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PPL Montana, LLC v. Montana

February 22, 2012


ON WRIT OF CERTIORARI TO THE SUPREME COURT OF MONTANA Court Below: 2010 MT 64, 355 Mont. 402, 229 P. 3d 421



Argued December 7, 2011

Petitioner PPL Montana, LLC (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. 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 federal suit, claiming that PPL's facilities were on riverbeds that were state owned and part of Montana's school trust lands. The State joined the suit and, for the first time, sought rents from PPL for its use of the riverbeds. That case was dismissed, and PPL and other power companies filed a state-court suit, claiming that Montana was barred from seeking compensation for PPL's riverbed use. Montana counterclaimed, contending that under the equal-footing doctrine it owns the riverbeds and can charge rent for their use. The trial court granted Montana summary judgment as to navigability for purposes of determining riverbed title and ordered PPL to pay Montana $41 million in rent for riverbed use between 2000 and 2007. The Montana Supreme Court affirmed. Adopting a liberal construction of the navigability test, it discounted this Court's approach of considering the navigability of particular river segments for purposes of determining whether a State acquired title to the riverbeds underlying those segments at the time of statehood. Instead, the Montana court declared the river stretches in question to be short interruptions of navigability that were insufficient as a matter of law to find nonnavigability, since traffic had circumvented those stretches by portage. Based on evidence of present-day, recreational use of the Madison River, the court found that river navigable as a matter of law at the time of statehood.

Held: The Montana Supreme Court's ruling that Montana owns and may charge for use of the riverbeds at issue was based on an infirm legal understanding of this Court's rules of navigability for title under the equal-footing doctrine. Pp. 10--26.

(a) The rule that the States, in their capacity as sovereigns, hold "title in the soil of rivers really navigable," Shively v. Bowlby, 152 U. S. 1, 31, has federal constitutional significance under the equal-footing doctrine. Pursuant to that doctrine, upon its date of state-hood, a State gains title within its borders to the beds of waters then navigable. It may allocate and govern those lands according to state law subject only to the United States' power "to control such waters for purposes of navigation in interstate and foreign commerce." United States v. Oregon, 295 U. S. 1, 14. The United States retains title vested in it before statehood to land beneath waters not then navigable. To be navigable for purposes of title under the equal-footing doctrine, rivers must be "navigable in fact," meaning "they are used, or are susceptible of being used, . . . as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water." The Daniel Ball, 10 Wall. 557, 563. This formulation has been used to determine questions of waterbed title under the equal-footing doctrine. See United States v. Utah, 283 U. S. 64, 76. Pp. 10--14.

(b) The Montana Supreme Court erred in its treatment of the question of river segments and portage. To determine riverbed title under the equal-footing doctrine, this Court considers 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. See, e.g., Utah, supra, at 77. The State Supreme Court erred in discounting this well-settled approach. A key justification for sovereign ownership of navigable riverbeds is that a contrary rule would allow private riverbed owners to erect improvements on the riverbeds that could interfere with the public's right to use the waters as a highway for commerce. Because commerce could not have occurred on segments nonnavigable at the time of statehood, there is no reason to deem those segments owned by the State under the equal-footing doctrine. Practical considerations also support segmentation. Physical conditions affecting navigability vary over the length of a river and provide a means to determine appropriate start points and end points for disputed segments. A segment approach is also consistent with the manner in which private parties seek to establish riverbed title. Montana cannot suggest that segmentation is inadministrable when the state courts managed to apportion the underlying riverbeds for purposes of determining their value and PPL's corresponding rents. The State Supreme Court's view that the segment-by-segment approach does not apply to short interruptions of navigability is not supported by this Court's Utah decision. Even if the law might find some nonnavigable segments so minimal that they merit treatment as part of a longer, navigable reach, it is doubtful that the segments in this case would meet that standard. Applying its "short interruptions" approach, the State Supreme Court found the Great Falls reach navigable because it could be managed by way of land route portage, as done by Lewis and Clark. But a portage of even one day would demonstrate the need to bypass a nonnavigable river segment. Thus, the State Supreme Court was wrong to conclude, with respect to the Great Falls reach and other disputed stretches, that portages were insufficient to defeat a navigability finding. In most cases, they are, because they require transportation over land rather than over the water. This is the case at least as to the Great Falls reach. In reaching a contrary conclusion, the State Supreme Court misapplied The Montello, 20 Wall. 430. There, portage was considered in determining whether a river was part of a channel of interstate commerce for federal regulatory purposes. The Montello does not control the outcome where the quite different concerns of the riverbed title context apply. Portages may defeat navigability for title purposes, and do so with respect to the Great Falls reach. Montana does not dispute that overland portage was necessary to traverse that reach, and the trial court noted the waterfalls had never been navigated. The Great Falls reach, at least from the head of the first waterfall to the foot of the last, is not navigable for purposes of riverbed title under the equal-footing doctrine. There is also a significant likelihood that some of the other river stretches in dispute fail this federal navigability test. The ultimate decision as to these other disputed river stretches is to be determined, in the first instance, by the Montana courts on remand, which should assess the relevant evidence in light of the principles discussed here. Pp. 14--21.

