The Stanly News and Press (Albemarle, NC)

September 30, 2013

Alcoa finds itself in more legal battles, loses Wildlife Resources Commission support

By Brian Graves, News Editor

Monday, September 30, 2013 — The state’s approval of a recertification permit for Alcoa had seemed to be a done deal once the Stanly County Commission gave its approval to the Relicensing Settlement Agreement (RSA) in the spring.

However, the company now finds itself arguing its case on numerous legal fronts and just last week found what was once an ally has decided to no longer side with them.

Although it took years, lots of attorney fees and a 3-2 vote, the county commission gave its blessing to the RSA on May 6.

With one of the hardest standouts from an agreement now in the fold, Alcoa had every reason to believe the worst was behind it.

It was a feeling that was reinforced when the Department of Environment and Natural Resources (DENR)  recommended in a July 29 report  Alcoa’s certificate should be issued.

The report by hearing officer Jim Gregson recommended the state certified water standards would not be violated if Alcoa continued to operated the dams.

His report also stated disputes concerning the ownership of submerged lands “are outside the scope of the 401 water certification.”

Alcoa had also received a draft from the Department of Environmental and Natural Resources (DENR) that would have finalized the recertification process.

The letter is not dated and clearly marked as a “draft,” but it is on DENR letterhead and was designed to be signed by Thomas A. Reeder, who was named the acting director of the agency on June 3.

All that positive news for Alcoa came crashing down only days after the DENR report when, on Aug 2, the state Department of Administration filed a lawsuit against Alcoa claiming the company should not have ownership rights to the property under the Yadkin River.

Even Gov. Pat McCrory weighed into the issue, saying: “The Yadkin River is a North Carolina river. We should be able to use it for North Carolina water needs and to create North Carolina jobs.”

Less than a month later, the North Carolina Wildlife Resources Commission (WRC) met in a regular session Aug. 29 at the commission’s headquarters in Raleigh.

That session was chaired for the first time by its new chairman, Stanly County resident Jim Cogdell.

Executive Director Gordon Myers reported that the “Committee of the Whole,” another way of stating the entire board, had met a day earlier.

According to the minutes of the commission, the committee “moved into closed session ... to receive legal advice from agency and assigned counsel.”

Myers said assistant attorneys general briefed the committee on three claims and lawsuits.

When the committee moved back into open session, a motion passed authorizing Myers to send a “recission letter” to Alcoa concerning the February 2007 Federal Regulatory Energy Commission (FERC) RSA.

The minutes of that meeting do not record there were any discussions nor the votes of the individual members.

Attempts to have those questions answered were unsuccessful as of Friday afternoon.

On Sept 2, five state representatives, Justin Burr (Stanly and Montgomery counties), Harry Warren (Rowan County), Roger Younts (Davidson County), Rayne Brown (Davidson County) and Carl Ford (Cabarrus and Rowan counties) sent a letter to McCrory.

The legislators argued the RSA would be an economic boost to the area and noted Alcoa’s gifts to non-profits and a $1 million agreement to improve economic development in Stanly County.

“This lawsuit that was recently filed will bring this prosperity and development to a screeching halt,” the letter read.

“We urge you to drop the lawsuit and allow Alcoa to continue on the path they are paving for our local counties and municipalities to grow economically.”

That letter crossed in the mail, with the one the WRC was sending to Alcoa telling them of their action.

Dated Sept. 16, the WRC told Alcoa it believes the company “intentionally withheld material information” from the Division of Water Quality when the application for the 401 Water Quality certification was submitted.

It references a DENR letter of Dec. 1, 2010 stating the company withheld information material to determining the project’s ability to meet the state standards for dissolved oxygen.

The letter also refers to a fish consumption advisory from the state health department  in 2009 because of high concentration of PCBs.

The WRC said its explanation to recant its RSA support  “constitutes a sufficient, but not necessarily comprehensive, itemization and summary of the reasons the WRC has decided to rescind its agreement to the RSA.”

Last Wednesday, Alcoa made several legal filings, including its appeal of DENR’s decision to deny the 401 certification for the Yadkin Project.

