Intervention in Post-licensing Case Granted

Hydroelectric Project Licensee Argued FERC Should Dismiss Consulting City’s Motion as Untimely
Mark Reishus
July 8, 2019 at 13:25:59 ET

On July 3, 2019, FERC issued a notice granting intervention to the City of Salisbury, North Carolina (City) in a post-licensing proceeding involving Cube Yadkin Generation LLC’s (Cube Yadkin) Yadkin Hydroelectric Project No. 2197, located on the Yadkin River, in North Carolina. Cube Yadkin opposed the City’s intervention, arguing that the motion is premature. FERC ruled that the motion was timely. “The Commission considers timely, motions to intervene that are filed after the filing of an application or compliance filing and before a Commission notice or Commission order is issued.”

Project Description and History

On May 19, 1958, FERC’s predecessor, the Federal Power Commission, issued a 50-year original license to the Carolina Aluminum Co. for the Yadkin Hydroelectric Project No. 2197 (Yadkin Project), located on the Yadkin River, in Davie, Davidson, Montgomery, Rowan and Stanly Counties, North Carolina. The Yadkin Project includes four developments located along a 38-mile segment of the Yadkin River.

Soon after the license was issued, Carolina Aluminum Co. changed its name to Yadkin Inc. In 2000, FERC approved a transfer of the license from Yadkin Inc. to Alcoa Power Generating Inc. (Alcoa Generating). In 2006, Alcoa Generating filed a relicense application to continue to operate and maintain the project. In 2007, Alcoa Generating filed a settlement agreement that it had entered into with 23 other parties. While the City participated in the settlement negotiations, it did not sign the agreement. The original license for the Yadkin Project expired on April 30, 2008. Thereafter, the project operated under an annual license pending disposition of Alcoa Generating’s relicense application. In 2016, FERC staff issued Alcoa Generating a new 38-year and 7 month license to operate and maintain the project. On Dec. 13, 2016, the new license was transferred from Alcoa Generating to Cube Yadkin.

On Sept. 20, 2017, FERC issued an order that affirmed the staff’s decision to issue the new license to Alcoa Generating. Included in the order was the requirement that Cube Yadkin file within 18 months of license issuance a Sedimentation and Flood Protection Plan (Plan) for the City water intake. FERC subsequently extended the filing deadline until Sept. 18, 2018.

The Plan

Cube Yadkin filed the Plan on the extended deadline, Sept. 18, 2018.

Among other things, Cube Yadkin: (1) committed to removing sediment, as necessary, to keep the raw water intakes clear and fully operational during all flow conditions; (2) recommended physical modifications to the pump station to raise critical equipment at or above 3.6 feet above the 100-year flood water surface elevation; (3) estimated the costs of alternatives; (4) recommended topographic and bathymetric surveys at the intakes to determine the current sediment load and acceptable sediment elevations for proper operation of the intakes, as well as annual monitoring; and (5) provided an implementation schedule, which would require the City’s cooperation, as the City’s pump station is outside the project boundary and on property not owned by Cube Yadkin.

When Cube Yadkin filed the plan, it explained that it “initiated an 8-month-long consultation process with a meeting on January 10, 2018 in Salisbury, North Carolina. Subsequent to this meeting, there were three site visits to the pump station on February 21, 2018; July 20, 2018; and August 8, 2018, and a second meeting on July 16, 2018 in Salisbury, North Carolina. Cube Yadkin distributed a draft Plan to the City [and other participants] on May 14, 2018 for a 30-day review and comment period.” Cube Yadkin said it received a written response from the City on June 14, 2018.

Cube Yadkin noted that, on Sept. 14, 2018, the City filed a letter with the Commission alleging non-compliance and requesting enforcement action. Specifically, the City “claims that Cube Yadkin has unreasonably delayed developing the required Plan and has not applied adequate resources necessary to develop a reasonable plan. Cube Yadkin vehemently disagrees with these allegations.”

