On December 7, 2011, the US Supreme Court heard oral arguments in the case of PPL Montana, LLC v. Montana. Paul Clement represented the petitioner, PPL Montana, while Gregory Garre argued on behalf of the respondent, the State of Montana. In addition, Edwin Kneedler, Deputy Solicitor General, participated as amicus curiae for the US in support of the petitioner. The result was a spirited and informative three-way debate among the parties.
The case involved a dispute between the State of Montana and a power company over various submerged lands within the state. The controversy began in 2003 when a group of private citizens sued PPL in federal court, claiming that the power company should be required to compensate the state for the use of these submerged lands as sites for several of its hydroelectric power facilities. The case was eventually dismissed by the federal court on jurisdictional grounds. However, in 2004, PPL filed a declaratory judgment action against Montana in state court, claiming ownership of the beds beneath portions of the Upper Missouri, Clark Fork and Madison rivers. The trial court granted summary judgment for the state and decreed that PPL must pay millions of dollars in "back rent" for its unauthorized use of the state's land for its dam sites. This ruling was affirmed by the Montana Supreme Court. The case then came before the US Supreme Court as the result of a successful petition for a writ of certiorari by PPL.
Because the case will depend on whether the rivers in question are navigable, I will briefly discuss the tests for navigability and their relation to ownership of streambeds under state and federal law. Both federal and state courts distinguish between navigability for purposes of regulation and for purposes of determining title to streambeds. The power of the federal government to regulate navigable waters under the commerce clause is quite broad and may extend to non-navigable tributaries of navigable waters. Originally, in United States v. Holt State Bank, the Court held that waters are navigable for purposes of federal regulation if they are "used, or are susceptible of being used, in their natural and ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water."
However, this rule was later modified in United States v. Appalachian Power Co. to provide that waters could be deemed navigable for regulatory purposes if they could be made navigable through reasonable improvements even though these improvements had not been completed or even authorized. The subordination of private property rights to the federal power to regulate navigation is often referred to as the "navigation servitude." State tests of navigability for regulatory purposes vary, but are roughly similar to the federal test. Notice that the power to regulate commerce and navigation on lakes, rivers and streams is not conditioned upon ownership of the beds below these waters.
The tests of navigability for title purposes are even more complex. According to an early case, when the US became independent each state held title to the beds of the navigable waters within its borders to be reserved for the common use of its citizens. Under the "equal footing" doctrine, states that were subsequently admitted to the Union succeeded to the same rights as the original 13 colonies. Consequently, the Court held that when the federal government acquired land from one of the original states or from a foreign country, it held the beds of navigable waters in trust for the benefit of new states. Thus, the beds beneath navigable waters were transferred to each state (subject to a public trust) upon its admission to the Union; on the other hand, the beds beneath non-navigable waters remained under federal ownership until it was transferred to the state or to private parties.
In PPL Montana, the state maintained that the rivers in question were navigable where the dams were located when Montana was admitted to the Union in 1889 and, therefore, their beds belonged to the state. Consequently, PPL violated the state's property rights when it constructed dams on the beds of these rivers. On the other hand, PPL Montana alleged that the rivers in question were not navigable and that their beds had passed into private ownership by the time the power company's predecessors acquired them as sites for their hydroelectric power facilities in the early years of the twentieth century. More specifically, PPL Montana claimed that in the case of the Clark Fork and Upper Missouri rivers, the Montana court had considered the rivers in their entirety when deciding if they were navigable instead of focusing on the segments of the rivers where the dams were actually located. Furthermore, according to PPL Montana, although there were no obstructions in the Madison River, there was also no evidence that it had been used, or could have been used for navigation at the time of statehood. Instead, the Montana court improperly considered evidence of current recreational use to support its conclusion that the Madison River was navigable.
During the course of oral arguments, members of the Supreme Court covered a wide range of issues. However, the principal concern of the Court and the litigants was the proper test of navigability for title and its application to non-navigable portions of rivers and streams. In its brief, PPL Montana maintained that the Court in United States v. Utah had adopted a segmentation approach to navigability except for "de minimis," or negligible, interruptions. This prompted Justice Sonia Sotomayor to press for a more precise definition of the term "de minimis." Clement replied that the concept had been applied by the Court to determine whether small islands in navigable waters were transferred at statehood or whether they remained the property of the federal government. The nature of the lawsuit might also define what lands are de minimis and what lands are not. In this case, Clement argued that the submerged lands in question could not be considered de minimis since the State of Montana placed their rental value at more than $50 million. Finally, the area's topography was relevant to whether a portion of the bed was de minimis or not. A change in topography might mark the boundary of a new segment of the river.