(c) The Montana Supreme Court further erred as a matter of law in relying on evidence of present-day, primarily recreational use of the Madison River. Navigability must be assessed as of the time of statehood, and it concerns a river's usefulness for " 'trade and travel.' " Utah, 283 U. S., at 75--76. River segments are navigable if they " '[were]' " used and if they " '[were] susceptible of being used' " as highways of commerce at the time of statehood. Id., at 76. Evidence of recreational use and poststatehood evidence may bear on susceptibility of commercial use at the time of statehood. See id., at 82--83. In order for present-day use to have a bearing on navigability at statehood, (1) the watercraft must be meaningfully similar to those in customary use for trade and travel at the time of statehood, and (2) the river's poststatehood condition may not be materially different from its physical condition at statehood. The State Supreme Court offered no indication that it made these necessary findings. Pp. 21--24.

(d) Because this analysis is sufficient to require reversal here, the Court declines to decide whether the State Supreme Court also erred as to the burden of proof regarding navigability. P. 24.

(e) Montana's suggestion that denying the State title to the disputed riverbeds will undermine the public trust doctrine-which concerns public access to the waters above those beds for navigation, fishing, and other recreational uses-underscores its misapprehension of the equal-footing and public trust doctrines. Unlike the equal-footing doctrine, which is the constitutional foundation for the navigability rule of riverbed title, the scope of the public trust over waters within the State's borders is a matter of state law, subject to federal regulatory power. Pp. 24--25.

(f) This Court does not reach the question whether, by virtue of Montana's sovereignty, neither laches nor estoppel could apply to bar the State's claim. Still, the reliance by PPL and its predecessors in title on the State's long failure to assert title to the riverbeds is some evidence supporting the conclusion that the river segments over those beds were nonnavigable for purposes of the equal-footing doctrine. Pp. 25--26.

2010 MT 64, 355 Mont. 402, 229 P. 3d 421, reversed and remanded.

KENNEDY, J., delivered the opinion for a unanimous Court.

The opinion of the court was delivered by: Justice Kennedy

565 U. S. ____ (2012)

Opinion of the Court

This case concerns three rivers which flow through Montana and then beyond its borders. The question is whether discrete, identifiable segments of these rivers in Montana were nonnavigable, as federal law defines that concept for purposes of determining whether the State acquired title to the riverbeds underlying those segments, when the State entered the Union in 1889. Montana contends that the rivers must be found navigable at the disputed locations. From this premise, the State asserts that in 1889 it gained title to the disputed riverbeds under the constitutional equal-footing doctrine. Based on its title claims, Montana sought compensation from PPL Montana, LLC, a power company, for its use of the riverbeds for hydroelectric projects. The Montana courts granted summary judgment on title to Montana, awarding it $41 million in rent for the riverbeds for the period from 2000 to 2007 alone. That judgment must be reversed.


The three rivers in question are the Missouri River, the Madison River, and the Clark Fork River. The Missouri and the Madison are on the eastern side of the Continen­ tal Divide. The Madison flows into the Missouri, which then continues at length to its junction with the Mississippi River. The Clark Fork River is on the western side of the Continental Divide. Its waters join the Columbia River system that flows into the Pacific Ocean. Each river shall be described in somewhat more detail.


The Missouri River originates in Montana and traverses seven States before a point just north of St. Louis where it joins the Mississippi. 19 Encyclopedia Americana 270 (int'l ed. 2006). If considered with the continuous path formed by certain streams that provide the Missouri River's headwaters, the Missouri is over 2,500 miles long, the longest river in the United States. Ibid. The Missouri River's basin (the land area drained by the river) is the second largest in the Nation, surpassed only by the Mississippi River basin of which it is a part. Rivers of North America 427 (A. Benke & C. Cushing eds. 2005) (hereinafter Rivers of North America). As a historical matter, the river shifted and flooded often, and contained many sandbars, islands, and unstable banks. Id., at 432--433. The river was once described as one of the most "variable beings in creation," as "inconstant [as] the action of the jury," Sioux City Register (Mar. 28, 1868); and its high quantity of downstream sediment flow spawned its nickname, the "Big Muddy," Rivers of North America 433.