Cube Yadkin asserted that its Plan meets all the requirements of the Project License and the Clean Water Act Section 401 Water Quality Certificate (Certification) issued by the North Carolina Department of Environmental Quality on Oct. 13, 2015. “Throughout this process Cube Yadkin has attempted to work collaboratively with all constituencies, and has complained with its Project license, and remains in compliance with the Project license.”

The Motion

In its May 13, 2019 Motion to Intervene, the City asserted that more than 53,000 Rowan County residents rely on its water supply system “which is adversely affected by the Yadkin Project. Sedimentation and flooding effects … jeopardize the City … water supply system. The health, safety, and welfare of the citizens who rely on the [City] water supply system will be directly affected by the outcome of the proceeding and can only be adequately represented by the City … which owns, operates, and is responsible for the water supply system.”

According to the City, operation of the Project causes the bedload sediment of the Yadkin River to stop and accumulate in several miles of the Yadkin River channel. “In fact, High Rock Dam traps almost all of the Yadkin’s bedload sediment, primarily in and above the upper reaches of High Rock Lake, where [the City’s] pump station and Salisbury-Rowan Wastewater Treatment Plant are located. The resulting sediment delta is massive.”

The City alleged that the Project’s High Rock Dam sediment delta causes: (1) increased frequency and severity of flooding at the Salisbury Water Pump station and its access road; (2) increased probability of loss of the City’s water system due to floods; (3) violation of the City’s property rights by causing flooding of the Salisbury Water Pump Station, where Cube Yadkin and its predecessor never acquired flood rights; (4) sediment deposits that block the Salisbury Water Pump Station intakes unless continuously removed; and (5) increased amount of sediment to enter and cause mechanical damage to pumps and lines of the water system.

The City said it participated in the relicensing of the project and provided substantial input regarding Cube Yadkin’s work on the Plan. “If allowed to intervene, [the City] will provide relevant facts and engineering analyses for the Commission’s consideration and will urge the Commission to require Cube Yadkin to substantially modify the Cube Yadkin Proposed Plan which, as filed, does not provide reliable engineering support for its proposed sediment removal plans or its ‘physical modifications to the facilities such as a protective dike for the pump station’ and omits entirely ‘improved access to the pump station with the road consistent with the City[’s] design or other feasible option(s) for achieving the same benefits.’ ”

The City “also will urge the Commission to craft an order that will prevent Cube Yadkin from further delaying compliance by making repeated proposals that do not comply with Article 401(a) and are not supported by sound and prudent engineering. The ‘City of Salisbury’s design’ is pump station relocation, which eliminated the access road flooding hazard. Any other design is required by Article 401(a) to have a ‘road consistent with the City[’s] design or other feasible option(s) for achieving the same benefits.’ The Cube Yadkin Proposed Plan would reduce cost by disregarding one of the essential requirements under Article 401(a) – safe road access.”

As grounds for intervention, the City argued that it “has interests and represents interests that may be adversely affected by the proceeding and the City’s participation is in the public interest as required by [Rule 214(b)(2)(ii)-(iii)]. The City[’s] intervention in this proceeding, if allowed, will focus on providing accurate information and engineering expertise and urging the Commission to require Cube Yadkin to implement a substantially revised, compliant plan and to do so without further delays that might be caused by unsound engineering, failure to account for and comply with license and certification requirements, or procrastination, and by serial submittals of inadequate plans. Prompt implementation of an adequate Plan is necessary to protect the health, safety and welfare of more than 53,000 citizens by protecting critical water supply systems that are jeopardized and burdened by the Yadkin Project. The City[’s] participation, if allowed, is and will be in the public interest. No other party will be able to adequately protect the interests of the citizens that rely on the Salisbury water supply system. Also, the City owns and operates its water supply system and has its own direct interest in protecting the system and its property from harm. Accordingly, the City of Salisbury has a substantial interest in the outcome of the application proceeding.”

