By Russell Prugh, Associate, Marten Law PLLC
In this Emerging Issues Analysis, Russell Prugh of Marten Law PLLC discusses the U.S. Supreme Court's reversal of a decision by the Montana Supreme Court that required a hydroelectric dam operator to pay the State of Montana back rent for the use of state-owned riverbeds. The U.S. Supreme Court held that the state high court incorrectly applied the "navigability-for-title" or "navigability-in-fact" test.
On February 22nd, a unanimous Supreme Court reversed the Montana Supreme Court's ruling that required a hydroelectric dam operator to pay the State of Montana nearly $40 million in back rent for the use of state-owned riverbeds. In PPL Montana, LLC v. State of Montana (PPL Montana), the Court decided that the Montana Supreme Court incorrectly applied the so-called "navigability-for-title" or "navigability-in-fact" test when it determined that the State obtained title to the riverbeds beneath petitioner PPL Montana, LLC's (PPL) dams. The navigability-for-title test requires courts to determine whether a river, or section of a river, was "navigable" at the time of statehood. This test differs from the navigability concept in other areas of federal law, for instance the statutory term "navigable waters" in the Clean Water Act, which broadly includes "waters of the United States" as well as those waters that are navigable-in-fact. In the decision below, the Montana Supreme Court concluded that although short segments of several rivers might not actually be navigable, the State held title to those stretches because the majority of the rivers at issue were navigable at the time of statehood. PPL sought Supreme Court review, categorizing the decision an "enormous uncompensated land grab by state court judges." The high Court's decision is welcome news to power companies and private land owners throughout the West as it will most likely prevent other states from following Montana's lead in seeking to assert title over additional riverbeds.
PPL Montana focuses on 10 federally-licensed hydroelectric dams on the Missouri, Madison, and Clark Fork rivers in the State of Montana. In 2003, parents of Montana schoolchildren sued the dams' owner, PPL, in federal court, arguing that PPL owed the state compensation because the riverbeds underlying its dams were part of Montana's "school trust lands." The State of Montana joined the suit in 2004, asserting that PPL also owed the State compensation pursuant to Montana's Hydroelectric Resources Act (HRA). The federal district court dismissed the action for lack of diversity, and PPL filed suit in state court seeking a declaration that the Federal Power Act (FPA) preempted the State's HRA claims. The State counterclaimed, arguing that it obtained title to the relevant streambeds at the time of statehood pursuant to the "equal footing doctrine."
Russell Prugh is an associate at Marten Law PLLC's Seattle office. Russell's practice focuses on environmental and natural resources litigation and environmental permitting for facilities and projects in the Pacific Northwest and Alaska. Russell has particular experience with stormwater compliance issues and in litigation arising under the Clean Water Act, CERCLA, MTCA, and other federal and state environmental laws. Russell earned his Juris Doctor, summa cum laude, from Vermont Law School, where he served as a National Moot Court Competition team member and as a managing editor of the Vermont Law Review. He received his Bachelor of Arts in Natural Resources from the University of the South (Sewanee). Prior to joining Marten Law Group, Russell served as a legal intern with the RCRA Enforcement Division of the Environmental Protection Agency in Washington, D.C., and a full-time intern to the Honorable John A. Dooley, Associate Justice of the Vermont Supreme Court. Following law school, Russell served as law clerk to the Honorable Patrick J. McKay, Superior Court Judge, State of Alaska.
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