The decision reverses a ruling by the Montana Supreme Court, and could be used as precedent for disputes in other states.
In the facts of the case: PPL Montana LLC owns and operates hydro-electric facilities in Montana, 10 on segments of the Missouri, Madison and Clark Fork rivers. The 10 facilities make up two PPL projects, both licensed by the Federal Energy Regulatory Commission. PPL's facilities have existed for many decades, some for more than a century.
Montana, though aware of the projects' existence, asked no rent for use of the riverbeds, the opinion by Justice Anthony Kennedy said. 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 suit in federal court claiming 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 use of the riverbeds.
When that suit was dismissed, PPL and other power companies filed suit in state court suit claiming Montana was barred from seeking compensation for PPL's riverbed use. Montana counter-sued, contending under the equal-footing doctrine -- that as each state joins the Union it has all the rights of older states -- it owns the riverbeds and can charge rent for their use.
A judge granted Montana summary judgment and ordered PPL to pay Montana $41 million in rent for riverbed use between 2000 and 2007. The Montana Supreme Court affirmed, citing the navigable rivers doctrine. Navigable rivers are generally under the jurisdiction of the United States.
But in reversing the state court and sending the case back down for further consideration, Kennedy's opinion said 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 [Supreme] Court's rules of navigability for title under the equal-footing doctrine."