This story was updated at 4 p.m.
In a unanimous decision, the Supreme Court today reversed a Montana court ruling that required a hydroelectric dam operator to pay rent for the use of the state's riverbeds.
PPL Montana -- backed by the Obama administration -- had objected to the Montana Supreme Court's conclusion, arguing that the court had incorrectly tackled the key question of whether the rivers were navigable at the time Montana was admitted to the union in 1889.
The Supreme Court agreed, with Justice Anthony Kennedy writing that the Montana court had failed to correctly interpret the test for determining navigability.
The Montana court ruled in March 2010 that three rivers in Montana -- the Clark Fork, Missouri and Madison -- are navigable (Greenwire, Oct. 3, 2011).
It based its ruling in part on an 1845 U.S. 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.
If the ruling had been upheld, PPL Montana, which owns 10 dams on the three rivers, faced the prospect of paying $40 million in rent for its use of the riverbeds since the company acquired them in 1999.
In his opinion, Kennedy wrote that the principle problem with the state court's finding was that it failed to conduct the necessary segment-by-segment analysis for establishing navigability.
"The segment-by-segment approach to navigability for title is well settled, and it should not be disregarded," Kennedy wrote.
He noted that various sections of the Montana rivers are easily divided up, especially the segment of the Missouri River that includes the Great Falls, "which is 17 miles long and has distinct drops including five waterfalls and continuous rapids in between."
Kennedy's opinion includes numerous references to explorers Meriwether Lewis and William Clark, who traveled along Montana's rivers. They had to portage around the most difficult sections, including the Great Falls.
That took at least 11 days, Kennedy noted, which undermined the state's argument that any section that could be portaged should be considered navigable.
The Montana court had wrongly relied on an 1874 Supreme Court decision -- called simply The Montello -- that concerned navigability but, as Kennedy pointed out, more specifically focused on whether boats could be regulated by the federal government.
"The reasoning and the inquiry of The Montello does not control the outcome where the quite different concerns of the riverbed title apply," Kennedy wrote.
There is a "significant likelihood" that not only is the Great Falls section of the Missouri River not navigable but that some of the other sections at issue in the case aren't either, the court concluded.
It also found that the Montana court relied too much on evidence of current recreational use of the Madison River.
The case will now return to Montana courts.
Making it clear that they need to do a better job next time, Kennedy wrote that "the relevant evidence should be assessed in light of the principles discussed in this opinion."
David Hoffman, a spokesman for PPL Montana, said the company was "very pleased that the Supreme Court has overturned the Montana court rulings and has agreed with our position."
The decision should help lead to a resolution of what has become an eight-year legal battle, he added.
In a statement, Montana Attorney General Steve Bullock (D) vowed to continue the fight in state court.
"From the beginning, this case has been about whether PPL pays its fair share for use of our rivers for hydroelectric power -- just like Montana farmers using agricultural trust lands, ranchers using grazing trust lands, loggers using timber trust lands, and others who benefit from state trust lands already do," he said.
Leon Szeptycki, who teaches environmental law at the University of Virginia School of Law and often represents conservation groups, said that at first glance the decision could lead to "more conflict in the future" about the navigability of certain river stretches.
Click here to read the opinion.