On May 3, 2011, the United States Court of Appeals for the District of Columbia Circuit (“DC Circuit”) rejected a petition by Alcoa Power Generating Company (“Alcoa”) to review two FERC orders on the relicensing of the company’s Yadkin River Project in North Carolina.  Alcoa petitioned the Commission in order to expedite the process for renewing a fifty-year license to operate several dams on the Yadkin River.

Alcoa’s previous license expired in 2008, but Alcoa has been able to operate under a FERC one-year license.  A prerequisite for FERC to approve the new license is that the state must certify the discharged water complies with the Clean Water Act, but that requirement is waived if the state fails or refuses to act within one year under section 401(a)(1) of the Clean Water Act.  Alcoa was able to receive a 2009 certification from the state one day before the one year mark, but one day later, a state administrative law judge issued an injunction staying the 2009 certification due to a motion from Stanley County accusing the state of violating the law by not considering certain water quality impacts.  Alcoa challenged the 2009 certification claiming certain requirements were excessive and impossible because the company must monitor and improve water quality and post a $240 million surety bond to cover water improvement costs.  Alcoa also petitioned FERC arguing that the state agency waived its right by not acting within a year once the judge stayed the certification. 

FERC did not agree with Alcoa and determined that the state did act within a year by staying the decision.  Alcoa then appealed to the DC Circuit, claiming FERC misinterpreted the law.  Alcoa argued that FERC’s decision was factually and legally unsupported, and Alcoa stated the conditions in the 2009 certification could never be satisfied.  FERC explained to Alcoa that the Commission is still able to issue a license, even if the state certification is not yet effective.  FERC stayed their licensing proceeding pending the outcome of the state appeal. 

In siding with the Commission, the DC Circuit noted that “[n]owhere in “Section 401 is it stated that a certification must be fully effective prior to the one-year period much less prior to licensing; it requires only that a State “act” within one year of an application and that a certification be “obtained.””  Thus, although Alcoa could not meet the certification requirements within the one-year timeframe, the Clean Water Act was not violated, and the Commission reasonably interpreted the law.  The DC Circuit also dismissed claims by Alcoa that FERC failed to engage in reasoned decision-making by ignoring material facts of the case.  The DC Circuit said those arguments were irrelevant once FERC concluded it would not have to wait on evaluating the relicensing until the surety bond was issued.

A full copy of the DC Circuit opinion is available here.