Alcoa Prevails In State Lawsuit | Eastern North Carolina Now

    Publisher's note: The author of this post is Don Carrington, who is executive editor for the Carolina Journal, John Hood Publisher.

Judge says river not navigable at statehood

    RALEIGH — Alcoa Power Generating Inc. scored a victory in federal court May 6 when U.S. District Judge Terrence Boyle ruled that the state of North Carolina failed to prove that a 45-mile segment of the Yadkin River where Alcoa operates four hydroelectric dams was navigable for commerce in 1789.

    The state argued that if boats could navigate that segment of the river before statehood, then the land under the river would have been categorized as state-owned property, and Alcoa could not claim a property right to that land.

    Alcoa continues to assert that the deeds it has to property all along the contested area are valid. But the company's attempt to renew its federal license to operate the dams would have become more complicated had the state prevailed. Alcoa has operated the dams since 1917 and its license expired in 2008. The company is operating dams under a temporary license. It began the relicensing process in 2002, but in 2008 state officials began throwing obstacles in Alcoa's way, the most recent being the state's claim in court that the river was navigable more than 200 years ago.

    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.

    The state initiated the legal action in North Carolina Superior Court in August 2013, but the following month Alcoa's request moving the case to federal court was granted.

    The state listed the N.C. Department of Administration as the designated owner of the land and attorneys from Attorney General Roy Cooper's Department of Justice represented the department.

    Cooper's office did not respond to questions about the ruling. Administration Department legal counsel Bill Peaslee told Carolina Journal, "The state is considering all of its options."

    "We're pleased that the judge recognized that the Yadkin River was not navigable at the time of statehood," said Ray Barham, Alcoa's relicensing manager. "We hope this will bring us closer to finally resolving this issue," he said. Barham added that Alcoa "spent what was needed to defend our property rights. However, we would have much rather invested that money to attract new jobs to the Badin Business Park or improve water quality in the Yadkin River," he said.

    CJ also asked Barham if he was aware of any other methods the state might use to stall the relicensing process. "We don't see why the state would want to continue trying to stop us from generating clean, renewable energy on the land we've owned for the past 100 years," he said.

    Alcoa has the support of several state legislators. "It started with Gov. Easley, continues by Perdue and McCrory. The state's foolish lawsuit to take the property," tweeted Sen. Andrew Brock, R-Davie, after Boyle's ruling.

    Rep. Justin Burr, R-Stanly, speculated that Volvo's recent decision to open an automobile factory in South Carolina rather than North Carolina might be related to the state's treatment of Alcoa. "What automaker would want to locate here when they see N.C.'s treatment of one of its global partners," Burr tweeted.


    Known as the Yadkin Project, the hydroelectric plant comprises four hydroelectric dams and reservoirs located along a 45-mile section of the Yadkin River in Davidson, Davie, Montgomery, Rowan, and Stanly counties. 
The reservoirs, named High Rock, Tuckertown, Badin, and Falls, lie within 38,000 acres of real estate owned by Alcoa Power Generating Inc., a subsidiary of Pittsburgh-based Alcoa. The company bought the land and constructed the hydroelectric dams to supply power to its aluminum smelting plant in Badin, a small Stanly County town east of Albemarle. Aluminum production started in 1917 and continued until 2002, when the company shut down most of the operation. All production stopped in 2007.

    The hydro facilities continue to generate up to 210 megawatts of electricity that Alcoa sells on the wholesale market to other power companies. Alcoa operates the project under a license from the federal government.

    The most recent 50-year license was issued in 1958 and Alcoa started the relicensing process in 2002. The Federal Energy Regulatory Commission routinely renews licenses and probably would have issued a new license to Alcoa if Gov. Mike Easley had not taken the unusual move in April 2008 of intervening in the relicensing process.

    Citing water quality concerns by some local governments in the region, Easley asked FERC to delay issuing a new license until those concerns were addressed. Easley's action came after Bill Ross, his secretary of environment and natural resources, had signed off on the relicensing agreement.

    Easley left office in January 2009, but his successor Perdue also asked FERC to delay a new license. A legal brief filed in 2009 by an attorney representing Perdue stated that she "intends to vigorously oppose" a new license for Alcoa.


    Both the state and Alcoa stipulated that the "relevant segment" for purposes of the navigability issue was a 45-river mile segment that included all four dams, Boyle ruled. Prior to the construction of the dams, the river's most turbulent point was a three-mile section that now includes the Falls and Narrows Dams. "Given the turbulence of the Falls and Narrows, it is perhaps unsurprising that absolutely no evidence was presented in support of the navigation of this portion," Boyle wrote.

    "Pole boats and flats would have had difficulty navigating shallow, steep, swift-moving rocky rivers," Boyle wrote, citing testimony from a marine archaeologist testifying for Alcoa.

    Boyle noted that historic records for navigating that section of the river were minimal and there were no accounts of anyone navigating the entire section. He also noted that the U.S. Army Corps of Engineers considered plans to make the river navigable, but abandoned the idea because it would be cost-prohibitive.

    "Given that the stipulated segment includes the Falls and Narrows, and that the state conceded both portions had to be portaged, the court is compelled to conclude that the relevant segment, in its entirety, was not navigable in fact at statehood," he wrote.

    In addition, Boyle noted that the Yadkin-Pee Dee River Basin is less treacherous the further east and south it travels below the Narrows. "It seems likely therefore that the segment of the Pee Dee on which Duke Energy operates the Blewett and Tillery hydroelectric plants is more susceptible to navigation than the relevant segment. The court is not aware, however, of any claim by the state to the title of the historical riverbed underlying those projects," he wrote.

    "For the foregoing reasons, the court finds that the state had failed to meet its burden to prove that the relevant segment, as stipulated by the parties, was navigable for commerce at statehood," he concluded.


    Alcoa's next step in the relicensing process is to acquire a water quality certificate from the state under Section 401 of the federal Clean Water Act.

    "We appealed the denial of our 401 water quality permit and expect a ruling soon. If the Administrative Law Judge rules in our favor, we expect the NC Division of Water Resources to act quickly to issue a 401 water quality certificate for the Yadkin Project that is consistent with the draft that was prepared in 2013. Our application had previously been determined to be complete and the hearing officer had recommended issuing certification," said Barham.