Senate Bill No. 56

Introduced By lynch

By Request of the Department of Commerce

A Bill for an Act entitled: An Act regulating privately owned, for-profit, perpetually maintained cemeteries; regulating private cemetery perpetual care and maintenance trust funds; adding a sixth member to the board of funeral service; amending sections 2-15-1853 and 37-19-101, MCA; and repealing sections 35-21-101, 35-21-102, 35-21-103, 35-21-201, 35-21-202, 35-21-203, 35-21-204, 35-21-205, 35-21-206, 35-21-207, 35-21-208, 35-21-209, 35-21-210, 35-21-211, 35-21-212, 35-21-213, 35-21-214, 35-21-215, 35-21-216, 35-21-217, 35-21-301, 35-21-302, 35-21-303, 35-21-304, 35-21-305, 35-21-306, 35-21-307, 35-21-401, 35-21-402, 35-21-403, 35-21-404, 35-21-405, 35-21-406, 35-21-407, 35-21-408, 35-21-409, 35-21-410, 35-21-411, 35-21-412, 35-21-413, 35-21-414, 35-21-415, 35-21-416, 35-21-417, 35-21-418, 35-21-419, 35-21-420, 35-21-421, 35-21-422, 35-21-423, 35-21-424, 35-21-425, 35-21-426, 35-21-427, 35-21-428, 35-21-429, 35-21-430, 35-21-431, 35-21-432, 35-21-433, 35-21-501, 35-21-502, 35-21-503, 35-21-601, 35-21-602, 35-21-603, 35-21-604, 35-21-605, 35-21-606, 35-21-607, 35-21-608, 35-21-609, 35-21-610, 35-21-611, 35-21-612, 35-21-613, 35-21-614, 35-21-615, 35-21-616, 35-21-617, 35-21-618, 35-21-619, 35-21-620, 35-21-621, 35-21-622, 35-21-623, 35-21-624, 35-21-625, 35-21-626, 35-21-701, 35-21-702, 35-21-703, 35-21-704, 35-21-705, 35-21-706, 35-21-707, 35-21-708, 35-21-710, 35-21-711, 35-21-712, and 35-21-713, MCA.

STATEMENT OF INTENT

This bill requires a statement of intent because it requires rulemaking by the board of funeral service. The board shall adopt rules setting forth the information that must be included in an application to establish or expand a cemetery, rules setting forth the information that must be included in an application for a permit for an existing cemetery, rules determining the fee schedules for the permits required by [sections 3 through 16], rules determining the information required to build structures on a cemetery covered by [sections 3 through 16], and rules setting forth the information that must be included in the reports submitted to the board by a cemetery company covered under [sections 3 through 16]. Recognizing the sensitive nature of cemetery services and the potential for abuse to those in need of cemetery services, the legislature considers it necessary to provide guidelines for the operation of for-profit cemeteries. However, protection of the public must be balanced against the right of a business to conduct its affairs in a private manner. All rules promulgated by the board must be narrowly tailored to require only such disclosure as is necessary to effectuate the intent of this legislation without violating the people's constitutional right to know. The intent of this legislation includes ensuring that for-profit cemeteries are operated in a fiscally sound and prudent manner to protect the public's interest in well-maintained cemeteries, both now and in the future.

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

Section 1. Section 2-15-1853, MCA, is amended to read:

"2-15-1853. Board of funeral service. (1) There is a board of funeral service.

(2) The board consists of ~~five~~ six members appointed by the governor with the consent of the senate. Three members must be licensed morticians. One member must be a representative of the public who is not engaged in the practice of mortuary science or funeral directing. One member must be a licensed crematory operator or crematory technician or a mortician who is engaged in a crematory operation. One member must be a representative of a cemetery company governed by [sections 3 through 16].

(3) Board members shall serve staggered 5-year terms.

(4) The board is allocated to the department for administrative purposes only as prescribed in 2-15-121."

