees Bay Harbor improved a site that likely was leaching toxics into the lake for years before the development reclaimed it. But he contends the technology was available to cap the site fully and build leachate collection systems and the developers chose not to spend the money. Now, CMS likely will have to spend more money to do it, Cronk said.

The contamination was unearthed after the leachate collection system went off- line in early 2004 and groundwater ran through the dust piles and into the bay unimpeded. State tests prompted by the shutdown showed the liquid flowing into the bay was stronger than bleach and contained unacceptably high levels of chemicals including mercury.

Since the system was restarted in September, dangerous leachate continues to flow into the bay, said Ralph Dollhopf of the U.S. Environmental Protection Agency.

Holyfield said the company is discussing solutions with regulators. He said CMS has sole liability for the cleanup.

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