The town of Carlton Landing’s water board is considering taking a $53,750 loan from the town’s founder to pay for penalties levied by the Oklahoma Department of Environmental Quality related to pumping water out of its sewage lagoons, as well as increasing customer rates to hire an outside attorney to represent it on DEQ issues.
However, the new loan document — which adds to existing debt the water district owes to town founder and developer Grant Humphreys — also requires the board to hire an attorney that specializes in environmental law, a provision the water board and town’s attorney Kay Wall called “strange.”
On Thursday, The Frontier reported that the DEQ had opened a criminal investigation and was preparing a separate administrative penalty against Carlton Landing’s water district after DEQ inspectors discovered a dozen hoses running out of the town’s sewer lagoons to drain water onto nearby land and into Lake Eufaula.
A report submitted by a worker for Carlton Landing Enterprises, which contracts with the water district to provide day-to-day operational services, states that one of the lagoons was in danger of breaching a dike because of rainwater, and more than 400,000 gallons of water was released.
Last week, the water board approved a measure halting any future discharges from the lagoons, except through a DEQ-approved land application system or trucking water out to an outside wastewater treatment plant. The board also approved a measure to hire a contractor to begin hauling water out of the lagoons. That process began this week.
In March, the town’s water district — Pittsburg County Rural Water District #20 — was placed under a DEQ consent order requiring it to complete a wastewater treatment facility to replace its three total retention sewer lagoons, from which millions of gallons of water were discharged onto U.S. Army Corps of Engineers property and into Lake Eufaula. The move prompted the U.S. Army Corps of Engineers to halt the town’s planned construction on 420 acres of leased public land nearby.
The following month, DEQ issued a separate administrative order against the water district after workers attempted to use an unapproved land application system to drain the lagoons, which filled rapidly because of rainwater infiltrating the system.
The district now has a permit from DEQ for a land-application system, but it will not be operational for another three to six weeks, town founder and developer Grant Humphreys said, The DEQ consent order requires that the wastewater treatment facility be operational by October 2020.
The water board met briefly on Thursday afternoon, but did not approve the loan agreement listed on the agenda. The loan amount listed — $33,750 to pay off the DEQ fines — had been increased to $53,750 in the actual loan document provided to water board members a few hours prior to the meeting, Wall told the board.
Humphreys, who is also an owner of Carlton Landing Enterprises, said the $20,000 increase was to pay for water trucks that are vacuuming water out of the town’s lagoon system and hauling it to the Eufaula Water Treatment Plant. That effort began this week, he said, but would continue until a DEQ-approved land-application system is completed in 3 to 6 weeks.
Wall informed the board that, in order to not run afoul of the Oklahoma Open Meetings Act, another special meeting would be required to accept the full $53,750 loan amount, so the board scheduled a new special meeting for 8 a.m. Wednesday, at the town offices on 29 Water St. in Carlton Landing.
In addition to accepting the $53,750 amended promissory note, the agenda for Wednesday’s upcoming meeting contains a measure that would allow the board to add a special assessment to customer’s bills to pay for outside legal counsel. The agenda also contains a measure that would allow the board to hire Oklahoma City attorney Rob Singletary, a director at the Crowe & Dunleavy law firm, at a rate of $350 per-hour or for a $10,000 retainer and 10 percent discount.
Singletary is an environmental lawyer who has served as general counsel for the Oklahoma DEQ and an attorney in several DEQ divisions, the Oklahoma Water Resources Board, an assistant state attorney general in the Environmental Protection Unit of the Oklahoma Attorney General’s Office and an attorney for the U.S. Army Environmental Command.
Singletary left DEQ’s general counsel post in late November 2018, according to the DEQ.
Humphreys said he made the recommendation to the board to hire Singletary.
“The district is free to go to any bank they wish,” Humphreys told the board, “but for the disbursement of additional debt one of the additional requirements, from the lenders standpoint, from my standpoint, it shall be disbursed upon the debtor providing me with evidence that the debtor — the district — has hired an Oklahoma attorney with environmental law expertise, with specific experience with DEQ alleged wastewater violations, and that this attorney will be acceptable to us and will approve all outgoing communications related to our wastewater system, and would cover the wastewater treatment plant and the DEQ consent order, and that attorney would be a spokesperson for the district for matters in any way related to the DEQ consent order.”
Humphreys is the water district’s largest creditor. Several years ago, after his company built the water system in Carlton Landing, ownership of the system was turned over to the public water district under a $966,000 financing agreement. Humphreys also obtained $1.5 million in loans for the district to construct the future wastewater treatment plant. The loans discussed in Thursday’s meeting, and on the agenda for Wednesday’s meeting, would be added to the original loan document.
Humphreys, as well as water board members, said the water district has had issues with obtaining financing from other institutions in the past.
During Thursday’s meeting, Wall told the board that she recommends hiring an outside lawyer to represent the district on the DEQ issues.
“I wish for you to retain outside counsel. I think if all does not go well — and it’s frankly not going well — that you will say ‘Kay didn’t have the expertise.’ So I wish you well and wish you to go with someone with expertise,” Wall said.
Wall recounted to the board how she and DEQ’s general counsel agreed that communication between the state agency and Carlton Landing’s water district about DEQ enforcement actions would go only through her and DEQ’s attorneys. However, after the May 8 bypass from the lagoons, the DEQ began receiving multiple phone calls and visits from individuals on behalf of the Carlton Landing water district.
“She (the DEQ attorney) didn’t mean our neighbors who are irritated with us or political people, she meant people at Carlton Landing,” Wall said. “She said ‘ever since we found the 12 hoses, our phones have just blown up.’
“If you don’t have client control, you can’t do very well because you can’t say what you think is best and know that it will be trusted,” Wall said.
Wall also cautioned that the provision in the loan document tying the funding to hiring an attorney with very specific qualifications could be problematic.
“I think it’s conflicting that your funding has a requirement that you use a certain attorney,” Wall said. “I’ve never seen that before.”
After the meeting, Humphreys provided The Frontier with water testing data from the May 8 and 9 bypasses from the lagoons, showing that the presence of e. coli in the lagoon water sample was lower than that of a sample pulled from the lake — 344.8 MPN/100 mL from the lagoon sample compared to 365.4 MPN/100 mL from the lake sample.
Humphreys said the water released was safe, but that DEQ was doing important work and helping the town’s water district as it grows.
“I don’t think they’re making a big deal out of nothing. The stewardship of our natural environment is of absolute importance and they have a real important role to play,” Humphreys said. “The staff is used to dealing with water districts that have been around for 100 years and have a large capacity and a single digit growth rate. We’re a new player in this process. We’ve been around for seven years now, we’ve had exponential growth since we’ve started and we appreciate the way they’ve worked with us through this process and helping us get up to speed.”