Court upholds ruling that State agency unlawfully denied water quality certificate for Alcoa dams

Court upholds ruling that State agency unlawfully denied water quality certificate for Alcoa dams

Wake County Superior Court judge upholds ruling by administrative law judge, orders agency to issue decision on Alcoa application within 30 days

Alcoa Power Generating Inc. (APGI) won a significant legal victory in Wake County Superior Court on Friday when a judge upheld a previous ruling that the N.C. Department of Environment and Natural Resources (DENR) wrongly denied a water quality certificate that is necessary to relicense the company’s dams along the Yadkin River.

Superior Court Judge Bryan Collins ruled that an administrative law judge was correct in finding that DENR exceeded its authority, acted erroneously and failed to act as required by law when it denied APGI’s application for a water quality certificate in August 2013. Judge Collins denied the state agency’s appeal and ordered DENR to reconsider APGI’s application and issue a decision within 30 days.

“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,” said Ray Barham, APGI Relicensing Manager for the Yadkin Project.

Judge Collins notes that in the days leading up to DENR’s decision to deny APGI’s application, “DENR’s customary process of reasoned review collapsed under the pressure of 11th hour action by the Governor’s office and the (Department of Administration), agencies outside of DENR and having no direct responsibility for the protection of water quality or the environment.”

Before the Governor’s office inserted itself into the review process, Judge Collins says a final report recommended approving APGI’s application and issuing a water quality certificate for the Yadkin Project.

“DENR would have issued a merits based decision on the Application on August 2, 2013, likely issuing a 401 in APGI’s favor, but not for the secret intervention of the DOA and the Governor’s office into the process…” states Judge Collins ruling. “The undisputed facts recited in the Order demonstrate that DENR reversed course at the last minute, only after Executive Branch pressure and the 11th-hour filing of the Lawsuit.”

The NC Department of Administration filed a lawsuit against APGI on August 2, 2013, claiming ownership of the land under the Yadkin Project dams. The case is currently being considered in U.S. District Court by Judge Terrence Boyle.

The state’s failure to issue a water quality certificate has resulted in the unnecessary delay of water quality protections and improvements. APGI cannot move forward with its plans to invest up to $80 million on water quality improvements at the Yadkin Project until it receives a new federal license.

“We remain committed to meeting North Carolina water quality standards and have a proven solution to continue improving water quality at the Yadkin Project,” Barham said.

The issuance of a water quality certificate is a precondition to Federal Energy Regulatory Commission (FERC) issuing APGI’s new long-term license to continue generating clean, renewable energy at the Yadkin Project. FERC staff has previously recommended issuing a new license to APGI.

Alcoa and Stanly County Reach Agreement on Yadkin Project Relicensing

The Agreement Is Signed

Stanly County, N.C., and Alcoa Power Generating Inc. (APGI) reached an agreement Monday night related to Alcoa’s relicensing efforts of the Yadkin Hydroelectric Project. The Stanly County Commissioners voted 3-2 to approve the agreement, which resolves all issues between the County and Alcoa and will provide significant support for infrastructure, economic development and other county needs.

“This agreement provides significant investment in economic development and ensures that Stanly County will have long-term access to clean and affordable water, which is essential to our future growth,” said Stanly County Commission Chairman Gene McIntyre. “We are ready to move forward in a positive direction with Alcoa that will benefit Stanly County residents for years to come.”

“This agreement provides a clear and collaborative path forward that will support our efforts to bring new jobs to the Badin Business Park,” said Kevin Anton, Alcoa’s Chief Sustainability Officer. “This is a positive step for both Alcoa and Stanly County, and we appreciate the support of the County Commissioners and Representative Justin Burr in making this agreement a reality.”

As part of the settlement:

Alcoa will support Stanly County’s request to the Federal Energy Regulatory Commision (FERC) for future water withdrawals from the Yadkin River, providing access of up to 30 million gallons of water per day from Alcoa’s reservoirs. Alcoa also agreed to provide 20 acres plus right of way for a potential water treatment plant.

Stanly County will support Alcoa’s application for a new Water Quality Certificate from the North Carolina Department of Environment and Natural Resources (NCDENR) as well as its application for a 50 year FERC license.

