News: CJ Exclusives

State Ending Battle With Alcoa?

Water quality permit for dams could pave way to FERC relicensing

A nearly eight-year-long legal battle between the state of North Carolina and Alcoa Power Generating Inc. over four hydroelectric dams the company owns and operates on the Yadkin River may be coming to an end.

The state last week issued a water quality permit to Alcoa, one of the final impediments preventing the company from receiving a new license from the Federal Energy Regulatory Commission to continue operating the dams, known collectively as the Yadkin Project. In recent weeks, the state had lost rulings in state Superior Court and U.S. District Court over the relicensing process.

“We are pleased the state of North Carolina has issued a water quality certificate for the Yadkin Project and are in the process of reviewing it. The certificate clears the way to a FERC license that will allow us to implement enhanced water quality technology and additional environmental and recreational benefits promised by the Relicensing Settlement Agreement. We have been good stewards of the watershed for nearly 100 years and remain committed to meeting North Carolina water quality standards,” said Ray Barham, Yadkin relicensing manager, in a statement.

Alcoa has operated the dams since 1917 and its federal license expired in 2008. The company is operating the dams under a temporary license. It began the relicensing process in 2002, but in 2008 state officials began throwing obstacles in Alcoa’s way. Democratic Govs. Mike Easley and Bev Perdue and Republican Gov. Pat McCrory each have opposed the relicensing. They wanted the state to take over the dams and operate the hydroelectric facilities. (See earlier Carolina Journal news reports here).

After clearing several hurdles, in Sept. 2012 Alcoa submitted an application for a water quality certification to the North Carolina Department of Environment and Natural Resources, which recently was renamed the Department of Environmental Quality. The certification is required under the Clean Water Act before the Federal Energy Regulatory Commission can renew a license to operate the dams. DENR was prepared to issue the license in July 2013 until a last-minute intervention by the North Carolina Department of Administration caused a problem. DOA claimed that the riverbed belonged to the state rather than Alcoa.

Alcoa filed a complaint against DENR with in the Office of Administrative Hearings. Administrative Law Judge Selina Brooks ruled in May 2015 that DENR was wrong to deny Alcoa’s water quality certificate based on the state’s new claim to ownership. She ordered DENR/DEQ to reconsider the application.

DEQ appealed the Brooks decision to the state Superior Court, where in September Judge Bryan Collins affirmed her ruling gave DEQ 30 days to process Alcoa’s application for the license.

“We’re pleased the court has reaffirmed what we’ve known all along: the state had no legal reason to deny our application. We urge the state to follow the judge’s order and quickly issue a water quality certificate for the Yadkin Project,” Barham told CJ in September.

Federal court

DOA initiated a separate legal action in August 2013 over ownership of the riverbed in N.C. Superior Court. The following month, Alcoa successfully had the case moved to federal court.

Boyle ruled in May that the state failed to prove the Yadkin River was navigable for commerce in 1789, a fact the state believed would help it claim ownership of the “Relevant Segment” of the riverbed.

On Sept. 28, Boyle ruled on the remaining issues in federal court.

“It is impossible not to notice the timing of this lawsuit. The state did not file suit immediately upon learning that Alcoa claimed ownership of the property. Instead, it waited over seven years, until after Alcoa closed the Baden Works aluminum smelting plant, to file suit. … The evidence, even viewed in the light most favorable to the state, overwhelmingly demonstrates that Alcoa has title to the bed of the Relevant Segment,” Boyle concluded.

Rick Henderson is managing editor of Carolina Journal. Executive Editor Don Carrington contributed additional reporting to this story.