This long-running dispute concerns ownership of riverbeds underlying hydroelectric dams on the Missouri, Clark Fork, and Madison Rivers in Montana. The State of Montana and the United States are the primary parties, joined by Talen Montana, LLC and NorthWestern Corporation, who own and operate the dams and owe rent to the title holder. Under the equal footing doctrine, a state gains title to riverbeds that were navigable in fact at the time of statehood, while the United States retains title to non-navigable riverbeds. The Supreme Court previously clarified the legal standards in PPL Montana, LLC v. Montana, remanding the case to determine navigability on a segment-by-segment basis. The district court conducted a ten-day bench trial, dividing the rivers into segments based on physical characteristics and finding that only the Sun River to Black Eagle Falls Segment was navigable in fact in 1889. Montana appealed the denial of title for four segments, while Talen and NorthWestern cross-appealed, arguing that the Sun River segment was part of the non-navigable Great Falls reach already decided by the Supreme Court.
The panel affirmed the district court's judgment, applying the 'navigability in fact' test as clarified in PPL Montana. The court first addressed Montana's appeal, rejecting its argument that the district court erred by analyzing entire segments rather than narrower 'Disputed Reaches' defined by FERC boundaries. The court held that PPL requires segments to be defined by physical characteristics, not regulatory boundaries, and that narrowing the review to Disputed Reaches would ignore the physical realities of the surrounding river. Second, the court addressed Montana's claim that evidence of 'actual use' alone establishes navigability. The panel clarified that while actual use is persuasive, the 'true criterion' is the river's susceptibility to use as a highway for commerce in its natural and ordinary condition at statehood. The court found that the district court did not clearly err in weighing the evidence, including expert testimony and historical records, to conclude that the four challenged segments were not navigable. Regarding the cross-appeal, the court analyzed the Supreme Court's mandate in PPL. The Supreme Court had held that the '17-mile Great Falls reach' was not navigable, but specifically limited that holding to the area 'from the head of the first waterfall to the foot of the last.' The Ninth Circuit concluded that the Sun River to Black Eagle Falls Segment lies upstream of this specific non-navigable stretch and was therefore open to further analysis. The district court's determination that this segment was navigable was consistent with the mandate to apply the segment-by-segment approach and determine the exact point where navigability ends.
The decision affirms the district court's quieting of title, meaning the United States retains title to the riverbeds underlying the Big Belt Mountains, Big Falls to Belt Creek, Eddy, and Headwaters/West Yellowstone Basin Segments, while Montana holds title to the Sun River to Black Eagle Falls Segment. The case is remanded to the district court to proceed with Phase II to determine damages regarding the rent owed for the Sun River segment. The ruling reinforces that navigability for title is determined by physical characteristics and susceptibility to commerce, not just actual use, and clarifies the scope of the Supreme Court's prior mandate regarding the Great Falls reach.
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