Big setback for Alcoa in battle for the Yadkin River | Citizen | Indy Week

Big setback for Alcoa in battle for the Yadkin River

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One of Alocas hydropower dams

It's a long way from over, but if you were making odds in the battle between Alcoa and the Perdue Administration, Alcoa's got a lot worse yesterday and Gov. Bev Perdue's odds would look pretty good except for the fact that if she gets what she wants from Washington and the state is allowed to recapture (the legal term) Alcoa's water rights on the Yadkin River, North Carolina will have to compensate Alcoa for what its dams are worth — and the state presently has no money, honey.

That said, Alcoa's road to relicensing is suddenly looking a lot longer ... and the longer this plays out, the better the chance that North Carolina's revenues will rebound and the needed cash will materialize in Perdue's accounts.

[Another Update 12/3: Talked with Stanly County Manager Andy Lucas, who makes the good point that whether FERC — a federal agency — or the state would ultimately be responsible for compensating Alcoa, the payment would doubtless be financed via revenue bonds backed by future earnings from the power plants. Thus, the state's bare coffers wouldn't be in the way of recapture at all — assuming, that is, that FERC would side with the state and against Alcoa in the first place. I have no insight into FERC or how its members will vote. But clearly, while FERC has never recaptured a license, it also has a history of insisting — and Alcoa acknowledges this insistence — that its licensees be on good terms with the water-quality standards of, in this case, the state of North Carolina. Alcoa, as of this week's stunning reversal by the Division of Water Quality, is anything but.]

[Update 12/3: Mike Taylor, a lawyer who represents Stanly County in this case, left me a message about recapture. He said it would be FERC paying to recapture Alcoa's license, not the state, and the cost would be limited to Alcoa's net investment, meaning what it's spent over the years on facilities minus depreciation. But if I recall correctly, FERC would look to the state for money or it would look to Congress for an appropriation that, presumably, would be initiated by North Carolina's congressional delegation. I missed Taylor on the return call; wil post more after I talk with him.

As to the net investment cost, Taylor's said in his message that it was just $26 million as of a few years ago. I reported, in my story last year (see below), that Alcoa put the figure at $91 million, which included $24 million in long-depreciated investments plus another $67 million spent recently on better turbines. (And the turbine investments may be continuing — the setback Alcoa suffered this week was related to the new turbines and whether they would or wouldn't resolve the problem of dissolved oxygen in the Yadkin created by Alcoa's dams.) Alcoa was also arguing, last fall anyway, that it would be entitled to hundreds of millions more from its lost future revenue stream. That seemed at odds with the whole notion of net investment cost — but since FERC has never before initiated a recapture process, how it would work exactly isn't certain and may ultimately be a matter of negotiations.]


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You will recall that Alcoa's APGI subsidiary wants the federal government to renew — for another 50 years — the license under which the corporation operates four dams, four hydropower plants and a string of water-supply reservoirs on the Yadkin River.

You will also recall that Stanly County, the Yadkin Riverkeeper and Gov. Perdue since she took office have been fighting Aloca tooth and nail, arguing that:

(1) the only reason Alcoa was allowed to install the hydropower plants in the first place (which, in effect, gave it control of the river) was so it could supply cheap electricity to a big aluminum smelter in Stanly County, but the smelter and the hundreds of jobs that went with it are now kaput; and

(2) in the course of running the plant and the dams, Alcoa polluted the Yadkin but refuses to own up to the damage it's done.

For background, see our story "Give Back the Yadkin, Dammit" of a year ago. State officials tell us it will be another year or more before FERC, the Federal Energy Regulatory Commission, rules for or against Alcoa's relicensing application. But a key element of the application is supposed to be Alcoa's compliance with all relevant state water quality regulations.

As of yesterday, it isn't — The state Division of Water Quality, part of the Department of Environment and Natural Resources, revoked Alcoa's so-called 401 water quality permit, saying Alcoa withheld key evidence when it sought the permit.

The News & Record of Greensboro has a post up with more background, including DWQ's statement and Alcoa's response; you can view it here.

The actual DWQ revocation notice is worth reading for what it says about the evidence withheld by Alcao. You can read it here: 2010-01-10_APGI_Revocation_Notice.pdf

Finally, the Yadkin Riverkeeper, Dean Naujoks, was exultant:

This is a major step but we still have a long way to go, so watch for further developments on this topic. However, this decision opens the doors to pursue many of the other issues facing the Yadkin River such as full-scale environmental clean up/remediation of the site and River, as well as leveraging millions of dollars in water quality improvements for the Yadkin.

