Posted on September 23, 2011 by John H. Klock

If the Creek Don't Rise -- Montana's Right to Rental for Riverbeds Used by Power Company's Dams Now Before the U.S. Supreme Court - PPL Montana, LLC v. State of Montana

The U.S. Supreme Court will take up another Montana river case. The case involves a dispute between the State of Montana and a power company that purchased dams on several Montana rivers, which are licensed under the Federal Power Act by the Federal Energy Regulatory Commission. The last time Montana visited the U.S. Supreme Court, it lost to Wyoming in a dispute over water usage under the Yellowstone River Compact. This time Montana stands to gain $41,000,000 as fair market rental for its river beds granted on summary judgment and upheld by the Montana Supreme Court.

The power company, PPL Montana, LLC, is a wholesale electric generator (exempt from public utility regulation) who owns several federally licensed dams on various rivers in Montana. At issue is the ownership of over 500 miles of rivers and 5,600 acres of riverbed under dams and reservoirs associated with two federally licensed hydroelectric facilities on the upper Missouri, Madison and Clark Fork Rivers in Montana. Most of the dams were constructed between 1891 and 1930 and the projects were approved in 1949 and 1956 under the Federal Power Act. According to the Montana Supreme Court, the riverbeds belong to the State of Montana. When the original 13 states became sovereign, they gained absolute right to all navigable rivers and the lands beneath them for public use. All states joining the Union thereafter were put on equal footing with the original thirteen and so acquired the same rights. Thus Montana’s ownership depends upon whether the rivers were navigable when the Montana joined the union, i.e. 1889. Navigability basically means whether a log can float downstream. If so, it is commercially navigable. PPL had argued that under US Supreme Court precedent, the issue of navigability for title purposes required a section by section test where there were relevant non-navigable sections of the river at the time of statehood. The trial court had concluded that a section by section analysis was not necessary and that based on current conditions of recreational usage on parts of the rivers, the entire rivers were navigable in 1889.

By owning the dams, the Montana Supreme Court held that PPL uses the riverbeds both above and below the dam. PPL acquired the dams in l999 and is charged for the usage between 1999 and 2007 at the time of the trial. PPL filed a petition on two grounds: one is the State's determination of navigability was flawed and the other is that a license under the Federal Power Act preempts that State's right to seek compensation. Indeed, PPL noted that it currently pays the federal government over $500,000 in annual charges for the “use, occupancy and enjoyment” of federal lands, which includes the riverbeds held by the Montana Supreme Court to belong to the state.

Although at first glance, the dispute between a hydroelectric power company and a state may seem esoteric, the case could prove to have more extensive ramifications preemption and the interplay between federal and state authority.


John H. Klock is a Director in the Gibbons Real Property & Environmental Department.
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Posted on July 16, 2010 by Alfred R. Fuscaldo

Time-out: Pennsylvania Passes Permit Extension Act

Last week, Governor Rendell signed the Permit Extension Act ("Act") into law as part of the approval of the budget, breathing life into expired and expiring permits and the development projects they represent.

The Act, found at pages 99-110 of the budget bill, extends the expiration date of many governmental approvals, permits and agreements, including building permits and construction permits, relating to construction and development projects.

What Permits Does It Affect?

The Act applies to certain permits issued under more than thirty statutes, including:

The Act also applies to certain permits issued to condominiums, cooperatives and planned communities.

The Act Does Not Apply to All Permits

The Act does not apply to other statutes, including the:

The Act also does not apply to permits with expiration dates determined by federal law, or to administrative consent orders and enforcement actions for a permit subject to the extension period.

How Long is a Permit Extended?

Under the Act, a permit granted under an applicable statute and having an expiration date after December 31, 2008 may have its expiration date extended until July 1, 2013, regardless of whether the permit was issued before or after the extension period. The Act does not shorten the life of a permit with an expiration date after July 1, 2013.

How Can You Find Out If the Act Applies to Your Permit?

The permit holder can request verification, subject to a fee, from the issuing agency of the existence of a valid permit and its expiration date, but must identify the permit in question and its anticipated expiration date. The issuing agency must tell you in writing within 30 days of receiving your request:

  1. whether you have a permit;
  2. its expiration date; and
  3. stating any issues related to the validity of the permit.

Except in Philadelphia and Pittsburgh, the failure of the issuing agency to respond within 30 days will result in the "deemed affirmation of the existence of the [permit] and the expiration date set forth in the request."

In the City of Philadelphia, in order to exercise its right to extend the permit under the Act, the permit holder must provide the issuing agency with notice of its intent to extend the permit and pay the agency a fee equal to fifty percent of the original application fee, not to exceed $5000. Elsewhere, the issuing agency may charge a fee up to twenty five percent of the original application fee, but no more than $5000, to extend the Permit.

Permits granted pursuant to the MPC are protected from changes in a "zoning, subdivision or other governing ordinance or plan," such that those changes will not affect the permit holder’s right to begin or complete the activities authorized by the permit during the extension period. The extension period is further extended for the length of litigation, including appeals, concerning permits issued under the MPC that prevent the completion of the work authorized by the permit.

The Act brings Pennsylvania into line with New Jersey which enacted its own permit extension legislation in 2008. The Act gives needed flexibility and time to developers who may be facing financial challenges in the current economy. At a minimum, permit holders should consider verifying the viability of permits, and extending them as required, now so they will be in a position to proceed when market conditions warrant.


Alfred R. Fuscaldo is a Director in the Gibbons Real Property and Environmental Department.
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