By Michael Brooks

The D.C. Circuit Court of Appeals on Friday denied a petition by North Carolina to overturn several FERC decisions that kept the state from acquiring the system of dams on the Yadkin River (17-1243).

The state has been seeking the four dams collectively known as Yadkin Hydroelectric Project No. 2197 since 2009, when previous owner Alcoa announced it would close and dismantle the Badin Works aluminum smelting plant. The Yadkin Project had powered the plant, which at its peak employed about 1,000 workers, for almost half a century.

Alcoa started curtailing production and laying off workers in 2002 amid a downturn in the aluminum market. By the time it applied for relicensing in 2006, Alcoa was only using 3 to 5 MW of the 210.5-MW project to power the plant.

In approving Alcoa’s application in 2016, FERC denied North Carolina’s proposal that the U.S. government acquire the project and transfer it to the state, saying the company had failed to maintain the jobs at Badin Works, which had been cited as a benefit in the project’s original 1958 license (P-2197).

“The state’s proposal — albeit creative — lacked any basis in the law,” D.C. Circuit Judge David B. Sentelle wrote in agreement with FERC.

The Federal Power Act allows FERC to recommend that the federal government take over, maintain and operate hydroelectric facilities after a license expires. “North Carolina does not and cannot identify a single case, statute or regulation to provide authority” for the federal government to transfer a seized project to a state government, Sentelle said. The judge noted that the state could have filed its own application for the project with FERC, negotiated a sale or initiated a condemnation proceeding of the project.

“Thriftiness and political pressure do not create a legal basis for federal recapture when its sole purpose is transferring the hydropower project to a state,” Sentelle said. “Indeed, none exists.”

North Carolina also challenged FERC’s approval of Cube Yadkin Generation’s $243 million purchase of the Yadkin Project in 2017, a challenge the commission also denied. The state alleged that Alcoa misled the state and other potential applicants for the project into thinking the company intended to continue operating Badin Works.

“Alcoa disclosed the curtailment of industrial production at Badin Works every step of the way, from its initial filing of intent to relicense, through its various correspondences with FERC, to the license application itself,” Sentelle said. “The loss of jobs from the closure of Badin Works is a dark and menacing cloud that hangs over the state of North Carolina. However, Alcoa did not conceal this impending squall and, thus, FERC did not err by denying North Carolina’s request to reopen licensing.”

The state attorney general’s office could not be reached for comment Monday because of the Martin Luther King Jr. Day holiday.

Though it is no longer the owner of the Yadkin Project, Alcoa still owns the land bordering the river, though it agreed to sell it as part of FERC’s approval of its relicense application. Local conservation group Three Rivers Land Trust is raising money to purchase an initial 2,310 acres of land by September so it will be granted an additional two years to purchase the remaining 2,390 acres.