RALEIGH, N.C. (AP) — Days before the state Administration Department sued to challenge Alcoa Inc.'s property rights for four hydropower dams built on the Yadkin River, a North Carolina environmental official recommended that the company win a crucial state approval needed for a new 50-year license to operate them.

The state Department of Environment and Natural Resources on Monday released a report dated a week earlier in which one of the agency's officials recommended that the state certify that water standards wouldn't be violated if Alcoa continued to operate the dams.

With that recommendation, Alcoa appeared to be on track for its state certification had the lawsuit not been filed. DENR spokesman Drew Elliot said whatever the initial recommendation, a decision on whether to issue a water quality certification would be weighed by higher agency officials.

The certification is needed before the Federal Energy Regulatory Commission will issue a new multiyear dam operating license. Former Gov. Beverly Perdue fought Alcoa's effort to secure a new federal license. Gov. Pat McCrory said last week that the river's water should be used to supply the state's people and to create jobs rather than power the company's dams.

Alcoa executives were aware of the report, "but we don't expect to find anything that we didn't anticipate," Alcoa relicensing manager E. Ray Barham said in an email.

The July 29 DENR report by hearing officer Jim Gregson said approval should include conditions such as requiring Alcoa to post a guarantee in case it's unable to follow through on improvements.

The state environmental agency said when it issued a previous water quality certification in 2009 that Alcoa should post a bond worth $240 million, which the company fought as excessive. State officials revoked the certification in 2010, citing internal company e-mails that suggested officials withheld information that downstream waters may not meet state standards.

Last week's report does not recommend how large a bond Alcoa should post. It suggested only that Alcoa could post a surety bond worth $47.6 million for upgrades and monitoring over the next 20 years.

Alcoa's route to a state water quality certification was upended Friday when the Administration Department sued the company in the long-running fight over who will control the water and electric power that comes from the state's second-largest river system.

Ownership of riverbeds beneath commercially navigable waterways has historically gone to state governments upon statehood. Non-navigable riverbed ownership stays with the federal government.

State officials said in the lawsuit that Alcoa has no ownership rights to the bed of the Yadkin River over which four dams were built beginning in 1917 to power a Stanly County aluminum smelter that once employed nearly 1,000. The plant closed in 2007 and the company has since sold the electricity to commercial customers.

The lawsuit asks a state court judge in Wake County to rule that the state retains ownership rights to the submerged land, so North Carolina now has rights to a stake in the hydropower dams. Citing the new dispute over riverbed property rights, DENR then rejected Alcoa's request for the water quality certification the company needs for a new federal operating license.

Alcoa has supporters within DENR who sought to push the agency to sign off on state approval, but once another state agency filed its lawsuit "obviously they had to reconsider their options," Yadkin Riverkeeper Dean Naujoks said.