A pulp and paper company’s effort to surrender two eastern Maine dams has triggered panic in rural communities bordering the lakes they regulate and interventions from the Canadian government.

Woodland Pulp, which owns the dams and the pulp mill in Baileyville, notified federal officials in late December that it wishes to abandon ownership of the dams at Forest City and Sysladobsis Lake – both in the St. Croix River watershed – because it has been operating them at a significant loss.

The company says it is in negotiations to give the larger of the dams – the one straddling the border between Maine and New Brunswick at Forest City – to an undisclosed third party. But if that deal does not come together, filings with the Federal Energy Regulatory Commission show, the default remedy would be to leave the gates on the United States’ side of the dam open, causing the water levels in East Grand Lake to drop by 6 feet, a potential disaster for local communities.

“If you look at the reason why there are people in this border area of Maine and Western New Brunswick, it’s all because of the lake, everything is reliant on the lake,” said Forest City fishing guide Dale Wheaton, longtime proprietor of the family sporting lodge founded by his father, legendary guide Woodie Wheaton. “If you couldn’t get access to the lake, it would destroy all the traditional (boat) landings and entirely shake up the ecology of the area. It would just be a matter of time.”

His brother, seasonal resident Arthur Wheaton, agrees. “We’re looking at a damming situation that’s been in place for well over 125 years, and you can’t just wipe that out overnight,” said Wheaton, a retired executive of Remington Arms and president of the Woodie Wheaton Land Trust, which preserves lakeside land. “People have invested a huge amount of time and effort in their cabins, and to have the lake drop and leave them with a rocky front yard – it would knock the tar out of them.”

David Townsend, a retired University of New Brunswick law professor who serves as president of the area’s transnational lake association, the Chiputneticook Lakes International Conservancy, said the impacts of leaving the gates open would be extensive and far reaching in a remote region where the economy depends on outdoor recreation.

“There would be a lot of bare shoreline showing that would hurt the aesthetics, boat launch ramps that were no longer usable and a collapse in property tax assessments for lots that would cease to have waterfront,” Townsend said. “It would be devastating.”

The Forest City dam has long controlled water levels in East Grand Lake, which is Maine’s eighth largest lake at 16,000 acres and straddles the border with New Brunswick. The dams were built to help regulate water levels feeding two hydroelectric dams farther downstream that power the Baileyville paper mill.

The other dam to be surrendered is much smaller: a 250-foot wide, 9-foot-high earthen embankment that impounds the 5,400-acre Sysladobsis Lake, a popular recreational area for the Passamaquoddy Tribe, which owns half of the shoreline. The tribe’s historic preservation officer, Donald Soctomah, and the U.S. Bureau of Indian Affairs have written FERC to express concern about tribal archaeological sites that might be exposed to erosion or looting if the lake levels fall.

Dams are expensive to maintain and operate, particularly those regulated by the federal government, which can require the construction and upgrading of fishways, the management of historical properties and archaeological sites, and regular monitoring of lake and stream environment, and wildlife species.

FERC’s 2015 economic analysis of the Forest City dam estimated its operation boosts hydroelectric production at Baileyville’s downstream power dams by 543 megawatt hours a year, but at a cost of $221,203 – more than eight times that of simply buying the energy from alternate suppliers. A FERC spokesman, Craig Cano, said the agency couldn’t discuss the projects because they are a “pending matter.”

Dozens of residents and camp owners have protested the permanent opening of the Forest City dam’s gates in filings with FERC, the regulator that will determine what happens to all of the dams. The Passamaquoddy Tribe, the Province of New Brunswick and the U.S. National Marine Fisheries Service all have expressed concerns, the latter over how the opening of the gates would effect spawning fish runs. Local residents say the Thoroughfare, a passage connecting East Grand Lake and North Lake, could become impassable.

The Maine Department of Environmental Protection said in its letter to FERC that it was concerned about the likely impacts on recreation, navigation, fish passage and aquatic habitat.

Even Canada has become involved, as the Forest City dam straddles the border and water levels on the St. Croix River are subject to international treaty requirements dating to 1909.

“This is a shared jurisdiction, not a river in the middle of Maine like the Kennebec,” said David Alward, the Canadian counsel general for New England. “Whatever the outcome, it is paramount that Canada’s concerns be taken into account before a decision is taken.”

Residents say someone needs to continue to operate the gates at the Forest City dam, which are raised and lowered seasonally to help fish and loons spawn, to control flooding, and to ensure summer recreational access. “These gates have been actively managed for years and years to help the economic, aesthetic, or aquatic environment,” Townsend said. “It’s a wonderfully rich and lavish environment for everyone, human or animal, and all that will change if the gates are removed.”

A spokesman for Woodland Pulp said the company shares people’s concerns and is in negotiations with a potential new owner that could take over management of the Forest City dam.

“It is not our goal to dewater East Grand Lake and disadvantage shoreland property owners or any of that,” said Woodland’s communications manager, Scott Beal. “We think this dam needs to stay right the way it is and the water levels where they are, but should be under somebody else’s ownership.”

Federal regulatory procedures, however, require the company to submit a surrender application that would leave the gates open, he said, in order for it to start the path toward relinquishing control of the dams. Over the past two decades, Woodland had exhausted all other remedies – getting the dams removed from federal licensing requirements via regulatory, court and Congressional action – but was unsuccessful.

“The only remaining option for us was to surrender the dam, though we worked hard to avoid that,” Beal said, noting that the three dams were a drain on revenues for the company, which is owned by Hong Kong-based International Grand Investment Corp., and employs 300 at Baileyville producing hardwood pulp at a mill previously owned by Domtar. A sister company also owned by International Grand produces paper tissue products at a new mill opened last year that employs 80.

Beal said that while it was going through the process of delicensing the dam, it was in the midst of a parallel effort to turn ownership over to an unnamed third party. “If we’re successful in our efforts, we’ll be able to set aside our application for surrender with the commission and be filing an application to transfer the license instead,” he said. “What the new owner would do – comply with the FERC orders, seek to become not FERC regulated – I don’t know.”

Local residents hope the deal comes together, but wish they could engage with the potential suitor about various management issues ahead of any transfer. “We would like to help and to make sure the dam continues to be operated much as it has before,” said Townsend, who owns a camp on the New Brunswick side of East Grand Lake. “That would sound wonderful to us.”

Colin Woodard can be contacted at:

cwoodard@pressherald.com