The U.S. Court of Appeals for the Fourth Circuit has decided the case of North Carolina v. Alcoa Power Generating, Inc. The Court of Appeals affirmed, in a 2 to 1 ruling, the decision of the U.S. District Court for the Eastern District of North Carolina that a relevant segment of North Carolina’s Yadkin River—on which Alcoa Power Generating, Inc. (Alcoa) has constructed and operated for many years hydroelectric dams to supply power to its neighboring aluminum smelter—was not “navigable” at the time of North Carolina’ statehood (1789). Consequently, the State could not claim title to this segment as an aspect of state sovereignty.

Despite the fact that Alcoa appeared to have acquired title to this riverbed land in 1915, and that North Carolina, in its submissions to the Federal Power Commission, confirmed that Alcoa owned the land on which these facilities were constructed and operated, the closing of the smelter and the dismissal of many of its employees, caused the State to withdraw its permission to operate these facilities on this land. The State argued that it has owned this section of the riverbed since 1789, and Alcoa operations were always subject to its permission.

North Carolina filed a declaratory judgment action in state court, seeking a judgment that the riverbed was “the sole and exclusive property of the State.” Alcoa then removed the lawsuit to federal court, contending that the issue of navigability for title was a federal question warranting the jurisdiction of the federal courts. The District Court agreed, and granted Alcoa’s motion for summary judgment because the State had not demonstrated that the contested segment of the Yadkin River was navigable at the time of statehood; if it had done so, then the State would, in law and in fact, have owned this land. The District Court applied the Supreme Court’s standard for determining navigability in such cases set forth in PPL Montana, LLC v. Montana, and concluded that Alcoa held title to 99% of the contested riverbed under North Carolina’s Marketable Title Act, and 1 % through adverse possession.

On appeal, the State argued that the District Court lacked jurisdiction to decide this case because the PPL Montana “navigability principle” only applied to the 37 “later-admitted” states, and not to the original 13 states, such as North Carolina. The Court of Appeals disagreed, holding that the District Court had jurisdiction, and it was correct in rejecting the State’s motion to return the case to the state courts.

Based on the historical evidence presented at trial, the District Court was also correct to hold that this segment of the Yadkin River was not navigable in 1789, and accordingly, the State could not claim title to this segment “as an aspect of state sovereignty.”

Circuit Judge King filed a long dissent, concluding that North Carolina “has owned the Yadkin River free and clear since 1776.”