BRISTOL, Tenn. (WJHL) — A Northeast Tennessee utility district under state scrutiny for contract payments it made to companies owned by its paid manager now faces state allegations that it completed a waterline without being granted a permit.

In a May 24 letter addressed to South Fork Utility District (SFUD) Manager Garry Smith, Tennessee Department of Environment and Conservation (TDEC) area environmental manager Dane Cutshaw writes that TDEC inspected an area along Cant Hook Hill Road after someone complained about line construction occurring without prior TDEC approval.

The letter says SFUD had submitted a drinking water plans review worksheet for the project on April 29 but had not submitted additional required documentation to TDEC when the agency conducted its inspection.

The letter cites a state law prohibiting new construction or changes to existing public water systems “until plans for such new construction or change have been submitted and approved by the Department.”

The notice of violation requires SFUD to submit “as-built plans for this project” by June 30.

It also occurred less than a month after Tennessee’s Utility Management Review Board (UMRB) called for the resignation of all SFUD board members and for SFUD to seek a merger with Bristol-Bluff City Utility District. Since then, only the board’s chairman, James Graham, has resigned.

A Tennessee Comptroller’s Office (TCO) spokesman said to TCO’s knowledge, the other four board members have not resigned. Neither has Smith, who was at the center of a TCO investigation of SFUD that found more than $1.5 million in “questionable payments” to two companies owned or partly owned by Smith.

At its April 28 hearing — which occurred two days after UMRB’s staff lead Ross Colona drove to Blountville for a called SFUD meeting only to have the board and Smith fail to appear — UMRB board member Bruce Giles said the investigation revealed “what appears to be the worst case of abuse” in his nine years on the board.

The TDEC violation involves the construction of 1,480 feet or slightly more than a quarter-mile of new water line. The notice says SFUD did submit a “drinking water plans review worksheet” for the project on April 29.

News Channel 11 contacted SFUD Tuesday to ask about the notice of violation and to request an interview with Smith.

The district’s Denise Jordan said she would pass a message on to Smith and confirmed he was still the utility’s manager. The station has submitted questions about the 3,400-customer utility’s plans for a potential merger, Smith’s future status, costs and invoices related to the recent waterline project and when the utility’s next meeting will be held.