The Supreme Court decided today to take up the question of whether a power company has to pay rent for the use of riverbeds where its hydroelectric dams are located.
In a March 2010 decision, the Montana Supreme Court held over the objections of power company PPL Montana that the state owned the riverbeds.
Legal groups supportive of the company's position have warned that the Montana case could lead to other states taking similar action if the ruling is allowed to stand by the Supreme Court.
The Obama administration had urged the Supreme Court not to take the case. It is long-established law that "when a state is admitted to the union, it takes title to the lands beneath waters that are navigable at that time," acting Solicitor General Neal Katyal wrote in the government's brief.
Katyal conceded that there were some errors in the state court's analysis, but he argued that they were not serious enough to warrant Supreme Court intervention.
Prior to the Montana court's ruling, the riverbeds were assumed to be owned by either private landowners or the federal government. The state asserted its ownership claim as recently as 2004, and then only after private citizens had initially filed suit a year earlier claiming that PPL Montana owed the state millions of dollars in rent.
The company argues not only that the state does not own the riverbeds but also that its claim is pre-empted by federal law regulating the licensing of hydropower projects. The Supreme Court said today it would not decide that issue.
The initial lawsuit, filed in the U.S. District Court for the District of Montana, was dismissed, but the litigation continued in state court.
In its decision, the Montana Supreme Court held that the state owned the riverbeds based on an 1845 Supreme Court case that said states hold title to riverbeds if the river was navigable at the time the state was admitted to the Union. The state argued that the rivers were navigable when Montana was admitted in 1889, a conclusion the power company disagrees with.
Click here for the Montana Supreme Court ruling.