Article published Feb 23, 2008

AG leading investigaion into Thompsom River plant

By JOHN S. ADAMS Tribune Capitol Bureau

HELENA—Attorney General Mike McGrath directed the Division of Criminal Investigation to open a criminal investigation Friday into whether the owners of a troubled western Montana power plant misled state regulators in order to avoid paying a $1.9 million fine.

Gov. Brian Schweitzer requested the investigation Thursday, just two days after two environmental groups and more than a dozen Sanders County residents sent a letter to the governor, accusing former Thompson River Co-gen co-owner Barry Bates of misleading the state Department of Environmental Quality.

They said Bates wasn't honest about the company's financial situation and its plans to sell the plant to an investment firm, and they urged the governor to initiate an investigation.

"I believe the allegations raised in the letter are serious and warrant investigation," Schweitzer wrote in his letter to McGrath.

Anne Hedges, program director for the Montana Environmental Information Center, said she applauds Schweitzer's speedy response to the issues raised in Tuesday's letter.

"This is exactly what should be done," Hedges said Friday. "It's going to take a criminal investigator to get to the bottom of this and to find out what people knew and when they knew it. That will be the only way to truly determine if they lied to state."

In 2006, the DEQ fined Thompson River Co-gen $1.9 million for violating its air quality permit, but company officials told the DEQ that the plant, which had voluntarily shut down in October 2005, was in dire financial straits and couldn't afford to pay the full amount. The DEQ agreed to let the company hire an independent analyst to assess the company's ability to pay the fine.

According to the independent financial report, one of the factors that would have impacted the plant's future capability to pay the full $1.9 million fine was whether the plant, or the company, could be sold to an entity that could operate the facility more economically. The report concluded that there was "no such possibility on the horizon."

The DEQ settled with the company in November 2007 for $200,000. That same month Thompson River Co-gen sold the plant to a new Montana corporation, Thompson River Power, for an undisclosed amount.

Details of the sale have not been made public, and calls to Bates' Kalispell office have not been returned. A representative for Wayzata Investment Partners, the Minnesota-based investment firm that owns Thompson River Power, said the company does not comment to the media.

The plant's critics say the DEQ never should have allowed Thompson River Co-gen to hire an independent analyst in the first place. Instead, they say, DEQ should have conducted the analysis in-house and kept the details of the audit on file.

John Arrigo, administrator of the DEQ's enforcement division, said the company refused to divulge private corporate information to the state but agreed to turn the information over to the independent auditor.

In his letter to McGrath, Schweitzer said he instructed DEQ Director Richard Opper to ensure full departmental cooperation with the investigation.

"We are very pleased with Gov. Schweitzer's prompt response," said Matt Clifford of the Missoula-based Clark Fork Coalition, one of the authors of Tuesday's letter. "We asked him to launch an investigation, which is the only way to get to the bottom of this thing, and to review what on earth is going on with DEQ's enforcement policies.The governor says he's doing both.We could not be happier, and we thank him."