The City argued that the Plan could affect its rights in a manner not contemplated by the license and, therefore, under relevant FERC precedent, its motion to intervene may be granted. According to the City, the license and certification “require a ‘road consistent with the City[’s] design or other feasible option(s) for achieving the same benefits’; but the Cube Yadkin Proposed Plan does not comply with the requirement for safe road access and, thus, adversely affects the City’s and the public’s rights in a manner not contemplated by the license. In addition, the City … is an ‘entity specifically given a consultation role’ with respect to the Cube Yadkin Proposed Plan; Section 401(a) [of the License] explicitly requires that Cube Yadkin must document that it ‘developed the plan in consultation with the City …’ and other local and state governmental entities. Accordingly, the Commission’s precedent authorizes its consideration and approval of the City[’s] motion to intervene in this post-license proceeding.”

The Answer

On May 28, 2019, Cube Yadkin filed an Answer to the City’s Motion to Intervene and Comments. “Cube Yadkin respectfully requests that the Commission dismiss the City’s Motion as premature, reject the City’s comments, and approve the Plan as filed.”

Cube Yadkin acknowledged that the City “has an interest in the Plan, as it relates to its water supply intake and pump facilities. However, the Commission has not solicited public comment or interventions in the Commission’s consideration of the Plan, and the City’s Motion is premature.”

Cube Yadkin asserted that, after FERC issues a license, “opportunities for public participation in compliance matters are limited. This is because many post-license proceedings simply involve a licensee implementing the requirements that have been established by the project license, and the Commission does not permit entities to relitigate matters that were resolved in relicensing proceedings. The Commission’s longstanding policy and practice has been to allow an opportunity for intervention with respect to only certain types of post-license compliance filings. This includes filings or Commission orders involving: (1) a material change in the plan of project development or in the terms and conditions of the license; (2) an adverse effect on the rights of a property holder in a manner not contemplated by the license; or (3) an appeal by an agency or other entity given a consultation role in the license articles requiring the post-license compliance filing.”

Cube Yadkin argued that the Plan does not involve a change in the terms and conditions of the license, or unduly affects the City’s property rights in a manner not contemplated by the license.

According to Cube Yadkin, the City “asserts that if allowed to intervene, it ‘will provide relevant facts and engineering analyses for the Commission’s consideration’ and ‘will urge the Commission to require Cube Yadkin to substantially modify’ the proposed Plan. The City has already done these things, with gusto. … As a consulted entity and interested party, the City has had its chance to participate in the development of the Plan; it need not hinge its intervention on additional ‘serial submittals.’ Indeed, the City’s Motion repeats concerns it already has raised, many of which are based on unsupported mischaracterizations of the effects of the Project on the City’s water intake system.” Cube Yadkin suggested that the City’s assertions are nothing more than impermissible collateral attacks on the license order, “which is long since final.”

As for the City’s interpretation of Article 401(a), i.e., that it requires relocation of the entire pump station, Cube Yadkin emphasized that Article 401(a) “requires consideration of physical modification to the City’s existing facilities, improved access to the pump station, or other feasible options for achieving the same benefits. It does not require or even contemplate relocation of the existing facilities.” Cube Yadkin said the Plan “fully accomplishes the objectives set forth in Article 401(a), and the City has no basis to claim that the Plan constitutes a material change in license conditions, or that the Plan has an effect on the City’s rights in a manner not contemplated by the license.”

Cube Yadkin acknowledged the City’s status as a consulted entity for development of the Plan, but explained that, in post-licensing proceedings concerning matters for which entities are given a specific consultation role and FERC establishes an intervention deadline, “consulting parties must adhere to the intervention deadline established by the Commission. In proceedings where no intervention is established prior to the Commission’s issuance of an order, a consulting entity’s motion to intervene is timely if it precedes or accompanies a request for rehearing of an order in the proceeding. The Commission has not issued public notice of the Plan. Thus, intervention is premature at this juncture. In the event the Commission issues public notice and solicits comments and interventions from third parties, the Commission will fix a deadline by which the City may timely file a motion to intervene. If the Commission opts not to issue public notice, the City will have the right to file an intervention to preserve its party status within 30 days of the Commission’s order on the Plan.”