Section 2. Section 37-19-101, MCA, is amended to read:

"37-19-101. Definitions. Unless the context requires otherwise, in this chapter, the following definitions apply:

(1) "Authorizing agent" means a person legally entitled to order the cremation of human remains. An authorizing agent is, in order of preference:

(a) a spouse;

(b) a majority of adult children;

(d) a close relative of the deceased; or

(e) in the absence of a person or persons listed in subsections (1)(a) through (1)(d), a personal representative, a public administrator, the deceased through a preneed authorization, or others as designated by board rule.

(2) "Board" means the board of funeral service provided for in 2-15-1853.

(3) "Cemetery" means any land or structure in this state dedicated to and used or intended to be used for interment of cremated remains or human remains. It may be any one or a combination of a burial park for earth interments, a mausoleum for crypt or niche interments, or a columbarium.

(4) "Cemetery company" means an individual, partnership, corporation, or association that:

(a) owns or controls cemetery lands or property and conducts the business of a cemetery; or

(b) applies to the board to own or control cemetery lands or property and conduct the business of a cemetery.

~~(3)~~(5) "Closed container" means a container in which cremated remains can be placed and enclosed in a manner that prevents leakage or spillage of cremated remains or entrance of foreign material.

(6) "Columbarium" means a room or space in a building or structure used or intended to be used for the interment of cremated remains.

~~(4)~~(7) "Cremated remains" means all human remains recovered after the completion of the cremation, including pulverization that leaves only bone fragments reduced to unidentifiable dimensions.

~~(5)~~(8) "Cremation" means the technical process, using heat, that reduces human remains to bone fragments. The reduction takes place through heat and evaporation.

~~(6)~~(9) "Cremation chamber" means the enclosed space within which the cremation process takes place. Cremation chambers of crematoriums licensed by this chapter must be used exclusively for the cremation of human remains.

~~(7)~~(10) "Cremation container" means the container in which the human remains are placed in the cremation chamber for a cremation. A cremation container must meet substantially all of the following standards:

(a) be composed of readily combustible materials suitable for cremation;

(b) be able to be closed in order to provide a complete covering for the human remains;

(d) be rigid enough for handling with ease; and

(e) be able to provide protection for the health, safety, and integrity of crematory personnel.

~~(8)~~(11) "Crematory" means the building or portion of a building that houses the cremation chamber and the holding facility.

~~(9)~~(12) "Crematory operator" means the person in charge of the licensed crematory facility.

~~(10)~~(13) "Crematory technician" means an employee of a crematory facility who is trained to perform cremations and is licensed by the board.

(14) "Crypt" means a chamber of sufficient size to inter the remains of a deceased person.

~~(11)~~(15) "Department" means the department of commerce provided for in Title 2, chapter 15, part 18.

~~(12)~~(16) "Embalming" means the preservation and disinfection of the dead human body by application of chemicals, externally, internally, or both.

~~(13)~~(17) "Funeral directing" includes:

(a) supervising funerals, including the making of preneed or at-need contractual arrangements for funerals;

(b) preparing dead bodies for burial, other than by embalming;

(d) representing to the public that one is a funeral director.

~~(14)~~(18) "Holding facility" means an area within or adjacent to the crematory facility designated for the retention of human remains prior to cremation that must:

(a) comply with any applicable public health law;

(b) preserve the dignity of the human remains;

(d) be secure from access by anyone other than authorized personnel.

~~(15)~~(19) "Human remains" means the body of a deceased person or part of a body or limb that has been removed from a living person, including the body, part of a body, or limb in any stage of decomposition.

(20) "Interment" means any lawful disposition of cremated remains or human remains.

(21) "Lot" or "grave space" means a space in a cemetery used or intended to be used for interment.

(22) "Mausoleum" means a community-type room or space in a building or structure used or intended to be used for the interment of human remains in crypts or niches.

~~(16)~~(23) "Mortician" means a person licensed under this chapter to practice mortuary science.

~~(17)~~(24) "Mortuary" means a place of business used for the care and preparation for burial or transportation of dead human bodies or a place where a person represents that the person is engaged in the profession of mortuary science or funeral directing.

~~(18)~~(25) "Mortuary science" means the profession or practice of funeral directing and embalming.

(26) "Niche" means a space in a columbarium or mausoleum used or intended to be used for the interment of the cremated remains or human remains of one or more deceased persons.

