United States District Court, D. Montana, Helena Division
L. CHRISTENSEN, CHIEF DISTRICT JUDGE.
case has followed a long course from its inception in 2003 to
Defendants' pending motions to dismiss. On October 10,
2017, this Court determined that it has federal question
jurisdiction under 28 U.S.C. § 1331. (Doc. 171 at 14.)
Promptly following this decision, Defendants Talen Montana,
LLC ("Talen") and Northwestern Corporation
("Northwestern") renewed their respective motions
to dismiss, which had previously been denied as moot on
January 24, 2017. At this juncture, Defendants contend that
in PPL Montana v. Montana, 565 U.S. 576 (2012)
(hereinafter "PPL"), the Supreme Court of
the United States settled the issue of navigability for title
of the Great Falls reach, effectively barring Plaintiff, the
State of Montana ("Montana" or "the
State"), from seeking recovery for that section of the
Missouri River. Montana opposes Defendants' motions,
arguing that the Supreme Court issued an "open
mandate" which merely established a new legal rule to be
applied afresh in this case upon a more thoroughly developed
factual record. Consequently, the Court must now determine
whether the navigability of the entire Great Falls reach has
been fully resolved. For the following reasons, the Court
accepts as established that one section of the Great Falls
reach, "from the head of the first waterfall to the foot
of the last, is not navigable for purposes of riverbed title
under the equal footing doctrine" and will dismiss
Montana's claims as to rents owing from dams within that
stretch. PPL, 565 U.S. at 599.
2003, PPL Montana, LLC ("PPL"), was sued by parents
of Montana schoolchildren in the Missoula division of this
Court based upon diversity jurisdiction. The plaintiffs
alleged that PPL was operating hydroelectric facilities on
state-owned riverbeds and that the riverbeds were part of
Montana's school trust lands which entitled plaintiffs to
compensation for PPL's use of the property. The parents
were dismissed for lack of standing after the State
intervened as a party plaintiff. PPL then moved to dismiss
the case for lack of subject matter jurisdiction asserting
that the State is not a citizen for purposes of diversity
jurisdiction. The Court granted PPL's motion and
dismissed the case.
2004, PPL filed suit in state court seeking a declaration
that the State was not entitled to compensation for PPL's
use of the riverbeds. The State counterclaimed seeking a
declaration that it owned the riverbeds and was entitled to
collect rent from PPL for their use. The trial court granted
summary judgment to the State and ordered PPL to pay Montana
$41 million in rent for its riverbed use between 2000 and
2007. The trial court found that the riverbeds of the Clark
Fork, Missouri, and Madison rivers were navigable and
accordingly held that the State owned the riverbeds through
navigability for title under the Equal Footing Doctrine. The
Montana Supreme Court affirmed the state district court in
PPL Montana, LLC v. State of Montana, 229 P.3d 421,
443 (Mont. 2010), concluding the rivers were navigable as a
matter of law at the time of statehood in 1889, meaning the
State acquired title to the riverbeds at that time under the
Equal Footing Doctrine.
petitioned the United States Supreme Court for a writ of
certiorari, which was granted on the issue of whether the
Montana Supreme Court erred in its application of the
navigability for title doctrine by applying a whole-river
analysis. The Supreme Court reversed, holding, in relevant
part, that the Montana Supreme Court erred in disregarding
the segment-by-segment approach to navigability for title.
PPL, 565 U.S. at 593. The Montana Supreme Court
erroneously found the "segment-by-segment approach ...
inapplicable [to the Great Falls reach] because it does not
apply to 'short interruptions of navigability in a stream
otherwise navigable." Id. at 596 (internal
quotation marks and citations omitted). The United States
Supreme Court explained that this was a mistake because the
Court had not yet established that short interruptions should
"merit treatment as part of a longer, navigable reach
for purposes of title under the equal-footing doctrine,"
and, even if it had, the Great Falls reach "certainly
would not" qualify as a "short interruption."
Id. Further, the Court clarified that the Montana
Supreme Court erred in its finding that portages are
insufficient to defeat a finding of navigability-"[i]n
most cases," portages logically defeat navigability
because a portage, by necessity, requires
"transportation over land rather than over the
water." Id. at 597.
process of clarifying these principles, the Court applied
them to the Great Falls reach, finding "no
evidence" that this reach was navigable, stating that
the need for a portage of this reach defeats a finding of
navigability, and concluding that "the 17-mile Great
Falls reach, at least from the head of the first waterfall to
the foot of the last, is not navigable for purposes of
riverbed title under the equal-footing doctrine."
