House Bill No. 269

Introduced By _______________________________________________________________________________

A Bill for an Act entitled: "An Act revising the method of determining the bid deposit for leasing state grazing and agricultural lands; revising the method of leasing state grazing and agricultural lands; requiring cash leasing; allowing for reinstatement of leases canceled for nonpayment; amending sections 77-6-203, 77-6-501, and 77-6-506, MCA; and providing an effective date and an applicability date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 77-6-203, MCA, is amended to read:

"77-6-203.   Bid deposit. (1) A person bidding for the lease of state lands shall deposit with the department, as evidence of good faith, a certified check, cashier's check, or money order in an amount equal to 20% of the total annual rental bid in the case of grazing land and an amount equal to $1 per acre for each acre of agricultural land contained in the lease in the case of agricultural land on which the bid is made on a crop share basis or $100, whichever is greater.

(2)  The department shall retain the deposit of the successful bidder, apply it on the rental for the first year of the lease only, and return any balance of the deposit at the end of the first year to the successful bidder. The department shall return the deposits of the unsuccessful bona fide bidders. If the department finds a bid has been submitted that is frivolous, forged, or a bad faith bid or a bid submitted for purposes of harassment, the deposit is forfeited. The department shall make a reasonable attempt to notify the bidder in writing of the forfeiture and reasons therefor for the forfeiture.

(3)  If the successful bidder fails to execute the lease for any reason, his the bidder's deposit shall be is forfeited.

(4)  The department shall credit all forfeited deposits to the interest and income account of the proper trust."

Section 2.  Section 77-6-501, MCA, is amended to read:

"77-6-501.   Agricultural leases. (1) As to agricultural lands, all leases except lease renewals upon which the lessee has made improvements at the lessee's expense, as provided in subsection (3), must be continued or made upon a crop share cash rental basis of not less than one-fourth of the annual crops to the state or the usual landlord's share prevailing in the district, whichever is greater. The board may, however, approve special crop share rentals of less than one-fourth for high production cost crops such as but not limited to potatoes and sugar beets or for high production cost methods when these methods would result in more income to the state. The board may not delegate the authority to approve special crop share rentals. Except as provided in subsections (2) through (4), the rental is determined by multiplying by 95% the most frequently reported per-acre cash rental, under similar circumstances, in the county as reported by the Montana agricultural statistics service of the U.S. department of agriculture.

(2)  Except in the case of cash lease renewals under subsection (3), if it is in the best interests of the state, the department may authorize a lease upon other basis than crop share, but in these cases the rental must at least equal the value of the usual landlord's share prevailing in the district under similar circumstances, and the department shall set forth in the records the conditions of the case and the rental to be charged.

(3)  In cases in which the lessee has made substantial improvements for irrigation purposes to the lease at the lessee's own expense, the department shall authorize a cash lease renewal at not less than $15 an acre on the portion of the lease that has been improved. The board may approve special cash rentals at rates other than the amount determined under subsection (1):

(a) for high production crops, including but not limited to potatoes and sugar beets; or

(b) for crops requiring high production cost methods whenever the methods produce a crop that generates more income to the state.

(3) The board may establish rental rates other than the rates determined under subsection (1) if there is evidence of a wide disparity in rental rates within the county, provided that the board clearly states the evidence indicating a wide disparity.

(4) The board may reduce the cash rental per acre determined under subsection (1) within a county during the year if the county is declared a disaster by the United States department of agriculture."

Section 3.  Section 77-6-506, MCA, is amended to read:

"77-6-506.   Date when rental due -- penalty -- cancellation for nonpayment. (1) For a grazing leases, lease and for the grazing portion of leases a lease containing both agricultural and grazing land, and agricultural leases not based on a crop share, the grazing rental for the first year of the lease shall must be paid at or before the time of the execution of the lease;. however However, in the case of leases which take a lease that takes effect on and after October 1 and before the expiration of the coming February, both the rental for the fractional year and for the next full year beginning March 1 shall must be paid and collected at the time of issuing the lease. If the United States is the lessee of state lands for grazing purposes, the rental shall be is payable at the end of each year of the lease. The rental for each succeeding year on leases hereafter a lease issued after [the effective date of this act], with the exception of leases a lease wherein in which the United States is the lessee, is due and payable before March 1. If the rental is not paid before March 1, a $25 penalty shall be imposed on the lessee. If the full rental and the $25 penalty are not paid by April 1, the entire lease is canceled.

(2)  For an agricultural leases lease and for the agricultural portion of leases a lease containing both grazing and agricultural land, when the rental is paid on a crop share basis or on a crop share/cash basis, the rental is due in cash on or before November 15 of the year in which the crop is harvested. If the rental is not paid on or before November 15 of the year of crop harvest, a $25 penalty shall be imposed on the lessee. If the full rental and the $25 penalty are not paid on or before December 31 of the year in which the crop is harvested, the entire lease is canceled. The department may extend the deadline in writing. If the lessee does not make the rental payment by the date of extension, the entire lease is canceled. Any rental payment made after November 15 of the year in which the crop is harvested, including payment made after an extension of the deadline, must include the $25 penalty.

(3)  For all state land leases and licenses other than those described in subsections (1) and (2), the department shall impose a $25 penalty for failure to make a rental payment by any deadline established by statute, rule, or in the lease or license.

(4)  At least 2 weeks prior to the final deadline for payment under subsection (1) or (2), the department shall send by certified mail to each lessee who has not made payment a letter notifying the lessee that the lease is canceled if payment and the $25 penalty are not received by the final deadline. The notice shall must be sent to the lessee at the address given in the lease.

(5)  When a lease is canceled under subsection (1) or (2), the department shall notify the lessee of the cancellation by letter at the address given in the lease. The land is then open for lease to applicants.

(6)  The department may, within 30 days of cancellation under subsection (1) or (2), reinstate a canceled lease upon payment of the rental that is owing, plus a penalty not to exceed three times the annual rental. A penalty imposed under this subsection may not be less than $500.

(7) A canceled lease that is not reinstated must be made available for lease as provided in 77-6-202.

(8) The penalties collected pursuant to this section must be deposited into the same trust account as the rentals from the state land to which the penalties apply."

NEW SECTION. Section 4.  Saving clause. [This act] does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before [the effective date of this act].

NEW SECTION. Section 5.  Applicability. (1) [Sections 1 and 2] apply to all agricultural leases made or renewed on or after [the effective date of this act].

(2) [Section 3] applies to all rentals due on or after [the effective date of this act].

NEW SECTION. Section 6.  Effective date. [This act] is effective July 1, 1997.

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