Duke Energy enters Carolina water war

Catawba River Water Rights Dispute pits Duke Energy against S.C. DHEC over a Section 401 water quality certificate, FERC license renewal, hydroelectric dams, interstate flows, and Supreme Court litigation over drought models.

Duke Energy Corp. and South Carolina environmental regulators will battle in court over a permit that is holding up the energy giant’s federal license for control of the Catawba River.

Last summer, S.C. officials rejected a Section 401 waterquality certificate, and the board will hear a challenge related to Duke’s dams permit, which Duke is required to obtain under the Federal Clean Water Act. Without it, Duke can’t complete its renewal of a 50year license from the Federal Energy Regulatory Commission for its 11 reservoirs and 13 hydroelectric facilities along the Catawba. Five of those dams are in South Carolina.

A trial is scheduled to start May 17 in the S.C. Administrative Law Court, after a dispute over a permit was sent to trial in a related case. The case has been assigned to Chief Administrative Law Judge Ralph K. Anderson III.

However, that case may be delayed because of the volume of work under way during the discovery phase.

S.C. Attorney General Henry McMaster has lobbied against the permit. He argues an approval would damage South Carolina’s case against North Carolina that’s before the U.S. Supreme Court.

The states are fighting over water rights to the river. South Carolina says its neighbor to the north is taking more than its fair share.

And Duke has been caught in the middle. The FERC license gives the energy company control over how the Catawba River’s water flows through its dams and is stored in its lakes, and Duke has been at odds over federal river proposals in related proceedings.

Not enough of that water will make its way to South Carolina, S.C. officials argue, and that will worsen water quality there. Duke says the terms of the new license actually increase the amount of water that flows south.

Duke has fought back with an appeal, arguing the state’s Department of Health and Environmental Control took too long to protest the waterquality certificate, and an EPA lawsuit against Duke also faltered in court. Thus, DHEC’s rejection should be waived, the company contends.

An attempt at mediation in November failed.

If Duke loses in the Administrative Law Court, it can still appeal to the S.C. Court of Appeals, and Duke has also pushed a Save-A-Watt decision in separate regulatory proceedings.

It’s not uncommon for a DHEC decision on an environmental permit to end up before a judge, and in another high-profile matter South Carolina refused to block a nuclear plant amid permitting debates. “It would be safe to say we have numerous cases appealed during the course of a year,” DHEC spokesman Thom Berry says.

The DHEC fight is one of three active battles in the ongoing water war between South Carolina and North Carolina.

Duke also has asked FERC to bypass the South Carolina court system and issue its permit, as the agency weighs a decision in a separate water battle involving Mooresville. And McMaster has filed objections with FERC, claiming Duke uses flawed scientific models to predict droughts.

In the meantime, Duke has been allowed to participate as a defendant in the Supreme Court case.

South Carolina’s complaint, filed in October 2007, is expected to sort out how the river’s limited resources should be divvied up among competing interests.

In January, the Supreme Court ruled Duke and the Catawba River Supply Project, a bistate utility, could be part of the case.

In the majority opinion, Justice Samuel Alito noted Duke’s license from FERC “regulates the very subject matter in dispute: the river’s minimum flow into South Carolina.”

However, the justices ruled the city of Charlotte could not intervene. Instead, North Carolina will represent the city’s interests.

Attorneys for Charlotte now look to participate via a different avenue that could grant the city continued access to all documents and filings, plus all meetings, hearings and depositions. The city has submitted a request to San Francisco attorney Kristin Linsley Myles, the special master assigned to over see South Carolina v. North Carolina.

“Even as the U.S. Supreme Court ruled that Charlotte would not be allowed to intervene in the case, the court’s opinion suggested that amicus status, commonly referred to as a ‘friend of the court,’ was the appropriate role for the city,” Charlotte City Attorney Mac McCarley says. “We believe that we could be helpful to the special master as she works through the massive amounts of wateruse data in this case and the issues that relate to Charlotte’s use of water from the Catawba.”

The case threatens the city’s unfettered access to an ample water supply, which would then directly affect the Charlotte’s ability to expand. City Council approved a budget of $3 million last year for legal assistance from Washington law firm Hogan & Hartson.

South Carolina filed a partial objection to Charlotte’s request, stating it supported the city’s ability to monitor the case and attend public meetings as a spectator. But participation beyond that would “unnecessarily tax the resources” of the other parties in the case, according to the state’s March 12 filing. North Carolina submitted a filing March 29 in support of Charlotte’s efforts.

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