“It is Alcoa’s position that DENR acted unlawfully in its denial of our 401 water quality certificate,” Alcoa Relicensing Manager Ray Barnham said.

“The denial was based solely on unproven allegations in a lawsuit filed by the State itself only hours before the denial.”

Alcoa Vice President Kevin Anton said the company is prepared to take on the litigation fight that has now developed with the state in trying to acquire their relicensing.

He spoke at the Badin Community Advisory Board last week.

It was the first presentation Alcoa had made to the board since the state filed a lawsuit to prevent the relicensing in early August.

Anton, who is retiring as the company’s chief sustainability officer, said the company has hired “rock star” legal counsel to help with the lawsuit.

“We were expecting the 401 permit to come out at the end of July or early August and thought that would be a good time to announce my retirement,” Anton said.

“Then, Gov. McCrory had a slightly different plan for Aug. 2.

“It’s very unfortunate the governor chose to go the litigation path instead of the communication path. We had every reason to believe we were going the communication path and had a meeting scheduled with the governor on July 27. We were a little surprised when he cancelled that meeting a couple of days earlier and then (Commerce) Secretary Decker cancelled a meeting with us.

“But we thought they wouldn’t do anything without talking to us, then lo and behold. This is very unfortunate.”

Anton said Alcoa remains confident in its legal position.

That confidence comes from a 9-0 decision by the U.S. Supreme Court in the case of PPL Montana, LLC v. Montana.

PPL Montana owns and operates hydroelectric facilities on the Upper Missouri River much like Alcoa does on the Yadkin.

In that case, the state was granted summary judgement, ordering PPL Montana to pay the state $41 million in rent for riverbed use between 2000 and 2007.

The determination by the Montana court was made by deciding the navigability of the river only had “short interruptions” and did not meet the standards of declaring the stretch of river in question to be nonnavigable.

In February 2012, the Supreme Court overturned the state’s court ruling, saying the decision was “based upon an infirm legal understanding of this Court’s rules of navigability for title under the equal-footing doctrine.”

That doctrine ensured that admitted states would have the same legal rights as pre-existing states.

The high court said the state was in essence adopting “a retroactive rule for determining navigability” and that a state, by court or legislature, could not do that.

The ruling said that Montana had filed its claim for riverbed rent over a century after the first of the dams had been built.

“Montana had not sought compensation before then, despite its full awareness of PPL’s hydroelectric projects and despite the state’s own participation in the projects’ federal licensing process,” the ruling reads.

Alcoa claims it is being treated the same way by the state of North Carolina.

“That’s why we moved to file to take the case out of state court and move it to federal court and that’s where it sits today,” Anton said.

“This is a U.S. Constitution issue.”

He said the Yadkin Riverkeeper has filed to get intervener status in the state’s case and Alcoa has responded to that claim.

“We don’t believe he has any standing in that,” Anton said.

He said there will also be action on the 401 denial from DENR.

“We know the hearing officer ruled that Alcoa should get the license. We know that staff had written the detailed 401 permit in draft form,” Anton said.

“So, the denial is inconsistent with what DENR has done before and there is no basis for the denial. The hearing officer’s report said the ultimate ownership of the land is a mute point for them as far as the 401 is concerned and we feel we have a great case there.”

He said Alcoa has hired Paul Clement, who served as U.S. Solicitor General from 2004 to 2008, to work with its legal team.

Clement, 47, has argued in front of the U.S. Supreme Court 65 times in his career and is a senior fellow at the Georgetown Law School.

“He also represented Montana PPL which he won with the 9-0 decision,” Anton said.

After the board meeting, Anton said the notice from the state wildlife commission “makes no sense.”

“They were original signators on the agreement and had a large part in negotiating the agreement,” Anton said.

“The reasons they give now for wanting to withdraw their support are issues that have long been solved and settled,” he said.

“It’s obvious Gov. McCrory has his own ideas about this and there can be no other reason other than political to proceed in this manner.”

When asked if his reference to the motives for the lawsuit to be political was on the record, Anton quickly confirmed with “Yes.”

To submit story ideas, call Brian Graves at (704) 982-2121 ext. 28 or email