Clary Lake Mediation Ends Without Resolution

Mediation over the Department of Environmental Protection’s water level order for Clary Lake came to a close approximately one month ago with mediator John C. Sheldon calling

further mediation “futile.”

The recently ended mediation was undertaken as part of Pleasant Pond Mill LLC’s and Aquafortis Associates LLC’s superior court appeal of a January 2014 DEP water

level order.

That appeal will now move forward in superior court with the DEP given five weeks to make an argument for its dismissal.

However, with Pleasant Pond Mill LLC, which holds the deed to the Clary Lake Dam, effectively dissolved, the question of who is responsible for complying with the

DEP water level order is not easily answered by the parties involved.

“It is now unclear whether, and how, the Order can be enforced,” Sheldon wrote in his report.

The Preti Flaherty law firm, of Portland, is representing Pleasant Pond Mill LLC, managed by Paul Kelley, and Aquafortis Associates LLC, managed by Richard Smith, in

their appeal of the DEP water level order.

According to Anthony Buxton, a Preti Flaherty attorney, Pleasant Pond Mill LLC can still serve as a petitioner in the appeal, due to the Maine law governing

corporate dissolution. Whether the DEP can force a dissolved company to comply with the water level order, however, is uncertain.

“That would seem to be a metaphysical impossibility,” Buxton said.

With the Clary Lake Dam its only asset, Kelley took steps toward dissolving Pleasant Pond Mill LLC in 2014 and recently filed a certificate of cancellation for the

company with the secretary of state.

“The property was buried in debt, had no economic function, wasn’t insurable, and was facing threats and claims from multiple parties,” Kelley said. “It shouldn’t

strike anyone by surprise that the company went out of business.”

The DEP water level order was established due to the petition of the Clary Lake Association, an association of lakefront property owners, concerned about a dramatic

drop in the lake’s water level due to the structurally breached Clary Lake Dam.

According to Clary Lake Association spokesman George Fergusson, the lake’s water level has dropped approximately 5 feet due to the Clary Lake Dam, which has had an

impact on the lake’s wildlife.

Aquafortis Associates LLC, which took over ownership from Pleasant Pond Mill LLC of the historic Clary Mill downstream and land adjacent to the dam in 2010, was

included as a party in the original water level order petition.

“From the beginning, Aquafortis was named on the petition but was never told why, so we’ve been kind of dragged into this process,” Smith said.

Aquafortis Associates LLC was a party to the appeal of the water level order, due to concern Aquafortis’ property would be damaged due to the increased risk of

flooding posed by the order, Smith said.

A series of jurisdictional problems and procedural errors were highlighted in Pleasant Pond Mill LLC and Aquafortis LLC’s appeal of DEP’s water level order, which is

now set to be heard by the Superior Court.

Kelley has tried, at various times, to transfer ownership of the Clary Lake Dam to the towns of Whitefield and Jefferson, but residents in both towns voted down

accepting ownership. Whitefield selectmen voted in March to waive foreclosure on the dam for unpaid taxes, ending the possibility of transferring ownership of the dam to the

town by default.

According to Sheldon, the Clary Lake Association was not a party to the mediation, which Sheldon termed “significant” and “unfortunate.” According to Sheldon and

Fergusson, the Clary Lake Association developed a proposal to buy the dam in 2014, however, the association’s counsel was not permitted to attend a mediation session to discuss

the proposal.

“They wouldn’t even listen to the offer,” Fergusson said, “and it was a very generous offer. It’s in a drawer and we’ll bring it out and dust it off should the

opportunity arise in the future. For now it’s just sitting in a drawer.”

For some of his final words on the Clary Lake mediation, Sheldon reiterated a passage from one of his previously circulated memos. “The dam is a financial liability

to whoever owns it, and the magnitude of that liability cannot yet be estimated … This means it may be difficult to find anyone to assume its ownership and the responsibility

for its repair.

“The most obvious candidate for the assumption of ownership is the Clary Lakefront owners … Thus the irony: By petitioning the DEP in the first place, the Lakefront

owners may have imposed upon themselves an expense they never intended and perhaps can’t afford.”

With a now defunct Pleasant Pond Mill LLC the current deeded owner of the Clary Lake Dam, neither Kelley, Smith, Buxton, Fergusson, nor the DEP could answer who

would be responsible for complying with the water level order, if it was upheld.

“We’re going to wait, pending the resolution of the appeal, to pursue it,” Mark Bergeron, of the DEP, said.