Vantage Point: The Future of Riverbed Ownership

A 476Kb PDF of this article as it appeared in the magazine—complete with images—is available by clicking HERE

In December of 2011, the United States Supreme Court heard arguments about who owns the beds of three Montana rivers. Since the Supreme Court does not hear ownership cases very often, that in itself is of interest. But more importantly to surveyors, the outcome could possibly alter the course of boundaries in rivers. Judges start out as attorneys, and not all attorneys are intimately (or sometimes even passingly) familiar with real property and title law. We can only hope for the best.

For those unfamiliar with the fact that such a decision is in the works, today’s article will provide some background and a summary of the litigation since 2003. That was the year that two residents of Gallatin County sued four utility companies, including PPL Montana (now the last one standing), for compensation due the State of Montana for the use of riverbeds in operating hydroelectric facilities run by the named utility companies. The plaintiffs, parents of school children, alleged that the riverbeds were part of the school trust lands and that the utilities had not paid any compensation for using them, thus depriving the school system of income. The original plaintiffs were joined by the State of Montana and two school districts, but all except the State were dismissed for lack of standing by federal court in 2004. The four utility companies split their approaches to responding to the suit, with three following one route (eventually settled) and PPL Montana continuing on its own.

The interminable series of cases and reports associated with this legal altercation (at least 27, and I probably missed a few) cover important boundary material in their discussion of Public Trust Doctrine, Equal Footing Doctrine, navigability, and contrasts between public trust lands and school trust lands. Much of the argumentation is rooted in constitutional and historical roots of the State of Montana, which was first the Territory of Montana as a result of Congress passing the Organic Act in 1864. Although the Territory had written and ratified a constitution in 1884 in anticipation of statehood, Congress waited until 1889 to pass the Enabling Act to finally permit admission to the Union.

Let’s go to the core of the issue. PP&L Global, LLC had entered into an agreement in October of 1998 to buy most of Montana Power Company’s assets within Montana, and then assigned its rights and interests in that agreement to PPL Montana in 1999. PPL Montana’s ultimate purchase included title to lands related to the hydropower projects, and the company also acquired rights of way owned by the Montana Power Company and flood easement rights. Montana Power Company had transferred these lands and rights to PPL Montana by warranty deeds, apparently excepting the beds of the Missouri, Madison and Clark Fork Rivers. But PPL Montana is claiming record title to the lands and flood easements, including those riverbeds. If the deeds are not prima facie (at first sight) evidence of its ownership, then it claims rights by laches, estoppel, and prescription.

One difficulty in these cases arises from the age of the dams in question, in use for significant periods of time ranging from initial construction in the late 1800s to the early 1900s, all well beyond any statutory period ripening prescriptive rights or barring actions by laches or estoppel (meaning that anyone claiming damages should have acted within a certain time frame or forever rest in peace). However, with few exceptions there can be no prescriptive or adverse claims against a governmental entity, so any such line of argument seems to have been doomed from the start.

Another problem associated with the situation is the apparent conflict between state and federal regulation of hydroelectric power generation. PPL Montana claimed that it did not have to answer to the state because it is federally regulated. The State of Montana acknowledges the right of PPL Montana to use water in the rivers, but argues that such private use should not be for free because the riverbeds are lands held in trust for the public.

Riverbeds within territories owned by the federal government are held in trust for future states until such time as statehood is granted. The Equal Footing Doctrine keeps newly formed states on an "equal footing" with other states (present or future) in terms of claims to the riverbeds. Technically, lands acquired under the Equal Footing Doctrine were not "owned" by the United States prior to Montana’s admission as a state, but instead were held "in trust for" the future state, "vesting" in the new state upon gaining statehood.

Montana acquired its school trust lands differently. In this instance these are lands transferred to the State of Montana by a grant from the United States Congress under the Enabling Act. Use of school trust lands generates funds for the schools within the state.

Then we have the Public Trust Doctrine to further muddy the waters. Navigable waters are held in trust for the public’s benefit, preserving the public’s right of commerce and navigation over submerged lands. This, of course, means that we need to define what it means to be "navigable", a term subject to much contention over the centuries. Does a watercourse need to be "navigable in fact" or is being "navigable by law" sufficient to prove it is subject to the Public Trust Doctrine? Does a body of water need to be navigable for its entirety, or do waterfalls and other natural obstructions defeat that classification? Does merely being "susceptible of being used" for navigation prove title to "navigable" waters?

The questions before the Supreme Court are complex and intertwined: Are these public trust lands or school trust lands? Are the rivers navigable? Does PPL Montana owe for its use of the rivers’ waters, and if so, how is that to be assessed? Will the (numerous) prior opinions be upheld or overturned? The answers may not appear on the front pages of the news, but they will be significant to future determinations of riverbed ownership. Meanwhile, Montana’s Supreme Court opinion in PPL Montana, LLC v. State of Montana (229 P.3d 421) provides an overview of the issues and some points of interest to those serving as expert witnesses, although the prior cases explain the background facts and arguments more fully.

Wendy Lathrop is licensed as a Professional Land Surveyor in NJ, PA, DE, and MD, and has been involved since 1974 in surveying projects ranging from construction to boundary to environmental land use disputes. She is a Professional Planner in NJ, and a Certified Floodplain Manager through ASFPM.

A 476Kb PDF of this article as it appeared in the magazine—complete with images—is available by clicking HERE

About the Author

Wendy Lathrop, PS, CFM

Wendy Lathrop is licensed as a Professional Land Surveyor in NJ, PA, DE, and MD, and has been involved since 1974 in surveying projects ranging from construction to boundary to environmental land use disputes. She is a Professional Planner in NJ, and a Certified Floodplain Manager through ASFPM.