The organizations will work in partnership on the recruitment of jobs and economic development to Stanly County and the Badin Business Park.

Alcoa will provide $3 million to Stanly County, $1 million of which will be solely for economic development purposes.  Further, Alcoa will provide $100,000 to Stanly County for each year that the term of the FERC license exceeds 40 years.

Signs of Progress: Alcoa, Stanly County Near Agreement

There are signs of progress in our ongoing conversations with Stanly County. On Monday, the Stanly County Commissioners reached consensus on an agreement with Alcoa and APGI that will resolve all outstanding issues surrounding our relicensing and related lawsuits and appeals. 

The Stanly County Commissioners will vote on the agreement on May 6 after it is finalized.

"Today is a great day for Stanly Co," Rep. Justin Burr tweeted on Monday. "Stanly Co & Alcoa have settled their differences and will begin working together again for our community."

"We believe this agreement is in the best interests of the citizens of Stanly County," chairman Gene McIntyre said in an interview with WSPC.

"From Alcoa's perspective, we're very pleased with the agreement we've come to today" said Kevin Anton, Alcoa's Chief Sustainability Officer. We'll continue working on that and look forward to further developing the Badin Business Park."

Read a related story in the Stanly News & Press: Stanly County, Alcoa close to deal.

Lexington Dispatch: County signs settlement agreement

Davidson County Commissioner Fred McClure joined me in Lexington last week to officially sign the Relicensing Settlement Agreement on behalf of Davidson County.

The county is the latest organization to signal their support for Alcoa to receive a new license for the Yadkin Project. More than 20 organizations, including state and federal agencies, local governments, environmental groups, and homeowners previously signed the relicensing agreement.

"We just realized we needed to have the partnership with Alcoa," McClure told the Lexington Dispatch.

Click here to read the Lexington Dispatch story.

Central Park NC Study Criticized As "Propaganda"

The Salisbury Post and Stanly News & Press provide a good recap of the Uwharrie Commission meeting on Wednesday night in Mocksville. The meeting included the presentation of a controversial study prepared for Central Park NC. 

Here is a brief excerpt from the articles:

Salisbury Post
Report details benefits if state takes control of Alcoa-operated dams on Yadkin

Supporters of Alcoa Inc. bristled at a report that showed local jobs and millions of dollars could be available if North Carolina claimed control of four Alcoa-owned dams on the Yadkin River. ...

Larry Jones, president of the High Rock Lake Association, and Ray Barham, Alcoa’s relicensing manager, both spoke against the report after the presentation Wednesday afternoon.

Jones criticized the board for spending taxpayer money on the report he described as “propaganda” that pushed the commission’s agenda.

“The report that I saw presented up here is full of incorrect information, erroneous information and information that was addressed long ago,” Jones said, adding he hadn’t yet had time to thoroughly examine the report.

Barham said the report was flawed in the premise that the state could still recapture the license. Legislation to address the issue previously died in the N.C. General Assembly.

Click here to read the entire article.

Stanly News & Press

Alcoa slams Uwharrie Yadkin study

Alcoa's Yadkin relicensing manager slammed a report funded by the Uwharrie Regional Resources Commission that seems to favor a recapturing of the Yadkin dams by the state and warned of a long legal fight if that action is attempted.

Commission Chairman Dr. Max Walser gave Ray Barham of ALCOA “three or four minutes in the interest of fairness” to respond to the report after the nearly hour-long presentation concluded.

“There’s not enough time to go into all the financial errors in these reports,” Barham said.

He said the Federal Energy Regulatory Commission had never recaptured a project.

“They have already stated publicly in an environmental impact statement that recapturing is not an option on the Yadkin River,” Barham said.

“That don’t see it as being necessary and we’re already past the time permitted in the law before the license is up to be notified about recapturing.

“To continue down that path is really misleading and foolish. The state really shouldn’t be trying to look at controlling private dams and private property. It’s not what this commission is about. It’s not how you do economic development.”

He asked what would be next if the state began taking over private businesses.

“Would it be farm land or oceanfront property the state wants to turn into a casino or a hotel?” he asked.

