Alcoa suit about public trust, not property rights

The lawsuit North Carolina vs. Alcoa comes down to a simple principle: Who controls the Yadkin River – Alcoa’s shareholders or the people of North Carolina? And, if the answer is the people, what public benefit is Alcoa providing in exchange for using the Yadkin River?

A major river like the Yadkin cannot be owned by an individual or a corporation. Instead it is a public resource, owned by the public. It’s a public trust.

The “public trust” was not a major issue in the latest lawsuit. Instead, it focused on deeds and titles to determine who, the state or Alcoa, owned the land beneath the Yadkin River.

But the broader legal roots beneath the state’s dispute with Alcoa – which began in 2009 – go back almost a century to the Federal Water Power Act of 1920.

Back then, Congress was faced with two conflicting objectives. It wanted to encourage private investors to build hydroelectric dams. But, at the same time, it did not want private investors or corporations to own our rivers. It wanted the rivers to remain a “public trust.”

Congress resolved these conflicting goals by issuing licenses that allowed companies to use rivers to generate hydroelectricity – but did not allow them to own a river.

One additional fact was clear: Under the terms of the Federal Power Act, the license to operate the dams was not perpetual. It expired. And when it expired, it could be awarded to someone else. And to whom it would be awarded depended on another simple principle: Who would provide the most benefit to the public in return for the use of a public resource?

Alcoa itself acknowledged that principle back in 1957 when it asked the government for a 50-year, instead of a 30-year, license. It argued it needed the additional 20 years to fully recover its investment (in the dams) then stated, “Under Section 14 of the Act, any project may be recaptured at the expiration of the license term.”

“Recaptured” meant the next license could be granted to someone else.

So Alcoa knew – and acknowledged – the terms of the license agreement. But, now, it is telling the state if it does not receive control of the river for another 50 years, that amounts to the government taking its private property.

That claim has aroused a lot of passion from people bent on protecting property rights. However, as a practical matter, what Alcoa is really arguing is that it has a perpetual license and, in doing that, it guts the public trust doctrine and goes against what is required by the Federal Power Act.

In 1957 the state supported Alcoa receiving a license for a simple reason: Alcoa promised to provide North Carolina with a thousand jobs and millions of dollars of new investment in return. That was the “public benefit.” It was what the public received in return for allowing Alcoa to use the Yadkin River.

Who controls the Yadkin River is no small question. A major river like the Yadkin can be an engine to create thousands of jobs and bring billions in economic benefits to the state over the next 50 years. Three governors have stood up to say Alcoa is running roughshod over the public trust. Our state is not engaging in a land grab; instead, our leaders are responsibly working to protect our residents.

No one should be confused by overheated rhetoric. This isn’t about taking Alcoa’s land. It’s about whether Yadkin River will be treated as a public trust.

This story was originally published October 14, 2015 at 5:13 PM with the headline "Alcoa suit about public trust, not property rights."