AN ACT REVISING THE METHOD OF LEASING STATE GRAZING AND AGRICULTURAL LANDS; REQUIRING A RENTAL GUARANTEE FOR BIDS OVER A ONE-THIRD CROP SHARE; ALLOWING FOR REINSTATEMENT OF LEASES CANCELED FOR NONPAYMENT; AMENDING SECTIONS 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 77-6-501, 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 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.

(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 bases 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 a case 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.

(4) For all agricultural leases issued through competitive bidding provided for under 77-6-202 or 77-6-205, the department shall require on any competitive bid greater than a one-third crop share a minimum annual guarantee of not less than $15 an acre."

Section 2. Section 77-6-506, MCA, is amended to read:

"77-6-506. Date when rental due -- penalty -- cancellation for nonpayment. (1) For a grazing lease, for the grazing portion of a lease containing both agricultural and grazing land, and for agricultural leases not based on a crop share, the grazing rental for the first year of the lease must be paid at or before the time of the execution of the lease; however, in the case of 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 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 is payable at the end of each year of the lease. The rental for each succeeding year on a lease issued after [the effective date of this act], with the exception of a lease that involves the United States as the lessee, is due and payable before March 1. If the rental is not paid before March 1, a $25 penalty must 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 lease and for the agricultural portion of 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 must 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, by 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 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.

(6) The department may, within 30 days of cancellation, reinstate a canceled agricultural, grazing, or other surface lease upon payment of the rental that is owing, plus a penalty not to exceed three times the annual rental, except that 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."

Section 3. 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].

Section 4. Effective date. [This act] is effective July 1, 1999.

Section 5. Applicability. (1) [Section 1] applies to all agricultural leases made or renewed on or after [the effective date of this act].

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

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I hereby certify that the within bill,

SB 0007, originated in the Senate.

Secretary of the Senate

President of the Senate

Signed this	day

of	, .

Speaker of the House

Signed this	day

of	, .

SENATE BILL NO. 7

INTRODUCED BY JABS R

BY REQUEST OF THE DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION

AN ACT REVISING THE METHOD OF LEASING STATE GRAZING AND AGRICULTURAL LANDS; REQUIRING A RENTAL GUARANTEE FOR BIDS OVER A ONE-THIRD CROP SHARE; ALLOWING FOR REINSTATEMENT OF LEASES CANCELED FOR NONPAYMENT; AMENDING SECTIONS 77-6-501 AND 77-6-506, MCA; AND PROVIDING AN EFFECTIVE DATE AND AN APPLICABILITY DATE.