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US court rejects state's claim to riverbed where dams built

Emery p. Dalesio, AP Business Writer

RALEIGH, N.C. (AP) -- A federal appeals court has rejected North Carolina's claim that it owns the bottom of a major river where hydroelectric dams have been churning for a century.

The 4th U.S. Circuit Court of Appeals split 2-1 on Monday in dismissing the state's claim that it has a say in the operations and ownership of four Yadkin River dams built to power a now-defunct Alcoa aluminum smelter.

State attorneys are reviewing the court's decision and will decide later whether to appeal the case to the U.S. Supreme Court, Laura Brewer, a spokeswoman for state Attorney General Josh Stein, said in an email Tuesday.

The smelting plant once employed 1,000 workers, but closed a decade ago. Since then, Alcoa has made more than $210 million selling electricity to commercial customers. Alcoa last year sold the dams for an undisclosed price to a private-equity-backed entity called Cube Yadkin Generation LLC.

Former Republican Gov. Pat McCrory launched North Carolina's lawsuit in 2013 after he and Democratic predecessor Beverly Perdue for years fought Alcoa's efforts to renew its federal operating license for the dams. They argued that with the jobs gone and the smelter closed, North Carolina no longer derived benefit from the dams using the river. McCrory's lawsuit said the state was exerting the public's ownership of the riverbed.

But the Richmond, Virginia-based appeals court's majority upheld a lower court ruling that Alcoa had proved it acquired clear title to 99 percent of the disputed riverbed, and that North Carolina was too late to contest the rest.

After reviewing Revolutionary War troop movements and 18th century records created by Moravian settlers, U.S. District Judge Terrence Boyle decided in 2015 that the 45-mile (70-km) segment of the Yadkin where the dams were built couldn't be navigated as an avenue of commerce when North Carolina became a state in 1789. Under federal law, that defeated North Carolina's argument that it had owned the riverbed since obtaining statehood, Boyle ruled.

Two members of the circuit court agreed with Boyle; dissenting Judge Robert B. King said he got it wrong.

"North Carolina's obligation to hold the Yadkin River and its riverbeds in trust for the people of the Old North State — pursuant to the public trust doctrine — is an aspect of the State's sovereignty as one of the Thirteen Original States," King wrote. "The Yadkin River and its riverbeds have not, on this record, ever been conveyed to a private owner" by express action of the state's General Assembly.

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This story has been edited to clarify that McCrory is a former governor.

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