The issue on appeal is whether the superior court erred in affirming the decision of the ALJ dismissing petitioner’s petition for lack of jurisdiction. The ALJ concluded that no agency action as contemplated by the “contested case” requirement of an “administrative proceeding” as set forth in N.C. Gen. Stat. § 150B-2(2) (1987) had taken place on the part of respondent. Petitioner contends that respondent’s rejection of its study and of its request for lower streamflow requirements constituted agency action giving rise to a dispute which ultimately became a “contested case” over which the OAH has jurisdiction. We agree.
N.C. Gen. Stat. § 150B-22 (1987) of the North Carolina Administrative Procedure Act (APA) in pertinent part provides:
It is the policy of this State that any dispute between an agency and another person that involves the person’s rights, duties, or privileges, including licensing . . ., should be settled through informal procedures. . . . [however] Notwithstanding any other provision of law, if the agency and the other person do not agree to a resolution of the dispute through informal procedures, either the agency or the person may commence an administrative proceeding to determine the person’s rights, duties, or privileges, at which time the dispute becomes a “contested case.”
G.S. § 150B-22.
*174After being issued a license exemption from FERC for . the Craggy Dam Project in 1984, petitioner arranged for a site specific study of streamflow requirements for the project. The study was submitted to respondent and the USFWS in compliance with the condition contained in the exemption that a site specific study would be accepted as an alternate determination of minimum streamflow if it met with the approval of respondent and USFWS. In a letter to petitioner, respondent, in cooperation with USFWS, rejected the site specific study and imposed streamflow requirements that substantially differed from those established by the site specific study. After its site specific streamflow study was rejected, petitioner filed a verified petition for a contested case hearing with the OAH in July 1988.
In the present case there is clearly a dispute between respondent agency and petitioner concerning the minimum streamflow requirement for petitioner’s hydroelectric power project. The dispute involves a determination of petitioner’s “rights, duties, or privileges,” because petitioner’s option pursuant to the clause in its license exemption to use an alternate streamflow in the operation of its power plant was foreclosed by respondent’s refusal to approve the alternate flows. There was no resolution of the dispute through informal procedures. Consequently, petitioner properly initiated an administrative proceeding to determine its rights, duties, or privileges in light of respondent’s rejection of its site specific study.
Respondent attempts to argue that its action in this case could not constitute agency action because the state is preempted from acting in this area by the federal government. While it is true that FERC, a federal agency, issued the license exemption, to the extent that respondent has the opportunity to impose project specific conditions on petitioner, federal law has not preempted state action. This record shows that it is state action —not federal — which has imposed upon petitioner the streamflow requirements from which it seeks relief.
We hold that in the present context, respondent’s rejection of petitioner’s site specific study constituted agency action giving rise to a “dispute between an agency and another person” (petitioner is a “person” pursuant to N.C. Gen. Stat. § 150B-2(7) (1987)). When petitioner filed its verified petition for a contested case, the dispute effectively became a contested case over which the OAH has jurisdiction. We therefore reverse the order of the superior *175court affirming the ALJ’s dismissal of petitioner’s petition and remand to the Superior Court of Buncombe County for entry of judgment remanding this case for further appropriate proceedings consistent with this opinion.
Reversed and remanded.
Judges Parker and Duncan concur.