The U.S. Supreme Court on Monday said it would hear an appeal from PPL Montana of a March 2010 Montana Supreme Court decision that would have forced the power company to pay accrued rent and interest worth some $56 million to the state of Montana for the use of riverbeds beneath the company’s hydroelectric plants—some which have been generating power for more than a century.

PPL Montana owns and operates 11 dams in Montana, including seven on the Missouri River. Five of the dams are within 15 miles of Great Falls. The dispute between the state and the company began in 2004, when former Attorney General and current Montana Supreme Court Chief Justice Mike McGrath joined a citizen’s lawsuit arguing that utilities should have to pay rent for the land under dams. In June 2008, District Judge Thomas Honzel ruled in favor of the plaintiffs and ordered PPL to pay rent dating back to 2000. The Montana Supreme Court’s March 2010 ruling was reached on appeal of the lower court decision.

PPL Montana asked the U.S. Supreme Court to review that ruling last July. On Monday, the high court granted a writ of certiorari for PPL Montana’s petition—though it limited it to only one of two questions presented in the petition: “Whether the Montana Supreme Court erred in concluding that riverbeds occupied by [PPL Montana’s] hydroelectric facilities are the property of the State of Montana because they were navigable for title purposes at the time Montana became a State.”

The court declined to address the second question, which asked the court to decide whether the Montana law requiring rent for past and ongoing use of state-owned riverbeds is preempted.

The state is expected to argue that portions of the three rivers in question were navigable when Montana became a state in 1889—based on accounts from Meriwether Lewis and William Clark of their journey through the region more than two centuries ago. PPL Montana will contest that the waterways were difficult to navigate.

Reacting to the U.S. Supreme Court’s decision to hear the case, on Monday PPL Corp.’s senior vice president, general counsel, and secretary, Robert J. Grey, said the case had “broad implications” for water users throughout the West. Grey also said the case raises federal issues that affect the rights of streambed users including hydroelectric plant operators, ranchers, irrigators, cities, dock owners, recreationalists, and federal landholding agencies.

"The diverse support PPL Montana received to get this case on the high court’s docket shows the importance and potential consequences of this issue to many parties across the West," Grey said. "Many water users, water use associations and industry organizations—including the Montana Farm Bureau Federation, the Montana Water Resources Association, the Edison Electric Institute, the National Hydropower Association and others—have supported this appeal."

Bloomberg reported that justices agreed to hear the case even though the Obama administration had urged rejection without a hearing.

Oral arguments in the case will take place during the U.S. Supreme Court’s next term, which begins in October. The case is PPL Montana v. Montana, 10-218.

Sources: POWERnews, PPL Montana, U.S. Supreme Court