The Maine Supreme Judicial Court recently upheld a lower court’s decision that a hydroelectric company is not responsible for paying municipal property taxes on land it occupies in Waltham, a rural town in central Hancock County.

The town of Waltham filed a civil suit last year in Hancock County Superior Court against PPL Maine LLC, which operates several hydroelectric dams throughout Eastern Maine, including the Ellsworth Hydro Project on Graham Lake.

In the suit, the town claimed that PPL Maine was a “person in possession” of submerged land beneath Graham Lake.

That land was created by a dam operated by PPL Maine, and the town sought property taxes from the company. An attorney representing the town said those taxes have grown to about $80,000.

A Superior Court justice, however, did not agree with the town’s assessment regarding taxes. The town appealed that decision, but the state supreme court affirmed late last week the lower court’s ruling.

“The town’s sole claim to taxes from PPL is based on PPL’s easement over the submerged land located within the town,” the decision stated. “The town contends that the easement makes PPL a person in possession of the submerged land because the flooding prevents any other use of the land.”

The supreme court decision concluded that PPL’s interest in the land was “non-possessory interest,” meaning the hydroelectric company technically did not own the land, just the flowage rights.

“The court’s narrow legal holding was that a holder of flowage right easement is not a person in possession,” Charles Gilbert, a Bangor attorney representing the town, said Monday by telephone. “The rationale for that decision is based on fairly arcane principles of real estate law.”

In the 1920s, Bangor Hydro-Electric Co. built the Graham Lake dam, flooding land around the Union River bed, including land in Waltham.

The town had charged and received property taxes from Bangor Hydro on that submerged land for several years until the utility sold the dam in 1999.

PPL Maine took over the water-powered generating facility in 2001. When learning of a new owner, the town transferred the property tax card from Bangor Hydro to PPL for the tax years 2001, 2002 and 2003.

PPL, however, never paid those taxes and the town took the matter to court.

“Bangor Hydro paid these taxes for years and never questioned them,” Gilbert said. “Today in this deregulated environment, PPL has an incentive to cut costs any way they can.”

“There are plenty of towns and territory where there is flowed land created from dams,” he said. “It’s interesting to see how this decision will affect them.”