Alcoa bond dropped to $80M

As Alcoa Inc. works to keep its power-generating dams along the Yadkin River, state regulators have agreed to drastically reduce a bond the company will be required to provide to ensure various upgrades are made along the river.

Initially the state was going to require a $240 million surety bond from the company, but in an as-yet-unwritten agreement reached in recent months, the N.C. Department of Environment and Natural Resources has reduced that bond to $80 million.

State officials won’t say why they are willing to reduce the bond, citing a need to keep negotiations confidential while a hearing continues into Alcoa’s state-issued, water-quality certificate. But Alcoa spokesman Mike Belwood confirmed the change this week, and people on both sides of the legal fight over the certificate are aware of the figure.

Alcoa is pursuing a new 50-year federal license to continue operating its dams along the Yadkin, and obtaining a state-issued, water-quality certificate is a key part of that process. The Department of Environment and Natural Resources issued a certificate in 2009, but Stanly County, where Alcoa has much of its operation, and the Yadkin Riverkeeper challenged it. That is the hearing now before an administrative law judge in Raleigh.

The hearing was put on hiatus yesterday, and will resume Nov. 15. Once expected to wrap up quickly, the hearing is scheduled to run into December.

As part of the challenge, Yadkin Riverkeeper Dean Naujoks has accused Alcoa of a legacy of pollution. He said this week that the reduced bond is emblematic of a too-cozy relationship between Alcoa and state regulators.

“Why on Earth is DENR happy about compromising away $160 million for water quality?” Naujoks asked.

Belwood said $80 million is about what it will cost Alcoa to do work the state is requiring for the certificate.

He said he could not say why the state initially wanted the $240 million bond. Spokesmen for DENR, the governor’s office and the state attorney general’s office wouldn’t comment on the matter.

DENR provided a copy of the current certificate, before the changes recently negotiated. The $240 million bond appears in that certificate, which was issued in May 2009, almost two years after Alcoa requested it. Before then, there was no bond in place, according to DENR, because Alcoa’s initial 50-year license to operate along the river was approved in 1958. That was before the federal Clean Water Act made obtaining a state certificate a requirement.

The bond is meant to ensure that Alcoa follows through with plans to upgrade dam turbines and improve water-quality monitoring on the river. If Alcoa were to fail in that, the state could tap the bond money and implement upgrades itself.

The decision to lower the bond to $80 million was “a recent development,” Belwood said, and apparently hasn’t been put on paper yet.

“(With the hearings), nobody’s had a chance to write it down and sign it,” Alcoa attorney Charles Case said this week.

The Yadkin Riverkeeper’s attorney tried to bring the bond issue up during the hearing yesterday, but attorneys for Alcoa and the attorney general’s office objected, and Judge Joe Webster shut down most discussion of the matter.

Naujoks did say from the stand that the higher bond had been “the best thing” about Alcoa’s agreement with the state.

Naujoks has been an outspoken critic of Alcoa, calling for more testing of the water surrounding the company’s now-closed aluminum shelter along the river. While Naujoks was on the stand this week, Alcoa’s legal team portrayed him as a man looking “to politically smear Alcoa,” regardless of what tests say about the river’s water quality.

Alcoa attorney Lori Jarvis got Naujoks to acknowledge that he and other members of the riverkeeper group have been fishing and boating along the river, both before and after the state certificate was issued last year. The state advises people not to eat more than one fish a week from Badin Lake, a reservoir on the Yadkin.

Jarvis also questioned Naujoks about an e-mail from Zoe Hanes, the president of the Yadkin Riverkeeper’s board of directors, that called on members to pressure state and federal regulators not to approve a new 50-year license.

“We need to develop a clear message,” Hanes wrote. “That message is, essentially, Alcoa is evil.”

Jarvis called this “the cornerstone” of the riverkeeper’s plan against Alcoa, but Naujoks characterized it as a single mail following an informal brainstorming dinner of river supporters.

“We’re happy to use science,” Naujoks said. “We will use science.”

Stanly County and the riverkeeper aren’t the only groups opposing Alcoa’s license, which will be decided by federal overseers if the state-issued certificate survives the hearings.

Gov. Bev Perdue also has come out against Alcoa, saying the dams should be reclaimed and the river operated by the state. That leaves the state in an odd position: The governor is against the relicensing, but the N.C. Attorney General’s Office is working with Alcoa attorneys to defend the water-quality certificate against Stanly County and the riverkeeper.

ctfain@yahoo.com