(27) "Perpetual care and maintenance" means continual and proper maintenance of cemetery buildings, grounds, and lots or grave spaces.

~~(19)~~(28) "Temporary container" means a receptacle for cremated remains that is usually made of cardboard, plastic film, or similar material designed to hold the cremated remains until an urn or other permanent container is acquired.

~~(20)~~(29) "Urn" means a receptacle designed to permanently encase the cremated remains."

Section 3. Title. [Sections 3 through 16] may be referred to as the "Perpetually Maintained Cemeteries Act".

Section 4. Purpose. The legislature declares that it is the public policy of this state to regulate privately owned, for-profit cemeteries to protect public health and promote financial stability through perpetual care and maintenance trusts.

Section 5. Application of [sections 3 through 16] -- exceptions. [Sections 3 through 16] apply to all cemeteries and burial grounds located in the state of Montana unless the cemetery is owned and operated by:

(1) a church or similar religious organization;

(2) a municipality or county government;

(3) a family, as a private family burial ground where lots are not offered for sale; or

(4) a community nonprofit association in which persons other than the bookkeeper and maintenance crew are not entitled to receive any pecuniary profit.

Section 6. Powers and duties of board. The board is charged with administering [sections 3 through 16]. The board may:

(1) conduct reasonable periodic, special, or other examinations of a cemetery or cemetery company, including but not limited to an examination of the physical condition or appearance of the cemetery, an audit of the financial condition of the cemetery company and any trust funds maintained by the cemetery company, and any other examinations the board considers necessary or appropriate in the public interest. The board may also order examinations in response to public complaints. The examinations must be made by members or representatives of the board that may include a certified or registered public accountant or any other person designated by the board.

(2) issue or amend permits to operate a cemetery in accordance with the provisions of [sections 3 through 16];

(3) adopt rules and forms to enforce the provisions of [sections 3 through 16];

(4) require a cemetery company to observe minimum accounting principles and practices and to keep books and records in accordance with the principles and practices for the period of time the board may by rule prescribe; and

(5) require a cemetery company to provide additional contributions to the perpetual care and maintenance fund of the cemetery as provided for in [sections 3 through 16], including but not limited to contributions not to exceed $1,000 whenever a cemetery company fails to properly care for, maintain, or preserve a cemetery.

Section 7. Authority to inspect cemeteries and audit cemetery companies. (1) The board may order an inspection of a cemetery or may audit a cemetery company. For each cemetery examined or cemetery company audited in accordance with [sections 3 through 16], the cemetery company shall pay to the board a fee for each examination or audit as the board prescribes by rule. When an examination is ordered by the board, the cemetery company shall pay, at the state per diem rate, travel expenses, meals, and lodging for each day that a member of the board or an authorized examiner spends in examining the physical condition or appearance of a cemetery. Once audited, a cemetery company may not be required to submit to an audit at the request of the board for a period of 5 years unless complaints have resulted in a formal notice of disciplinary action by the department against the cemetery company.

(2) (a) In lieu of any financial examination that the board is authorized to make, the board may accept the audit of an independent certified or registered public accountant if the board has notified the cemetery company that the audit would be acceptable and the cemetery company has notified the board in writing that the audit will be prepared.

(b) The costs of the audit provided for in subsection (2)(a) must be borne by the cemetery company, and the scope of the audit must be at least equal to the scope of the examination required by the board.

Section 8. Permit -- application. (1) By January 1, 1998, a person operating a cemetery or a cemetery company governed by [sections 3 through 16] must have a permit issued by the board. The permit must be displayed in a conspicuous place at the cemetery.