Cube Yadkin urged the Commission to dismiss the motion as premature “because the City has not complied with Commission’s procedures governing intervention.”

The Answer to the Answer

On June 6, 2019, the City filed an Answer to Cube Yadkin’s Answer. (Although FERC’s Rule 213 generally does not permit an answer to an answer, the Commission accepted the City’s answer because it “ensures a full and complete record.”)

The City noted that “Cube Yadkin essentially concedes the City has a right to intervene in this post-licensing proceeding. However … the Cube Yadkin Answer misstates the license requirements for the Cube Yadkin Plan, confuses the record, and misstates the City’s arguments.”

According to the City, its motion to intervene is not premature. The City said it “cannot find any authority or basis for Cube Yadkin’s contention that earliness is a reason to deny (or dismiss, as Cube Yadkin phrases it) a motion to intervene. The Commission’s rule on motions suggests there is no such thing as a ‘premature’ motion, unless otherwise provided by the Commission.” A straightforward interpretation of Rule 212, concerning the filing of motions, “would allow the City to file its motion to intervene ‘at any time,’ unless some other rule or authority establishes a different time requirement. The City cannot find a rule or authority that imposes a different time requirement in this context.”

In addition, “the Commission’s precedents appear to authorize an early (pre-order) motion to intervene in a post-licensing compliance proceeding.”

Given the gravity and significance of its interest in the Plan, the City said it acted prudently by filing its motion without waiting for a possible Commission public notice that solicits comments and interventions or the Commission’s order regarding the Plan.

The City argued that the Plan should not be approved. “Its essential elements include poorly designed pump station floodproofing and a complete omission of access road floodproofing. Neither element is consistent with the City[’s] design and neither element will achieve the same benefits. The City opposes approval and implementation of the Plan since it would inevitably fail and would endanger the City’s water supply and its employees.”

The Ruling

In its July 3, 2019 Notice Granting Intervention, FERC explained that its policy and practice “is generally to issue notice of, or entertain motions to intervene in, post-licensing proceedings only when the compliance filing entails a material change in the plan of development or in the license terms and conditions, or the action proposed in the filing could adversely affect the rights of a property holder in a manner not contemplated by the license. This post-licensing proceeding is the type in which the Commission does not ordinarily provide notice or an opportunity to intervene.”

However, FERC said, it “has clarified that even in post-licensing proceedings that do not require notice and an opportunity to intervene, the Commission will entertain motions to intervene by agencies and other entities regarding matters on which they are required to be consulted. Article 401(a) of the license requires Cube Yadkin to consult with the City in developing the … Plan.”

In these types of proceedings, “where the Commission did not issue notice, a motion to intervene will be considered timely if the consulted entity files it within 30 days of the date of the order at issue. The City filed its motion to intervene before issuance of a Commission order on the … Plan. However, the Commission’s regulations do not preclude the filing of a motion to intervene prior to the issuance of an order or notice. The Commission considers timely, motions to intervene that are filed after the filing of an application or compliance filing and before a Commission notice or Commission order is issued. Therefore, the City’s motion to intervene is timely.”

Rule 214(c)(2) provides that, if an answer in opposition to a timely motion to intervene is filed within 15 days after the motion to intervene is filed, the movant becomes a party only when the motion is expressly granted. “As required by Rule 214(c)(2), the City’s motion demonstrates that the movant has or represents an interest which may be directly affected by the outcome of the proceeding. The City has an interest in potential impacts that the project may cause to the City’s water intake and pump station. Therefore, the City’s motion to intervene is granted.”

For More Information

See ¶214-31: Intervention — Party Status (Granted) for summaries of notices and orders granting timely motions to intervene.

Cube Yadkin Generation LLC, Project Nos. 2197-126 and 2197-127 “Notice Granting Intervention” (July 3, 2019) (Unreported).

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