PPL Montana, LLC v. Montana: Supreme Court Decision Leaves Montana Up a Creek

A recent decision by the U.S. Supreme Court has thwarted efforts by the state of Montana to gain title to certain riverbeds. To understand the decision, one has to know a little legal history. In fact, the opinion cites a number of historical sources, including the journals of famous explorers Meriwether Lewis and William Clark.

Under what is known as the equal footing doctrine, state governments were awarded title to lands beneath “navigable” waters when they were granted statehood. Therefore, the issue in the case was whether the riverbeds in question were navigable when Montana became a state way back in 1889.

PPL Montana, LLC (PPL) owns and operates ten hydroelectric facilities on riverbeds underlying segments of rivers in the state of Montana. The Federal Energy Regulatory Commission licenses the projects, and PPL’s facilities have existed in the same location for several decades.

Until recently, Montana, though aware of the projects’ existence, sought no rent for use of the riverbeds. Instead, the understanding of PPL and the United States is that PPL has paid rents to the United States.

In 2003, parents of Montana schoolchildren filed a lawsuit, claiming that PPL’s facilities were on state-owned riverbeds and part of Montana’s school trust lands. The State joined the suit and, for the first time, attempted to seek rents from PPL for its use of the riverbeds.

The trial court granted Montana summary judgment on the issue of navigability for the purposes of determining riverbed title. It subsequently ordered PPL to pay Montana $41 million in rent for its use of the riverbed between 2000 and 2007. The Montana Supreme Court affirmed.

Under the equal footing doctrine, a state holds title to the beds of waters navigable at statehood, subject only to the United States’ power “to control such waters for purposes of navigation in interstate and foreign commerce.” Meanwhile, the United States retains title to land beneath waters not considered navigable at the time.

Under the doctrine, rivers must be “navigable in fact.” This means they can be used in their ordinary condition as highways for commerce. The decision also relies on the term “portage,” which may be unfamiliar in modern times. It refers to the act of carrying watercraft or cargo over land to avoid river obstructions. The definition is important because the state of Montana argued that the need to portage did not interfere with the river’s navigability.

The Supreme Court found the Montana court had misinterpreted the rules of navigability for title under the equal-footing doctrine. It specifically found that The Montana Supreme Court erred in its treatment of the question of river segments and portage.

First, the Supreme Court held that the court erred in declaring that short interruptions of navigability were insufficient as a matter of law to find nonnavigability. According to the Supreme Court, since traffic was forced to go around the river stretches by portage, those sections were sufficiently obstructed to prevent navigability.

The High Court further found fault with the way the Montana court determined the issue of navigability. As noted by the Supreme Court, the court dismissed the well-settled approach that courts must “consider the river on a segment-by-segment basis to assess whether the segment of the river, under which the riverbed in dispute lies, is navigable or not.”

Finally, the Supreme Court held that the state court erred in relying on evidence of present-day, primarily recreational river use in determining navigability rather than the river’s usefulness for trade and travel at the time of statehood.