U.S. SC rules for power company over Montana riverbeds

By Michael P. Tremoglie | Feb 24, 2012

WASHINGTON (Legal Newsline) -- The United States Supreme Court (USSC) has reversed Montana's Supreme Court for ruling that the state could charge for use of riverbeds.

The Court on Feb. 22 reversed the Montana ruling that the state can charge for the use of three of its riverbeds. The court ruled 9-0 that the state court misunderstood that the state owned the riverbeds and may charge PPL Montana), a power company, for their use in hydroelectric projects.

The State of Montana claimed ownership of the riverbeds and billed PPL Montana for its use of the land. A lower court granted summary judgment to the state. The Montana Supreme Court affirmed the first court and said PPL Montano owed the State of Montana $40,956,180.

The litigation stemmed from an action filed in 2003. Some parents of Montana school students claimed that PPL's plants were on riverbeds that owned buy the state and part of Montana's school trust lands. The state of Montana joined the suit and, for the first time, sought rents from PPL for its use of the riverbeds. The case was dismissed.

But PPL and other power com­panies filed a preemptive lawsuit claiming that Montana could not collect compensation for PPL's riverbed use. Montana coun­tersued claiming it owns the riverbeds and can charge rent for their use.

The USSC reversed the Montana Supreme Court because, as Justice Kennedy wrote in the opinion, "(PPL), owns and operates hydroelectric facilities in Montana. Ten of its facilities are located on riverbeds underlying segments of the Missouri, Madison, and Clark Fork Riv­ers. Five hydroelectric dams on the Upper Missouri River are along the Great Falls reach, including on the three tallest waterfalls; and PPL's two other dams on that river are in canyons on the Stubbs Fer­ry stretch. These, together with two dams located in steep canyons on the Madison River, are called the Missouri-Madison project. The Thompson Falls project is a facility on the Clark Fork River. Both projects are licensed by the Federal Energy Regulatory Commission. PPL's facilities have existed for many decades, some for over a centu­ry. Until recently, Montana, though aware of the projects' existence, sought no rent for use of the riverbeds. Montana filed its claim for riverbed rent over a century after the first of the dams was built upon the riverbeds. Montana had not sought compensation before then, despite its full awareness of PPL's hydroelectric projects and despite the State's own participation in the projects' federal licensing ...The Montana Supreme Court's ruling that Montana owns and may charge for use of riverbeds across the State was based upon an infirm legal understanding of this Court's rules of navigability for title ..."

The case was remanded for further proceedings.

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