A related issue was that of portage. Garre for the State of Montana argued that the proper test for navigability had been formulated in The Daniel Ball and The Montello, where the Court declared that streams or lakes were deemed to be navigable if they were used, or could be used, as "highways for commerce." According to Garre, a waterway that fit this definition would be treated as navigable in its entirety even if obstructions, such as shoals, rapids or waterfalls, required that passengers or cargo be removed from boats in order to get around them. However, Justice Anthony Kennedy suggested that the test of navigability proposed by the state, while suitable for delimiting the regulatory powers of the federal government, was not necessarily appropriate for determining what submerged lands a state owned within its territory.
Justice Samuel Alito raised an interesting question about the rationale for state ownership of submerged lands beneath navigable waters. Garre stated that ownership of the beds was necessary to protect navigation. However, Justice Alito responded that the states would not have to own the beds beneath non-navigable portions of a river or stream in order to protect navigation and commerce, since they were already obstructed. Justice Antonin Scalia seemed to agree with this analysis, declaring that keeping a river open for commerce was a weak justification if commerce was impossible over it. Both Chief Justice John Roberts and Justice Scalia also observed that it was not necessary for a state to own the beds beneath rivers and streams in order to protect navigation. It could do so through the exercise of its police power.
Justice Elena Kagan expressed concern that Montana would try to collect back rent from other riparian owners if the rule adopted by the Montana court was upheld. Garre conceded that this could happen, but only if a riparian owner was physically occupying the bed in some manner.
Finally, several Justices raised questions about the procedural posture of the case. For example, Justice Stephen Breyer suggested that the real dispute was between the US and the State of Montana since the petitioner's rights depended upon which governmental entity owned the beds beneath the three rivers in 1889. Justice Breyer suggested that it might be better to appoint a special master to take evidence as was done in other cases. Justice Ruth Bader Ginsburg agreed that this seemed to be more of a dispute between the US and the State of Montana. Consequently, she expressed doubts about whether the Court should decide the case when the US was not a party. Another procedural issue was whether the trial court should have granted a summary judgment when there appeared to be a significant factual dispute about the rivers' navigability. Justice Sotomayor thought that the Court should address the question of whether summary judgment was appropriate in this case.
From the tone of the questioning, it seemed that most of the Justices were sympathetic to PPL Montana's position that the state should not own the beds of non-navigable portions of otherwise navigable rivers and streams. Nevertheless, some members of the Court also appeared to feel that the case might not be ripe for a decision. Accordingly, there are at least four options available. First, the Court could rule that the Daniel Ball and Montello "highway for commerce" test for navigability should be limited to regulatory cases and instead adopt a segmentation approach for title cases. Except where an obstruction to navigation was de minimis, the federal government or its successors in interest, not the states, would own the beds beneath non-navigable portions of a river. A less likely possibility is that the Court will reaffirm the application of the Daniel Ball and Montello decisions to title cases and conclude that Upper Missouri and Clark Fork rivers are highways for commerce throughout their entire length, notwithstanding the existence of rapids and other obstructions in some portions of these rivers.
If the Court chooses not to decide the case on the merits, it could vacate the decision of the Montana Supreme Court and require the State of Montana to invoke the Court's original jurisdiction to determine whether Montana or the US had title to the beds of the three rivers when Montana entered the Union in 1889. Finally, the Court could determine that summary judgment was improper and that the Montana Supreme Court's decision on this issue should be vacated and the case remanded for trial. Since the navigability issue is significant as well as interesting, hopefully the Court will choose one of the first two options and decide the Montana case on its merits.
The test for navigability based on Utah v. United States strikes a better balance between the interests of riparian owners and that of the states than the "highway of commerce" approach advocated by the State of Montana. The latter test, which originally applied to federal regulatory powers, rightly focuses protecting the right of members of the public to travel along a navigable river from Point A to Point B even though they may occasionally have to detour around rapids, shoals and other obstructions. However, when the "highway for commerce" test is applied to title cases, it upsets the settled expectations of riparian owners and confers a windfall on states by allowing them to demand millions of dollars in "back rent" for use of the beds. Instead, the Court should reaffirm its ruling in the Utah case and hold that titles to beds beneath non-navigable portions of a predominately navigable river or stream do not pass to the states under the equal footing doctrine. Furthermore, the Court should declare that portage is not evidence that a portion of the river is navigable, but rather it is evidence that it is not. Finally, because a river (or a portion thereof) must be navigable in fact at the time of statehood, the Court should require that one who submits evidence of present-day use, particularly recreational use, to prove navigability should also be required to show that the physical character of the river has not changed since that time.
Richard Ausness has been a Professor of Law at the University of Kentucky College of Law since 1973. He writes extensively on products liability and water law. His publications include books, such as The Model Water Code, and numerous articles in such journals as the University of Illinois Law Review, the Ohio State Law Journal, and the Wisconsin Law Review.
Suggested citation: Richard Ausness, Navigability and State Ownership of Riverbeds, JURIST - Forum, Dec. 27, 2011, http://jurist.org/forum/2011/12/richard-ausness-navigability.php.
This article was prepared for publication by Caleb Pittman, an assistant editor for JURIST's academic commentary service. Please direct any questions or comments to him at email@example.com