October 23, 2007 in Business

Montana trial begins in bid for rent on dams

Associated Press The Spokesman-Review
 
File photo

Water spills over Avista Utilities’ Cabinet Gorge Dam in northwest Montana. The state wants utilities to pay rent for the land on which dams sit. The case has gone to trial, but a settlement is possible.
(Full-size photo)

HELENA – The state of Montana’s claim that utilities, including Avista Corp., should pay rent for use of the riverbeds where hydroelectric dams sit went to trial Monday, even as both sides said a settlement is 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.

Avista also is interested in settling the suit before a judge determines damages during the trial.

Lawyers for the state and both utilities headed to court Monday for a trial before District Judge Thomas Honzel that could last up to two weeks.

PPL Montana and Avista are fighting the state’s attempt to get rent, including back rent, for using the streambed 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.

Attorney 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.

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