20070812 Ver 2_Petition for Contested Case Hearing_20090706

HUNTONIII;.11`11?
WULTAMS
July 6, 2009
VIA HAND DELIVERY
Kim Hausen
Office of Administrative Hearings
1711 New Hope Road
Raleigh, North Carolina 27609

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HUNTON & WILLIAMS LLP
POST OFFICE BOX 109
RALEIGH, NORTH CAROLINA 27602
TEL [phone]
FAX 919.833 •6352
CRAIG A. BROMBY
DIRECT DIAL: 919-899-3032
EMAIL: [e-mail]
FILE NO: 65215.000006
DOC. NO.: 27811207
Re: Petition for Contested Case Hearing
Alcoa Power Generating Inc. v. Department of Environment and Natural Resources
Dear Ms. Hausen:
Enclosed please find one Original and copy of a Petition for Contested Case Hearing for filing
by Petitioner, Alcoa Power Generating Inc. (APGI). This matter is an appeal of a water quality
certification pursuant to Section 401 of the Clean Water Act (the "401 Certification"). The 401
Certification was issued on May 7, 2009, by Respondent, Department of Environment and
Natural Resources, in connection with the application by Petitioner for a renewal of a federal
license for the operation of a hydroelectric project on the Yadkin River.
Please note that there are two other contested cases presently pending before the Office of
Administrative Hearings concerning the 401 Certification. Stanly County v. DENR, 09 EHR
3078 (filed on April 8, 2009) (Stanly Appeal); Yadkin Riverkeeper, Inc. v. DENR, 09 EHR
3179 (filed on May 13, 2009) (Yadkin Appeal). The Stanly Appeal was assigned to AU
Webster; the Yadkin Appeal to AU May. By order dated May 18, 2009, APGI was granted
status as Respondent-Intervenor in the Stanly Appeal. On May 29, 2009, Petitioner in the
Yadkin Appeal filed a motion to consolidate the Stanly and Yadkin Appeals into a single case
(Motion to Consolidate); as of the date, no ruling has been made on the Motion to Consolidate.
None of the parties to either appeal oppose the Motion to Consolidate. APGI has not yet
moved to intervene in the Yadkin Appeal, anticipating that the unopposed Motion to
Consolidate will be granted.
APGI would note that it has another case pending in front of AU May styled Alcoa Power
Generating, Inc. V. N. C. Dept. of Health and Human Services and its Division of Public Health,
09 DHR 2505 (filed on April 9, 2009) (Fish Advisory Appeal). By order dated May 28, 2009,
Stanly County was allowed to intervene in that case as a Respondent-Intervenor. That case
does not directly involve the 401 Certification. APGI does not believe it should be
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Kim Hausen
July 6, 2009
Page 2
consolidated with the three appeals of the 401 Certification (the 401 Appeals) and does not
intend to move for such consolidation, nor, we understand, does Stanly County intend to do so.
All counsel for the 401 Appeals have already conferred and anticipates that it will be necessary
to seek a revision of the scheduling orders already issued in the Stanly and Yadkin Appeals.
We would urge that this be considered by the assigned AU, assuming that the 401 Appeals are
consolidated in the immediate future. APGI anticipates that it will provide a suggested
schedule, and that a scheduling conference with all parties may be desirable. Appropriate
venues for the consolidated cases would include, because the hydroelectric project to which the
401 Certification pertains spans several counties, the Charlotte Region and the High Point
Region, and, of course, Raleigh. APGI anticipates that assignment of the consolidated cases
will take into consideration the potential venues and the mounting complexity of the matter,
given the number of parties.
Finally, there remains the possibility that additional petitions for contested case will be filed
with respect to the 401 Certification. Whether Petitioner will support consolidation of any
additional contested cases will depend upon the issues raised and the merits of any such cases.
Please contact me at 919.899.3032 if you have any questions.
Sincerely yours,
Craig A. Bromby
Enclosure
CAB/psb
cc: Mary Penny Thompson, Esq.
Donald W. Laton, Esq.
Thomas N. Griffin III, Esq.
Mary Katherine Stukes, Esq.
Ryke Longest, Esq.

