US top court rules for PPL on Montana riverbeds

WASHINGTON Wed Feb 22, 2012 12:08pm EST

WASHINGTON Feb 22 (Reuters) - The U.S. Supreme Court ruled on Wednesday for a unit of PPL Corp and overturned a decision that granted Montana ownership of riverbeds underlying company-owned hydroelectric dams in a case with an estimated $50 million at stake.

The high court's ruling was a setback for the state in the dispute involving PPL Montana and ownership of the riverbeds beneath 10 dams on three Montana rivers. The state has said the company owed it some $50 million in back rent and interest.

The justices unanimously overturned a decision by the Montana Supreme Court that PPL Montana must pay back rent, interest and an undetermined amount of rent in the future for use of the state's riverbeds beneath its plants.

Justice Anthony Kennedy wrote in the opinion that the state court ruling was based on an incorrect legal understanding of the U.S. Supreme Court's rules on navigability and ownership.

The company had argued the contested stretches of water were not navigable when Montana became a state in 1889 and therefore the title to the submerged lands under the dams should not go to the state.

The Obama administration supported PPL Montana in the dispute while 26 other states supported Montana.

The Supreme Court case is PPL Montana v. Montana, No. 10-218.