U.S. Supreme Court unanimously opposes Montana state decision

WASHINGTON, D.C. 2/27/12 (PennWell) -- The U.S. Supreme Court unanimously overturned a Montana state Supreme Court decision that would have required energy provider PPL Montana to pay US$41 million in back rent for the use of riverbeds under portions of three Montana rivers.

PPL Montana acquired private riparian lands for 10 facilities along the Missouri, Madison and Clark Fork rivers and pays rent to the U.S. for the use of adjoining federal lands.

In the early 2000s, the state of Montana began claiming it owned the riverbeds used by PPL Montana's projects and was entitled to rent for their use.

PPL Montana argued that when the state was admitted to the Union in 1891, the river segments now occupied were non-navigable and therefore the underlying riverbeds remained federal property.

The Montana Supreme Court ruled in favor of the state, saying that it declined the application of U.S. Supreme Court precedents requiring navigability be assessed by segments rather than by the river as a whole.

This approach was rejected the U.S. Supreme Court, which used PPL Montana v. Montana (No. 10-218) to establish that state title of riverbeds outside the original 13 states must be determined by the practical navigability of particular river segments at the time of the state's admission to the Union.

Justice Kennedy's opinion explains that the riverbed title principles are a corollary of the "equal footing" doctrine, which assures newly-admitted states enjoy the same sovereign rights to riverbeds as the original states.

It also distinguishes the navigability test used for state title determinations from the test used to define the scope of federal regulatory authority under the Commerce Clause, and reaffirms prior precedents that navigability be determined segment-by-segment as of the time of admission to the Union.

"The highest court in the land has affirmed PPL Montana's long-held position that non-navigable stretches of riverbed lands are not owned by the state," says Robert J. Grey, senior vice president, general counsel and secretary of PPL Corporation. "Any contrary decision could have serious future implications for other Montana streambed users including ranchers, irrigators, cities, dock owners and recreational users."

The case has been remanded to the Montana courts for further proceedings in accordance with the U.S. Supreme Court's decision.

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