PLEA SPRIIV`I CLEARLY CSR E
STATE OF NORTH CAROLINA IN THE OFFICE OF
rsn I: s;^ ADMINISTRATIVE HEARINGS
COUNTY OF WAKE i
(2) ALCOA POWER GENERATING INC., )
PETITIONER,
PETITION
V, ) FOR A
CONTESTED CASE HEARING
(3) DEPARTMENT OF ENVIRONMENT AND NATURAL )
RESOURCES, DIVISION OF WATER QUALITY, )
RESPONDENT. )
(The State agency or board about which you are complaining) )
I hereby ask for a contested case hearing as provided for by North Carolina General Statute § 150B-23 because the Respondent has:
(Briefly state facts showing how you believe you have been banned by the State agency or board.)
The Division of Water Quality issued a water Quality certification pursuant to Section 401 of the federal Clean Water Act and comaarable North
Carolina statutes and federal and North Carolina rules (the "401 Certification") The 401 Certification although generally acceptable. contains
certain specific unsatisfactory terms and conditions as outlined in Attachment A which is incorporated by reference herein and which is
intended to define and limit the scope of this a al to the extent iNrmitted by the North Carolina Administrative Procedure Act and any other
applicable statutes.
(II' more space is needed, attach additional pages,)
(4) Because of these facts, the State agency or board has: (check at least one from each column)
X deprived me of property; --&_exceeded its authority or jurisdiction;
ordered me to pay a fine or civil penalty; or .. _acted erroneously;
X---.,-otherwise substantially prejudiced my rights; AND X _failed to use proper procedure;
X acted arbitrarily or capriciously; or
X failed to act as required bylaw or rule.
(5) Date: gl,y 6 2009 (6) Your phone number: [phone]
(7) Print your full address: Hunton & Williams LLP One Bank of America Plaza Suite 1400, Box 109,
(8) Print your name:
(9) Your signature: -
You must mail or deliver a COPY of this Petition to the State agency or board named on line (3) of this form. You should contact the agency or
board to determine the name of the person to be served.
CERTIFICATE OF SERVICE
I certify that this Petition has been served on the State agency or board named below by depositing a copy of it with the United States Postal
Service with sufficient postage affixed OR by delivering it to the named agency or board:
(10) Marv Penny Thompson (1 I) Department of Environment & Natural Resources
(name of person served) (State agency or board listed on line 3)
(12) Mail to 1601 Mail Service Center. Raleigh NC 27699 Deliver to: 512 N Salisbury Street Raleigh NC 27604
(street address/p.o. box) (city) (state) (zip code)
(13) Thi s the 6ih day of Julv.2009
(14) - F-- r v
(your signature)
When you have completed this form, you MUST mail or deliver the ORIGINAL AND ONE COPY to the Office of Administrative Hearings,
6714 Mail Service Center, Raleigh, NC 27699.6714.

ATTACHMENT A
By letter dated May 7, 2009, Respondent, the North Carolina Department of Environment and
Natural Resources ("DENR") and its Division of Water Quality ("DWQ") purported to issue to
Alcoa Power Generating Inc. ("APGI") a water quality certification ("401 Certification")
pursuant to Section 401 of the Clean Water Act pertaining to APGI's application to the Federal
Energy Regulatory Commission ("FERC") for its relicensing of the Yadkin Hydroelectric
Project (DWQ # 2007-0812; FERC Project No. 2197) (the "Project"). The 401 Certification was
issued unlawfully and contained certain specific terms and conditions which are not authorized
by law or rule, are arbitrary and capricious, are unsupported by the record in this matter, and/or
unlawfully impose improper procedures, including the following:
Section 7, Performance/Surety Bond
1. The 401 Certification purports to require APGI to post a performance/surety bond of Two
Hundred and Forty Million Dollars ($240,000,000) to cover the costs of certain water quality
improvements. Such a requirement for a bond as a condition of the 401 Certification is
unsupported by authority in rule or statute. For this reason, DWQ acted erroneously, failed to
use proper procedure, acted arbitrarily and capriciously, and failed to act as required by law or
rule.
2. The amount of the performance/surety bond, in the event it is determined that such a bond is
authorized, is grossly excessive, unsupported in the record, and not directly or adequately based
on or related to water quality concerns. For this reason, DWQ acted erroneously, failed to use
proper procedure, acted arbitrarily and capriciously, and failed to act as required by law or rule in
setting the amount of any such surety bond.
3. The 401 Certification purports to require further approvals by Respondent and other agencies
within the State of North Carolina government subsequent to the issuance of the 401
Certification, with no standards for the additional approvals and without authority in rule or
statute. For this reason, DWQ acted erroneously, failed to use proper procedure, acted arbitrarily
and capriciously, and failed to act as required by law or rule.
4. The 401 Certification states that it is "only effective once the required performance/surety
bond is in place." The provisions regarding the timing of the bond and its purported impacts on
the efficacy of the 401 Certification, coupled with Respondent's absolute and arbitrary power to
approve the bond, amounts to an unlawful attempt to avoid the time limits imposed by 15A
NCAC § 2H.0507(b) and 33 U.S.C. § 1341(a)(1). For these reasons, DWQ acted erroneously,
failed to use proper procedure, acted arbitrarily and capriciously, and failed to act as required by
law or rule.
Section 9, Other Relicensing Settlement Agreement Conditions
5. The 401 Certification purports to impose certain conditions related to dissolved oxygen levels
in the tailwaters of each of the four dams in the Project. These conditions differ in several
respects from the conditions to the first 401 Certification issued by Respondent in 2008, and also
differ from the terms agreed to by the State of North Carolina in the Relicensing Settlement
Agreement February 2007 ("RSA"), negotiated as part of the FERC license process and to which
Respondent is a signatory. Because the 401 Certification purports to impose conditions related
to dissolved oxygen that differ from conditions Respondent previously agreed to without
sufficient justification in the record, and because these conditions are not supported by an
adequate factual and legal basis, these conditions lack statutory authority, are arbitrary and
capricious, and ignore appropriate and lawful procedure for imposition of lawful requirements.
Failure to Comply with Applicable Time Limits
6. 15A NCAC § 2H .0507(b) provides that the 401 Certification must have been "granted or
denied within 60 days after public hearing," subject to certain exceptions. A public hearing on
the 401 Certification was conducted on January 15, 2009. Pursuant to 15A NCAC § 21-1.0507(b),
the deadline for DWQ to take final action regarding issuing the 401 Certification was March 16,
2009. Failure on the part of DWQ on or before March 16 to issue an effective 401 Certification,
2009, resulted in a waiver of the 401 Certification requirement. For this reason, DWQ was
without authority to issue the 401 Certification, acted erroneously, failed to use proper
procedure, acted arbitrarily and capriciously, and failed to act as required by law or rule.
,65215.000006 EW-US 27749510v6