The upstream part of the Missouri River in Montana, known as the Upper Missouri River, is better characterized as rocky rather than muddy. While one usually thinks of the Missouri River as flowing generally south, as indeed it does beginning in North Dakota, the Upper Missouri in Montana flows north from its principal headwaters at Three Forks, which is located about 4,000 feet above sea level in the Rocky Mountain area of southwestern Montana. It descends through scenic mountain ter­ rain including the deep gorge at the Gates of the Mountains; turns eastward through the Great Falls reach, cascading over a roughly 10-mile stretch of cataracts and rapids over which the river drops more than 400 feet; and courses swiftly to Fort Benton, a 19th-century fur trading post, before progressing farther east into North Dakota and on to the Great Plains. 19 Encyclopedia Americana, supra, at 270; 8 New Encyclopaedia Britannica 190 (15th ed. 2007) (hereinafter Encyclopaedia Britannica); 2 Columbia Gazetteer of the World 2452 (2d ed. 2008) (hereinafter Columbia Gazetteer); F. Warner, Montana and the Northwest Territory 75 (1879). In 1891, just after Montana became a State, the Upper Missouri River above Fort Benton was "seriously obstructed by numerous rapids and rocks," and the 168-mile portion flowing eastward "[f]rom Fort Benton to Carroll, Mont., [was] called the rocky river." Annual Report of the Chief of Engineers, U. S. Army (1891), in 2 H. R. Exec. Doc. No. 1, 52d Cong., 1st Sess., pt. 2, pp. 275--276 (1891) (hereinafter H. R. Exec. Doc.).

The Great Falls exemplify the rocky, rapid character of the Upper Missouri. They consist of five cascade-like waterfalls located over a stretch of the Upper Missouri leading downstream from the city of Great Falls in midwestern Montana. The waterfall farthest downstream, and the one first encountered by Meriwether Lewis and William Clark when they led their remarkable expedition through the American West in 1805, is the eponymous "Great Falls," the tallest of the five falls at 87 feet. W. Clark, Dear Brother: Letters of William Clark to Jonathan Clark 109, n. 5 (J. Holmberg ed. 2002) (hereinafter Dear Brother). Lewis recorded observations of this "sublimely grand specticle":

"[T]he whole body of water passes with incredible swiftness. . . . over a precipice of at least eighty feet . . . . [T]he irregular and somewhat projecting rocks below receives the water . . . and brakes it into a perfect white foam which assumes a thousand forms in a moment sometimes flying up in jets . . . [that] are scarcely formed before large roling bodies of the same beaten and foaming water is thrown over and conceals them. . . . [T]he [rainbow] reflection of the sun on the sprey or mist . . . adds not a little to the beauty of this majestically grand senery." The Lewis and Clark Journals: An American Epic of Discovery 129 (G. Moulton ed. 2003) (hereinafter Lewis and Clark Journals); The Journals of Lewis and Clark 136--138 (B. DeVoto ed. 1981).

If one proceeds alongside the river upstream from Great Falls, as Lewis did in scouting the river for the expedition, the other four falls in order are "Crooked Falls" (19 feet high); "Rainbow Falls" (48 feet), which Lewis called "one of the most bea[u]tifull objects in nature"; "Colter Falls" (7 feet), and "Black Eagle Falls" (26 feet). See Lewis and Clark Journals 131--132; Dear Brother 109, n. 5; P. Cut-right, Lewis & Clark: Pioneering Naturalists 154--156 (2003). Despite the falls' beauty, Lewis could see that their steep cliffs and swift waters would impede progress on the river, which had been the expedition's upstream course for so many months. The party proceeded over a more circuitous land route by means of portage, circumventing the Great Falls and their surrounding reach of river before returning to travel upon the river about a month later. See Lewis and Clark Journals 126--152.

The Upper Missouri River, both around and further upstream of the Great Falls, shares the precipitous and fast-moving character of the falls themselves. As it moves downstream over the Great Falls reach, a 17-mile stretch that begins somewhat above the head of Black Eagle Falls, the river quickly descends about 520 feet in elevation, see Montana Power Co. v. Federal Power Comm'n, 185 F. 2d 491 (CADC 1950); 2010 MT 64, ¶¶29--30, 108--109, 355 Mont. 402, 416, 442, 229 P. 3d 421, 433, 449, dropping over 400 feet within 10 miles from the first rapid to the foot of Great Falls, Parker, Black Eagle Falls Dam, 27 Transactions of the Am. Soc. of Civil Engineers 56 (1892). In 1879, that stretch was a "constant succession of rapids and falls." Warner, supra, at 75; see also 9 The Journals of the Lewis & Clark Expedition 171 (G. Moulton ed. 1995) (hereinafter Journals of the Lewis & Clark Expedition) ("a continued rapid the whole way for 17 miles"). Lewis noted the water was so swift over the area that buffalo were swept over the cataracts in "considerable quantities" and were "instantly crushed." Lewis and Clark ...

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