Id. at 597-99. Thereafter, the Court remanded the
case for the "ultimate decision" on the
navigability of "the other disputed river
stretches" to be "assessed in light of the
principles discussed in [their] opinion." Id.
at 600. It is the Supreme Court's analysis of the Great
Falls reach which spurred the present controversy. Within the
Great Falls reach are five hydroelectric facilities.
Beginning upstream at Black Eagle Falls and continuing
downstream, these dams are the Black Eagle Dam, the Rainbow
Dam, the Cochrane Dam, the Ryan Dam (situated on the
eponymous Great Falls), and the Morony Dam.
case reached an eddy after the United States Supreme Court
rendered its decision, during which time Northwestern entered
into a purchase and sale agreement for the acquisition of
PPL's hydroelectric facilities in Montana, including the
facilities at issue here. (Doc. 1-1 at 4.) The acquisition
was approved by the Montana Public Service Commission in
September 2014. (Id.) In June 2015, PPL Montana, LLC
changed its legal name to Talen Montana, LLC. (Docs. 1-1 at
4; 13-3 at 2-3.)
State and Talen stipulated in late March of 2016 that the
State would be realigned as the Plaintiff and Talen would be
realigned as the Defendant. (Doc. 13-3 at 3.) The parties
also stipulated to bifurcate the issues of liability and
damages, with all claims or defenses relating to navigability
at the time of statehood to be adjudicated first.
(Id.) Six days later, on March 31, 2016, the State
filed its complaint on remand in state court, naming both
Talen and North Western as Defendants. (Doc. 13-4.) The State
asks for a declaration that it owns the land occupied by
Defendants' hydroelectric facilities and seeks to recover
rental payments for these lands, including a claim for the
five dams along the Great Falls reach.
April 20, 2016, North Western filed a notice of removal
invoking this Court's federal question jurisdiction.
(Doc. 1.) Talen consented in writing to the removal. (Doc.
1-3.) The State moved to remand the case back to state court,
arguing that mere application of federal law did not mean
that the case arose under federal law for purposes of federal
question jurisdiction and that state law governed "equal
footing lands." (Doc. 160 at 11 (internal quotation
marks omitted).) As previously mentioned, this Court
determined that federal question jurisdiction existed because
the vindication of the State's claims necessarily turned
upon the construction of federal law. (Doc. 171 at 14.)
Accordingly, the State's request for remand was denied.
October 16, 2017, Defendants renewed their motions to
dismiss, asserting that the decision of the Supreme Court
precludes relitigation of the navigability of the Great Falls
reach. Talen argues that the mandate rule allows this Court
to dismiss the State's claims regarding the Great Falls
reach because navigability of this segment of the river
should be considered as disposed of and finally settled by
the Supreme Court. (Doc. 5 at 10.) Northwestern joins in
Talen's argument and further asserts that, as a nonparty
in a subsequent suit, Northwestern is entitled to invoke the
Supreme Court's decision to dismiss Montana's claims
against it. (Doc. 7 at 5.) A hearing on Defendants'
motions was held on May 25, 2018.
have moved for dismissal of the State's claim pertaining
to the Great Falls reach pursuant to Federal Rule of Civil
Procedure 12(b)(6) and the mandate rule. (Docs. 4 at 1; 6 at
2.) Dismissal under Rule 12(b)(6) is "proper only when
the complaint either (1) lacks a cognizable legal theory or
(2) fails to allege sufficient facts to support a cognizable
legal theory." Zixiang Li v. Kerry, 710 F.3d
995, 999 (9th Cir. 2013). Unfortunately, Defendants have not
explained how Rule 12(b)(6) relates to the mandate rule.
Despite invoking Rule 12(b)(6), Defendants proceed to assert
their case for dismissal upon a theory that the mandate rule
deprives this Court of the authority to render a decision
regarding the Great Falls reach-implying that this Court
lacks subject-matter jurisdiction, a contention which has
already been litigated in this case (as condensed above) and
which would be appropriately filed as a Rule 12(b)(1) motion.
Nonetheless, the Court proceeds with the analysis satisfied
that dismissal under Rule 12(b)(6) is appropriate where
"the plaintiff 'cannot possibly win
relief.'" Reed v. Lieurance, 863 F.3d 1196,
1207 (9th Cir. 2017) (quoting Lee v. City of Los
Angeles, 250 F.3d 668, 683 n. 7 (2001)). If the mandate
rule supports the contention that this Court cannot consider
the navigability for title of the Great Falls reach, then
Montana "cannot possibly win relief on its claims to
that stretch of the river and those claims will be dismissed.