“That’s the dangers you’re talking about when you bring up this issue.”

Barham said the reports overlook hundreds of years of federal law, common law and those regarding ownership rights in North Carolina and the United States.

“I think the Supreme Court rulings would be very different than what you’re hearing tonight,” he said.

“If it continues down this path, it’s a long and expensive legal fight that the state of North Carolina does not have the money at this point to engage in.

“I would think the money fighting over this would be better put in doing something real instead of some pipe dream.”

Barham argued that ALCOA has invested in economic development in Badin.

“We’ve spent $10 million trying to create jobs,” he said.

“We’re actually the only ones that have created jobs in the last few years versus this committee.”

He said the company would welcome the state commerce department to work with them in creating jobs instead of “chasing the pipe dream of a few.”

Click here to read the entire article.

Progress at the Yadkin Project: Part 1

Over the last few months, we’ve heard a lot of feedback about what Alcoa Power Generating Inc (APGI) needs to be doing in North Carolina. 

I’m going to spend the next few blog postings covering what we’ve done.  Today’s topic: our financials.

On March 5, we responded to requests to be more open about our financial operations by publicly sharing our financial reports for the Yadkin Project for 2008-2010 (audited by PricewaterhouseCoopers).

Before releasing the financial data, we sat down with Department of Commerce Secretary Keith Crisco and others to show that the Yadkin Project has an average net profit of $8 million a year and a projected negative cash flow due to significant capital investments. Only a skilled operator with a long-term outlook can be successful, particularly given the $180 million investment that APGI is planning.

Looking at the audited numbers, you’ll see that operating costs are more $12 million a year and continue to increase.  Those costs include:  

• Cost of power generating: More than $4 million a year for labor, maintenance, tools, parts, paint, vehicles – costs that will continue to rise over time.

• Cost of transmission: More than $450,000 a year to maintain APGI-owned transmission lines which are required to transmit electricity from the dams to the grid.  

• Operating and overhead expenses: $7.78 million a year to operate the dams, including over $1 million a year for FERC-required property and shoreline management and over $3 million in business costs such as engineering, insurance, environmental and safety related expenses, and technology. 

Compare those figures with The State of North Carolina’s 21^st Century Plan, which estimates it will cost $2.79 million a year to run the Yadkin Project and shows those costs remaining at a fixed rate for the next 50 years. In other words, the state believes it can operate and maintain the dams for nearly 80% less than APGI and hold those costs steady for 50 years. What do you think?

Stay tuned for my next posing on water quality.

The Best Path Forward

I’ve been spending a lot of time traveling across North Carolina in recent weeks talking with people about the Yadkin Project. When I returned to Badin, I was struck once again by the sheer beauty of this place.

Looking out at the Badin Lake shoreline on a bright winter morning, you can see the wintergreen and the bare hardwood trees along the shore with a ray of sun shining on their branches. There’s a ripple in the water from some creature stirring below and a bird majestically flying overhead.

It is a wonderful reminder of what a great resource the Yadkin Project is to North Carolina. And, I believe, it demonstrates the care with which Alcoa has managed this great resource for the past 100 years.

North Carolina is a natural wonderland — with the Smoky Mountains to our west, and the Outer Banks to the east — and we are lucky to have this historic and scenic spot in the heart of the state.

This is where North Carolina’s first people settled 10,000 years ago. The Hardaway Site, one of the oldest and most significant archaeological sites in North America, was discovered in the shadows of Morrow Mountain in the 1940s.  

The hydroelectric dams along the Yadkin River have helped define this area today. The dams control flooding. They generate renewable energy. And they provide unlimited opportunities to hike, fish, camp, and boat along the lakes on the Yadkin River.

All of this reminds me of a quote from Friedrich Nietzsche, the 19th-century philosopher: “All credibility, all good conscience, all evidence of truth come only from the senses.” 

When you stand along the shoreline, in a boat on the water, or in the forest around these lakes, pay close attention to your senses: the taste of the morning air, the sight of the undisturbed lands along the shore, the smell of the pines, the sound of an eagle crying overhead and the feeling of peace.

Do that, and you will know that Alcoa is the best path forward.