Oregon-based utility PacifiCorp has agreed to lease 47.84 acres of the bed of Montana’s Swan River in a settlement agreement that is to dismiss the utility from a state lawsuit to force hydropower utilities to pay rent for the riverbeds their projects occupy.
A Montana judge declared in 2006 that dam owners PacifiCorp, Avista Corp., and PPL Montana LLC are not exempt from paying rent to Montana for the use of state-owned riverbeds occupied by their federally licensed hydro projects. (HNN 5/8/06) Montana District Judge Thomas Honzel found the Federal Power Act and federal navigational servitude do not pre-empt the state’s claim for compensation under a Montana hydro licensing law.
Although the lawsuit is still under way to determine the amount of the utilities’ liability, PacifiCorp’s settlement resolves the matter for its 4.15-MW Bigfork project (No. 2632) on the Swan River.
Attorney General Mike McGrath presented the settlement to the Montana Land Board for approval June 18.
PacifiCorp agreed to pay the state a full market value rental equal to the state’s share as a partial landowner of the net benefits produced by Bigfork Dam. The amount was reported to be $50,000 per year.
The agreement states the lease term began Jan. 1, 2007, and is to end no later than the expiration of Bigfork’s Federal Energy Regulatory Commission license, June 30, 2053.
PacifiCorp had the smallest Montana hydro holdings of the three utilities. Avista’s hydropower holdings in Montana include the 722.9-MW Clark Fork (No. 2058) project. PPL Montana’s holdings in the state include the 326.9-MW Missouri-Madison River (No. 2188), 10-MW Mystic Lake (No. 2301), and 92.6-MW Thompson Falls (No. 1869) projects.
Federal Power Act establishes dual federal-state control
Honzel said the Federal Power Act establishes a system of dual control under which the federal government possesses a superior right to regulate hydroelectric projects, but states retain traditional jurisdiction over property. Although the state cannot regulate a hydro project, nothing prevents the state from obtaining rental compensation, he said. Montana law requires a licensee to pay rent based on full market value and interest.
State authority over navigable riverbeds also is subject to federal navigational servitude — the power of Congress to ensure navigable waters remain open to commerce. Honzel said the FPA does not invoke navigational servitude on behalf of hydropower licensees.
However, Honzel said his order does not relieve the state of its obligation to prove it owns the riverbeds or that land involved is school trust land, as provided by Montana’s Constitution.