FERC denies APGI petition

Thursday, October 22, 2009 — In action on Oct. 15, the Federal Energy Regulatory Commission (FERC) sided with the State of North Carolina and against Alcoa Power Generating, Inc. (APGI).

APGI had petitioned FERC for an order declaring that the state has waived its authority under section 401 of the Clean Water Act to issue a water quality certification with respect to the relicensing of the Yadkin Hydroelectric Project, but FERC saw it otherwise, stating: “Because we conclude that North Carolina has not waived its Clean Water Act authority, we deny the petition.”

The Clean Water Act section 401 states: “Any applicant for a Federal license to permit to conduct any activity … which may result in any discharge into navigable waters, shall provide the licensing or permitting agency a certification from the State in which the discharge originates … If the State … fails or refuses to act on a request for certification within a reasonable period (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such Federal application. No license or permit shall be granted until the certification required by this section has been obtained or has been waived as provided in the preceding sentence.”

In its ruling on the APGI petition, FERC outlined the history of the water certification as follows:

  • On May 8, 2008, Alcoa filed a request for water quality certification with the
    North Carolina Department of Environmental and Natural Resources, Division of Water Quality (North Carolina).
  • On May 7, 2009, North Carolina issued the requested certification. The certification included a number of conditions, one of which required Alcoa, within 90 days of receipt of the certification, to provide a surety bond or equivalent instrument in favor of the State of North Carolina, in the amount of $240 million, to cover the cost of water quality improvements at the projects. The certification stated that “[t]his certification is only effective once the required performance/surety bond is in place.
  • On May 27, 2009, a North Carolina administrative law judge stayed the certification pending appeal.
  • On Sept. 17, 2009, Alcoa filed a petition for declaratory order, asking the commission to conclude that, because North Carolina had conditioned the effectiveness of the certification on the company obtaining the bond, the state had failed to issue a certification within one year of Alcoa’s certification request and had thus waived its authority to issue water quality certification.

FERC issued the following comments for its decision favoring the State and denying APGI's petition:

  • Alcoa argues that because North Carolina’s certification, issued on the 365th day after the state received Alcoa’s application, contained a requirement that Alcoa obtain a bond within 90 days – an action that Alcoa says could only take place after the expiration of the Clean Water Act’s one-year deadline, North Carolina’s action was “inherently incomplete,” with the result that the state has waived water quality certification. The company asserts the manner in which North Carolina crafted the certification “has the practical effect of withholding its final determination as to whether to grant or deny [Alcoa’s] application [for water quality certification] well beyond the one- year deadline . . . .”
  • We do not agree. Section 401(a)(1) requires that, in order to avoid waiver, a state must “act” on a request for certification within one year. Here, North Carolina acted by issuing its “APPROVAL of 401 Water Quality Certification with Additional Conditions” within the one-year period. The certification states that unless Alcoa requests an adjudicatory hearing “this Certification shall be final and binding.” As Alcoa notes, the certification does contain a condition providing that it will not become effective unless Alcoa provides the required bond within 90 days. However, we cannot conclude that such a requirement vitiates the issuance of the water quality certification. When the certification was issued, the state had completed its action. If Alcoa elected to satisfy the bond condition (and had the certification not been appealed), the certification would have been fully effective. Whether or not that occurred was solely up to Alcoa. We find that North Carolina did act within the one-year certification period, and therefore has not waived its Clean Water Act authority.

In his newsletter to friends of the Yadkin River, Dean Naujoks, the Yadkin Riverkeeper, wrote: Had Alcoa’s request been allowed by FERC, Alcoa would have been allowed to pollute the Yadkin River and water flowing through the Project, which consists of four reservoirs, dams and hydropower stations along a 38-mile stretch of the Yadkin River – without facing penalty for violating Environmental Protection Agency water quality standards. It also would have established a dangerous precedent that would have eroded the states' ability (all states) to enforce Clean Water Act protections.

“I am grateful that FERC turned down Alcoa’s declaratory order and sided with North Carolina on this issue,” said Naujoks. “It would have created a dangerous national precedent if it allowed Alcoa to disregard and disobey critical Clean Water Act laws and regulations which have greatly improved the water quality in America since they were established 40 years ago. By taking this action, FERC has emphasized that no corporation is above the law and exempt from the states rights to enforce compliance with water quality standards. FERC’s decision is a big set back for Alcoa and an important victory for Americans who want safe clean water for drinking, swimming and other recreational activities.

“If I were one of the groups who are signatories for the RSA, such as American Rivers or the Central Land Trust for NC, I would want Alcoa to explain to me its motives for trying this tactic to avoid following established law. If company officials cannot – as they have been unable to do so since filing the request a month ago – I think those signatories ought to hold Alcoa accountable for its actions and remove their endorsements of a company that clearly puts profits above the peoples need for clean water.”

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