On February 22, 2012, the Supreme Court decided PPL Montana v. Montana, No. 10-218, holding that a determination of "navigability" for purposes of determining title to a riverbed must apply a "segment by segment" analysis and must be based on navigability at the time of statehood, not on evidence of present day conditions.
PPL Montana, LLC (PPL) owns and operates hydroelectric facilities, 10 of which involve dams located on riverbeds underlying segments of rivers in the state of Montana. All of the facilities are licensed by the Federal Energy Regulatory Commission and have existed for decades. Montana had sought no rent for use of the riverbeds, and PPL had instead paid rents to the United States. In the early 2000s, litigation arose in which Montana for the first time sought rents from PPL for use of the riverbeds, and PPL and other power companies sought a ruling that Montana was barred from seeking compensation for their riverbed 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.
The Supreme Court reversed, holding that the Montana court had misread the Supreme Court's rules of navigability under the equal-footing doctrine. Under this doctrine, a State enjoys title within its borders to the beds of waters that were navigable at the time of statehood, subject only to the federal government's powers over interstate and foreign commerce. The United States retains title to land beneath waters that were not navigable at the time of statehood. "Navigable" means "navigable in fact," specifically that the waters were or could have been used for trade and travel through customary modes of water transportation. Navigability of a river is determined on a segment-by-segment basis. The Supreme Court held that the Montana court had erred by failing to employ the segment-by-segment approach and by holding instead that short interruptions in navigability such as portages did not defeat "navigability in fact." The Supreme Court also held that the state court erred in relying on evidence of present-day, primarily recreational river use in determining navigability rather than the river's usefulness for trade and travel at the time of statehood. The Court remanded the case so that the Montana court could apply the correct standards.
Justice Kennedy delivered the decision for a unanimous court.