APGI challenges some elements of Yadkin Project water quality certificate

In May 2009, the N.C. Department of Environment and Natural Resources issued a water quality certificate for the Yadkin Hydroelectric Project. Alcoa Power Generating Inc. (APGI) agrees with the determination by the Division of Water Quality (DWQ) that discharges from the Yadkin Project will meet North Carolina water quality standards and is committed to taking necessary steps to maintain and improve water quality in the Yadkin River.

The water quality certificate has been challenged by Stanly County and the Yadkin Riverkeeper in the Office of Administrative Hearings. While APGI believes that DWQ correctly determined that the Yadkin Project will meet water quality standards, certain conditions are excessive and beyond the state’s authority. In addition, certain timing requirements were not satisfied by the agency.

In light of the pre-existing challenges to the water quality certificate, APGI elected to file its own appeal of certain, specific items in the 401 water quality certificate on Monday.

APGI’s main point of contention is the $240 million surety bond required as a condition of the water quality certificate. While APGI has frequently said that it plans to spend a total of $240 million to upgrade the Yadkin Project dams and powerhouses, only a portion of that money is directly related to improving water quality by increasing dissolved oxygen levels as required in the 401 certification. The $240 million figure cited by APGI included other upgrades and maintenance that are unrelated to improving water quality.

APGI does not believe that a surety bond is required. The company has already spent more than $40 million on total upgrade efforts – including nearly $12 million to increase dissolved oxygen levels – and has continued those efforts voluntarily. APGI may spend as much as $69 million more to meet the water quality improvement requirements set forth in the 401 certificate. However, if a surety bond requirement is ultimately determined to be within the state’s authority and necessary to ensure APGI’s compliance with the dissolved oxygen requirements, the amount of that bond should not exceed $69 million.

401 Certificate Not Issued In Timely Manner

APGI’s appeal raises a second key issue – that the 401 certification was not “granted or denied” within a specific time period as required by DENR’s own rule and the federal Clean Water Act.

The original application was filed in May 2008.

The State waived the requirement for a 401 certificate for two reasons:

1. DWQ failed to issue an effective 401 certification within 60 days of a public hearing. A public hearing was held on January 15, 2009; and

2. DWQ it failed to issue a fully effective 401 certificate within one year of the date that APGI filed its application for it.