Taking on hard issues is always a gamble but the rewards can be far greater and the effort can accomplish more for our environment than less-controversial issues could ever hope to. Your continued support of our efforts is vital to our success; please consider a donation to Yadkin Riverkeeper so we can work to further protect and preserve this essential natural resource for future generations.

Some things—like clean water—are worth fighting for. And sometimes David actually beats Goliath!

The Riverkeeper's website is chock full of background as well. Naujoks' full statement is copied below the fold.

Dean Naujoks' statement:


Dear Friends,

I am very pleased to announce that we won our 401 Water Quality Certification case, Yadkin Riverkeeper and Stanly County vs. NC Department of Environment and Natural Resources and Alcoa! Alcoa’s house of cards literally crumbled in the court room when it was revealed (through emails that were found in the discovery phase) that Alcoa lied to the NC DENR, claiming that dam upgrades would actually comply with water quality standards for dissolved oxygen. The state could no longer comfortably stand with a global polluter like Alcoa, testifying they would not have approved the 401 water quality certification had they known this.

This was an amazing team effort such as I have never seen before with a coalition of strong minded people aligned at this special time and place to prevail on this important issue. Simply amazing! The media has really jumped on this story as well: NPR, the Associated Press, Business Week, and many more (links below).

This result is better than an actual ruling in our favor because NC DENR no longer supports ALCOA. Instead of Alcoa dividing and conquering state agencies (the Governors office vs. NC DENR), Alcoa has been divided and conquered. The state has abandoned them and can now work together with the Governor’s and Attorney General’s offices plus the Department of Justice, making this issue politically safe to support and the right thing to do. For a while we were on an island by ourselves but now the state will likely seek our help in defeating Alcoa!

All relicensing stakeholders can and should legally withdraw from the original agreement because Alcoa lied and violated the terms of the agreement. This evidence will now be presented by the state as a unified front to FERC, as evidence to deny Alcoa’s request for the bigger 50-year FERC license and support our efforts to legally “recapture” the Yadkin River for the citizens of North Carolina. If we are successful with federal recapture (for the first time in U.S. history,) this victory will have been a turning point.

We are extremely grateful for the consistent and continuing input of our partners in this fight, officials in Stanly County along with Ryke Longest and the students of Duke University Environmental Law & Policy Clinic, without whom we could not have reached this point. The sincere interest on the part of members of Yadkin Riverkeeper has also been key in inspiring us and supporting us in this effort.

This is a major step but we still have a long way to go, so watch for further developments on this topic. However, this decision opens the doors to pursue many of the other issues facing the Yadkin River such as full-scale environmental clean up/remediation of the site and River, as well as leveraging millions of dollars in water quality improvements for the Yadkin.

Taking on hard issues is always a gamble but the rewards can be far greater and the effort can accomplish more for our environment than less-controversial issues could ever hope to. Your continued support of our efforts is vital to our success; please consider a donation to Yadkin Riverkeeper so we can work to further protect and preserve this essential natural resource for future generations.

Some things—like clean water—are worth fighting for. And sometimes David actually beats Goliath!

Sincerely,

Dean Naujoks, Yadkin Riverkeeper

Links to news stories on the permit revocation:

http://www2.journalnow.com/news/2010/dec/02/state-revokes-alcoas-certificate-to-run-ar-583763/

http://www.wfae.org/wfae/1_87_316.cfm?action=display&id=6699

http://www.bizjournals.com/charlotte/blog/outside_the_loop/2010/12/nc-takes-back-alcoas-water-permit.html

http://www.businessweek.com/ap/financialnews/D9JRBCRO2.htm

http://www.newsobserver.com/2010/12/01/837197/apnewsbreak-nc-to-try-revoking.html#storylink=misearch

http://www.news-record.com/blog/53964/entry/106007

http://www2.journalnow.com/news/2010/dec/01/state-revokes-key-certificate-alcoa-power-generati-ar-582013/

http://www.wral.com/news/state/story/8708481/

http://www.wxii12.com/news/25974248/detail.html

http://www.law.duke.edu/news/story?id=5892&u=11

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