Wastewater leaks ‘far in excess’ at Holland Lake: DEQ

State regulators flagged a wastewater system that serves Holland Lake Lodge and the public campground as leaking “far in excess” of the amount allowed as the private resort goes back on the market.

The U.S. Forest Service holds the sewer permit for the wastewater system, which leaked three times as much in eight days as state law allows for an entire year.

“This excessive leakage constitutes a discharge without a permit in violation of the Montana Water Quality Act,” the Department of Environmental Quality said in a news release.

A spokesperson for the Forest Service said the federal agency is working with the DEQ on next steps for the treatment system.

No new effluent is entering the ponds because the Holland Lake campground and dump station are closed, and the septic tank for the lodge has been shut off from the ponds for the time being, the DEQ said.

Holland Lake Lodge operates on the Flathead National Forest with a special-use permit, and news of the leak comes on the heels of an announcement the lodge is once again for sale.

In a phone call, lodge owner Christian Wohlfeil said he believes the state and federal agency will address the matter.

“I trust the Forest Service and DEQ to handle their process,” Wohlfeil said.

He said his permit requires that he pay fees to the Forest Service, but he doesn’t otherwise deal with the wastewater system and doesn’t have access to it.

More information about the proposed expansion, sale, and its current unwinding came to light this week in a letter of intent between Wohlfeil and the Utah-based company that planned to buy and develop the lodge, POWDR.

The January 2021 letter of intent, obtained by the Daily Montanan, said in the first phase of the sale, POWDR would pay the lodge owner $750,000, or 20%, and it would pay the remaining $2.75 million subject to conditions.

The conditions included transfer of the permit to POWDR: “Upon the signing of this Letter of Intent, the Parties will work together in good faith to cause the Forest Service to assign and transfer the Forest Service permit to POWDR.”

The letter was signed and provided to the Forest Service more than one year before the Forest Service announced the proposed expansion to the public. Wednesday, a spokesperson for the Forest Service said he couldn’t comment on the letter between the private parties.

“However, the application for the new special-use permit based on a change in control was still being reviewed and had not yet been approved,” said Dan Hottle with the Forest Service.

The letter of intent also describes the steps if the Forest Service didn’t approve the development plan for the lodge within two years. The Forest Service rejected the plan last fall after public outcry and its own mistakes.

The letter said POWDR could extend the deal for another 24 months, it could buy the rest of the equity, the 80%, for $2 million, or it could force a sale.

“POWDR may force a sale of the company to a third party, provided, however, stockholder (Wohlfeil) shall have the exclusive right for a period of 120 days after POWDR notifies (Wohlfeil) of its intent to force a sale of (the lodge) to market the (lodge) (or POWDR’s equity … ) for sale and obtain a binding offer,” the letter said. “Any proposed sale transaction arising out of (Wohlfeil’s) marketing efforts must be on terms reasonably acceptable to POWDR.”

Last week, Wohfeil announced the lodge was up for sale; he said this week the price is $3.5 million. Neither he nor a POWDR spokesperson commented Wednesday on the letter.

Wohlfeil has operated the lodge for more than 20 years. He has said it’s time for him to turn the lodge over to a new owner who has the resources to update the resort and invest in making it sustainable for the next generation.

Wednesday, the DEQ said it will work with the Forest Service to fix the leak.

“DEQ is requiring a new engineering report and plans for the installation of new liners and leakage testing to be submitted to DEQ by Jan. 10, 2024,” the news release said.

The news release said the DEQ previously received a complaint about the wastewater system as well as an application to add connections to it. In response to the complaint and before approving the connections, the DEQ requested the Forest Service investigate the ponds and required the leakage study.

Wednesday, the agency said it is requiring sampling, groundwater monitoring wells, and plans for new liners at the wastewater treatment lagoon operated by a contractor on behalf of the Forest Service.

Save Holland Lake, a group that formed to fight the expansion and advocate for a clean lake, had earlier suspected the leak because data showed less treated liquid being sprayed on the forest despite an increase in use.

The work to fix the leak is between the DEQ and the Forest Service, Wohlfeil said, but he also feels singled out. He said 16 special-use permit cabins on the other side of the lake have aging septic systems, and Save Holland Lake should call environmental regulators about those as well.

In August, the DEQ requested additional information from the Forest Service about the lagoons that serve the campground and lodge in response to a complaint about the leak. DEQ also warned the Forest Service the excess leak could be considered an illegal discharge.

Wednesday, the DEQ said there are no residential drinking water wells down from the ponds.

“DEQ is committed to ensuring proper management of wastewater systems throughout Montana,” said DEQ Water Quality Division Administrator Lindsey Krywaruchka in a statement. “In our oversight role, we work with operators to get systems into compliance and provide technical assistance to protect and maintain Montana’s environment.”

Earlier this week, Wohlfeil said he had more than 12 non-disclosure agreements signed from prospective buyers for the lodge, and he hoped a deal would be in place in time for the opening Memorial Day next year.

The letter of intent sheds light on how at least the transfer to POWDR was going to take place.

It said POWDR would manage the lodge after the first phase of the sale, providing necessary capital to get approval of the development plan and receiving advanced deposits, and Wohlfeil would be an employee at $125,000, pending other arrangements between the parties.

POWDR intended to complete due diligence within 30 days to confirm the price and its interest in the deal, and it was prepared to close a deal within 45 days, assuming conditions were met for stage one.

Keila Szpaller is deputy editor of the Daily Montanan, a nonprofit newsroom. To read the article as originally published, click here.