In a letter dated Monday, the group apologizes for statements made about the proposed hydro project by its volunteer Bruno Marcocchio on a local radio program.
The group and Marcocchio retracted all statements suggesting Williams and the mining company Alderon Iron Ore Corp. (TSE:ADV) would benefit from a proposed royalty trust deal to finance the project.
Williams was premier almost two years ago when the provincial Tory government announced plans for the hydro development in Labrador that's expected to cost more than $6.2 billion if approved.
A spokeswoman for Williams says a defamation lawsuit against political blogger Brad Cabana, a vocal critic of Muskrat Falls, is going ahead.
Cabana is countersuing Williams and Alderon, claiming that both the former premier and the company have tried to silence criticism of the project.
None of the claims have been proven in court.