Trial starts in state's effort to charge PPL rent for dams

MATT GOURAS Associated Press Writer HELENA

The state's claim that utilities should be paying rent for use of the riverbeds where hydroelectric dams sit went to trial Monday, even as both sides said a settlement is still possible. The attorney general's office said it was still open to offers, and a representative for dam owner PPL Montana said his company has not ruled out a settlement. Lawyers for the state and two utilities headed to court Monday with dozens of boxes of exhibits, slide shows and charts for a trial before District Judge Thomas Honzel that could last up to two weeks. PPL Montana and Avista Corp. are fighting the state's attempt to get rent, including back rent, for using the stream bed in navigable rivers. The state earlier reached a settlement with PacifiCorp. PPL Montana argues that the dams are governed by the federal licenses it holds for the projects, and are not subject to the state claims. It also warns that the case could force other users of the rivers, such as irrigators and river guides, to pay for their use, or pay more. "There are a lot of users that are not paying," said PPL spokesman David Hoffman. "It's certainly not a matter of us not wanting to pay our fair share." Hoffman said the state shouldn't have a policy that singles out just the dam owners. Assistant Attorney General Anthony Johnstone said that other users, most with very small uses of the river, are in compliance with state law. "It is PPL that is not," he said. Johnstone said the dam owners use much more land than irrigators and other users. Honzel has already ruled that land under the dams is state school trust land and has rejected a claim from the companies that the rivers should not be considered navigable, which can determine ownership. He ruled against the state on its claim that the land submerged by reservoirs should also be considered school trust land. At torney General Mike McGrath has said that he believes the only real issue left to be decided at a trial is how much the companies should be charged for rent. PPL has predicted a long legal battle. PacifiCorp agreed in its settlement to pay about $50,000 a year for its one dam on the Swan River. PPL owns much larger dams, and state officials have yet to specify how much the company should be charged. The dispute began in October 2003 when two Gallatin County residents, later joined by the state and Great Falls elementary and high school districts, sued the utilities for compensation for use of the riverbeds for their dams. They argued that the state riverbeds are part of the school trust lands, but the utilities hadn't paid to use them. The courts later said that only the state had standing in the case, and the others were removed from the lawsuit.