WASHINGTON (AP) — The Supreme Court is entering a $40 million dispute between an energy company and Montana that could turn on the experiences of the Lewis and Clark expedition.

The justices said Monday they will hear an appeal from PPL Montana of a state court decision ordering the company to pay $40 million in rent for placing its hydroelectric dams in riverbeds owned by the state.

The ownership of the waterways turns on whether they were navigable when Montana became a state in 1889. Both the company and the state base part of their argument on the journey of Meriwether Lewis and William Clark more than 200 years ago.

The state says that portions of three rivers that are in dispute have a history of navigation dating back to the expedition and Lewis' description of rivers that run through ''such a mountainous country and at the same time are so navigable as they are.''

The company points to accounts of the expedition's arduous portages of canoes and supplies around waterfalls to argue that the contested stretches of water were not navigable.

As published at greatfallstribune.com.

Blankenau Wilmoth LLP is pleased to announce the addition of David A. Jarecke.  Dave brings with him years of experience representing utility and agribusiness interests, supplementing the firm’s vibrant environmental and natural resources practice.  Dave’s practice will continue to focus on Public Utilities, Natural Resources Districts, and agribusiness clients.   His clients include the Nebraska Rural Electric Association, numerous public power districts, natural resources districts, and other public and private entities.   Dave can be reached at 402.475.7084 and This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

By Martin Bricketto

Law360, New York (June 3, 2011) -- Four natural resources districts in Nebraska on Friday won the reversal of a state Department of Natural Resources decision designating most of the Lower Niobrara River Basin "fully appropriated" and restricting water development in the area.

The Nebraska Supreme Court ruled that the department's 2008 designation, triggered by a "call" from Nebraska Public Power District over its water diversion rights in the basin as a senior appropriator, was arbitrary and invalid. A call is effectively a request that the agency close the rights to divert water belonging to junior appropriators upstream of a senior appropriator.

NPPD diverts surface water to generate electricity at the Spencer hydropower facility.

"The department failed to comply with its own regulations when it determined that the basin was fully appropriated by comparing the stream flow values at a specific diversion point or stream flow gauge to a senior appropriator's total appropriation rights," the court ruled.

The court further found that a review of the department's previous reports showed "a complete lack of consistency" in how it applied a 20-year averaging methodology on stream flows and NPPD's appropriations in making the designation, and that the department failed to plainly describe its methodologies so they could be replicated and assessed.

While the designation under the Nebraska Ground Water Management and Protection Act restricts new water appropriations, it also requires Middle Niobrara Natural Resources District and the other plaintiff NRDs, which regulate groundwater in the area, to shoulder significant cost and land management practices to strike a balance between water uses and water supplies, according to the opinion.

The basin at issue encompasses about 8,900 square miles, and the department's designation for the portion of the basin upstream of Spencer Dam in northeast Nebraska includes most of the river basin, the opinion says.

NPPD placed a call with the department in March 2007 over its diversion rights, according to the opinion. The action increases stream flow to satisfy the diversion rights of the senior appropriator.

Two months later, the department issued closing notices to about 400 junior appropriators to stop diverting water for the benefit of the hydropower facility, though two of those entities subsequently challenged the validity of NPPD's appropriations, the opinion says.

And although its 2006 and 2007 reports held that the basin wasn't fully appropriated, the department in October 2007 issued its report for the following year concluding that the upstream area from the dam had reached a maximum development level.

The affected NRDs eventually petitioned the department for a hearing over its final determination, contending the basin wasn't fully appropriated, that the department failed to rely on the best scientific data and methods available, and that it failed to properly analyze whether current water supply uses would, in the long run, cause insufficient surface water or stream flow to recharge aquifers in support of ground wells, according to the opinion.

The department's director eventually rejected those challenges in December 2009.

In its ruling Friday, the Nebraska Supreme Court shot down the department's position that its investigation of NPPD's water use at the dam was based on the best available information, and agreed with the NRDs that the director improperly assumed that NPPD's appropriations were valid.

"The director's reasoning that a challenge to a call is irrelevant after the department has issued closing notices is incorrect," the court said. "Until a challenge is decided, the director is not at liberty to conclude that it is without merit."

The court also said the department could have avoided the dispute by following its own regulations, which don't allow it to make a determination based on the comparison of a senior appropriation right to the stream flow values at a specific diversion point or stream flow gauge.

An attorney for the NRDs, Don Blankenau of Blankenau Wilmoth LLP, said Friday that the decision meant the designation was no longer valid, and the basin was again open to appropriations with some limitations.

"We're generally pleased with the result, and I know my clients are looking forward to working with the state and moving forward and actually providing a greater level of refinement to this type of analysis, which is frankly not a simple task," Blankenau said.

A department representative did not immediately return a request for comment on Friday.

The NRDs are represented by Don Blankenau and Tom Wilmoth of Blankenau Wilmoth LLP.

The case is Middle Niobrara Natural Resources District et al. v. Nebraska Department of Natural Resources, case number S-09-1311, in the Nebraska Supreme Court.

--Editing by John Williams.

Earlier this year, President Obama issued Executive Order 13563 entitled “Improving Regulation and Regulatory Review,” which seeks to make the U.S. Government’s regulatory system work more efficiently. Last week, the Department of the Interior issued a report fulfilling that mandate and explaining its commitment to retrospective review of existing programs. The Department explains it will become “more efficient, by consolidating or eliminating duplicative or unnecessary regulations; less burdensome, by providing more flexibility and simpler means of compliance, where appropriate; more functional, while accomplishing the [Interior] mission and complying with statutes; more transparent, using the Internet to improve access and public participation; and more credible, by ensuring that decisions are based on sound science.” Among the programs to be reviewed is the Endangered Species Act. The Department explains that over the next two years, it will review ESA regulations, many of which have not been updated since the 1970s or 1980s and have been subject to extensive litigation. Among the possible changes are streamlining critical habitat descriptions; clarifying procedures for the development and approval of habitat conservation plans, safe harbor agreements, and candidate conservation agreements; expanding opportunities for states to engage effectively in the implementation of the ESA’s various provisions; and clarifying the definition of the phrase “destruction or adverse modification” of critical habitat and the scope as well as the content of incidental take statements. The regulated community and the public at large can expect opportunities to comment on proposed changes as the review progresses.