Battle for control of Yadkin dams at critical point

The years-long battle for control of four dams along a 38-mile stretch of the Yadkin River will reach a critical stage today when the Yadkin Riverkeeper, Alcoa and other parties present their opening arguments in a hearing to determine the validity of a state-issued water-quality certificate.

“It’s not naive to think that whoever wins here, the other side has an uphill battle,” said Dean Naujoks of the Winston-Salem-based Yadkin Riverkeeper, which serves as an advocate for the Yadkin River.

At issue is the 401 Water Quality Certificate, which all hydroelectric dam operators must have as part of their license application to the Federal Energy Regulatory Commission, the agency that oversees the nation’s dams. Alcoa is seeking a renewal of a 50-year license that was issued in 1958.

State environmental agencies issue the water-quality certificates to ensure that the water that companies discharge into rivers meets their state standards.

Alcoa, which wants to continue to sell electricity generated by those four dams, was issued a water-quality certificate by the N.C. Department of Environmental Resources in May 2009.

The Riverkeeper and Stanly County promptly filed an appeal, asking the state to revoke the certificate. The two groups claim that the state violated the federal Clean Water Act and the N.C. Environmental Policy Act when it granted the certificate.

Naujoks’ concern is that Alcoa has not been held accountable for what he calls a “toxic legacy,” that he said includes polychlorinated biphenyls, a cancer-causing chemical.

Alcoa officials say they are not the sole source of PCBs found in Badin Lake and cite a July memo from the N.C. Division of Public Health that confirms their position.

For decades, Alcoa harnessed the energy from the four dams to power an aluminum smelting plant in Stanly County that employed about 1,000 people. That plant closed in 2002. The electricity that those dams continue to generate is sold on the open market, resulting in average annual profits of about $8 million, according to Alcoa officials.

Some Stanly County and state officials, including Gov. Bev Perdue, object to Alcoa’s continuing use of a public resource that no longer provides local jobs and electricity to local residents.

In April 2009, Perdue filed a motion before the Federal Energy Regulatory Commission, asking it to “recapture” the license and designate the state as the license holder, all of which is allowed under the Federal Power Act. Once recaptured, the Perdue administration wants to buy Alcoa’s hydroelectric plant, a move that would have to be approved by Congress.

However, the federal government has never recaptured a license, which means the Alcoa case is being widely watched around the country by environmental policy experts, said Bill Holman, a director of state policy with the Nicholas Institute for Environmental Policy Solutions at Duke University.

“It’s a fascinating case to watch,” Holman said. “FERC has never come before a process like this so it’s hard to predict how the commissioners would respond.”

Alcoa’s backers say the state’s plan amounts to a government takeover of a private business.

Rick Henderson, the managing editor of the Carolina Journal, a publication of the John Locke Foundation, said one advantage of having a business operate the dams is that it can be fined or penalized if it runs afoul of water-quality issues.

“If the state takes charge of those facilities then the taxpayers become responsible for that sort of thing,” Henderson said.

The water-quality hearing at the N.C. Office of Administrative Hearings in Raleigh will last three weeks and include testimony from Naujoks. The Riverkeeper is being represented by law students from Duke University.

Judge Joe Webster could decide to uphold the certificate, which would pave the way for FERC to renew Alcoa’s license. If he rejects it, Alcoa could choose to resubmit its application.

Mike Belwood, a spokesman for Alcoa, said the company is looking forward to presenting its side.

“We believe the 401 permit was issued as a result of a very thorough process, and we believe it’s valid,” he said.

Naujoks is equally convinced that his side has a strong case.

“It gets down to ‘Did the state use the full scope of its authority in protecting the water quality of the Yadkin River and protecting the public health?’ And we think we have a very strong argument to say, ‘No, they did not,’” Naujoks said.

lo’donnell@wsjournal.com
727-7420