_________ Bill No. _______
Introduced By _______________________________________________________________________________
By Request of the Department of Natural Resources and Conservation
A Bill for an Act entitled: "An Act revising the method of leasing state grazing and agricultural lands; requiring cash leasing; allowing for reinstatement of leases canceled for nonpayment; amending sections 77-6-501 and 77-6-506, MCA; and providing an effective date and an applicability date."
STATEMENT OF INTENT
A statement of intent is required for this bill because in [section 1], the bill grants the board of land commissioners authority to adopt rules relating to formulas for determining cash leases on state lands. It is the intent of the legislature that the board consider the following factors in establishing rules under [section 1]:
(1) the value of the land;
(2) the type of agricultural production on the land, e.g., dry land versus irrigated;
(3) the productive capability of the land;
(4) the market rates for the respective products raised;
(5) federal farm program payments;
(6) prevailing cash rental rates in an area; and
(7) a multiplication factor representing the state's full market share of the crops raised.
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
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.
(2) Except in the case of cash lease renewals under as provided in 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 cash rental 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. The board shall adopt rules establishing
additional criteria to set formulas for the minimum rental rate for various types of crops.
(3) In cases 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."
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 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, 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 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 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 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].
NEW SECTION. Section 4. 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].
NEW SECTION. Section 5. Effective date. [This act] is effective July 1, 1997.
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