(2) A cemetery permit expires on the date set by board rule and may be renewed for a 5-year period upon payment of a fee set by the board. An application for a permit or renewal of a permit must designate a responsible person, including that person's address and telephone number, who is available to act on behalf of the cemetery company with regard to the requirements of [sections 3 through 16]. A cemetery company may designate a different person with board approval. An application for renewal of a permit must contain:

(a) the name of the cemetery company, the location of the cemetery, the name of the person in charge of the records of the cemetery company, and the telephone number of the cemetery company;

(b) the number and dollar amount of sales of cemetery lots, grave spaces, mausoleums, crypts, niches, and burial rights for which payment has been made in full and the number of certificates or deeds of conveyance issued during the preceding 5 calendar years;

(c) an accounting of the amounts paid into the perpetual care and maintenance fund and the income received from the fund during the preceding 5 calendar or fiscal years, including the total amount due to the fund whether paid in or not, the amount due to the fund at the date of the report, and the amount expended for maintenance of the cemetery;

(d) the names and addresses of the owners of the cemetery company or the officers and directors of the cemetery company, any change in control of the cemetery company that has occurred during the past 5 calendar or fiscal years, the date of incorporation, if applicable, and the resident agent and address of the registered agent's office if the cemetery company is a corporation; and

(e) any other information that the board requires by rule.

(3) The board may set a penalty fee for late renewal of a permit.

Section 9. Permit -- amendment. (1) Whenever a cemetery company that is subject to the provisions of [sections 3 through 16] proposes to amend its present permit for construction of a mausoleum, reduction or increase in percentage of gross sales proceeds to be placed in the perpetual care and maintenance fund, expansion of a cemetery, or other changes in its operation, the cemetery company shall file an application for amendment of the permit with the board.

(2) The application must be accompanied by a fee and other information that the board requires by rule.

Section 10. Permit -- transfer of ownership. (1) If a cemetery company that is subject to the provisions of [sections 3 through 16] is to be sold, if the ownership is to be otherwise transferred, or if a controlling interest in the company is to be sold or otherwise transferred, the proposed purchaser or transferee shall file an application for the issuance of a new permit with the board.

(2) The application must be accompanied by a fee and other information that the board requires by rule.

Section 11. Perpetual care and maintenance fund. (1) A perpetual care and maintenance fund established pursuant to the provisions of [sections 3 through 16] for the purpose of administration, care, and maintenance of a cemetery, including lots, grave spaces, crypts, niches, burial rights, or other land or buildings, is a trust fund.

(2) The net income from the fund must be used by the owners, managers, or officers and directors of a cemetery company exclusively for the care and maintenance of the cemetery and may not be used for any other purpose.

(3) The principal of a perpetual care and maintenance fund must in all cases remain intact and inviolate and must be administered with the same care, skill, prudence, and diligence, under the circumstances then prevailing, that a prudent person would use to accomplish the purpose of the trust as required by this section and reflected in the trust document.

(4) Each cemetery company shall maintain at a minimum the following:

(a) a general ledger and general journal or comparable books of entry showing all receipts, disbursements, assets, liabilities, and income of the perpetual care and maintenance fund;

(b) documents supporting and verifying each asset of the fund; and

(5) The board may require a cemetery company to provide an accounting or audit of its perpetual care and maintenance fund.

(6) Each cemetery company shall deposit not less than 15% of the gross proceeds of each sale of a lot, grave space, crypt, niche, or burial right, as determined by the board, into the perpetual care and maintenance fund.

(7) In establishing a perpetual care and maintenance fund, a cemetery company may from time to time adopt plans for the general care and maintenance of its cemetery.

(8) A perpetual care and maintenance fund may receive, take, and hold any real or personal property that is bequeathed, devised, granted, given, or otherwise contributed to it.

Section 12. Records required. (1) A cemetery company shall make and keep accounts and records confirming that it has made the required contributions to its perpetual care and maintenance fund. The burden is upon the cemetery company to maintain the accounts and records.

(2) All sales contracts and deeds, unless otherwise authorized by the board, issued by a cemetery company must be numbered prior to their execution by the cemetery company and must contain those items the board prescribes by rule.

Section 13. Conveyance. (1) An instrument of conveyance or deed for a lot, grave space, mausoleum, crypt, niche, or burial right or part of a lot or grave space must be issued to the purchaser upon complete payment of the purchase price.

(2) Only a cemetery company or its agents may sell or convey the items listed in subsection (1). However, an owner may sell the item if the owner has first offered in writing to sell it to the cemetery company at the purchase price then being charged by the cemetery company for a similar item and the cemetery company has not accepted the offer within 30 days of the offer.

(3) The secretary or other responsible person of a cemetery company shall file and record in the cemetery company's books all instruments of conveyance and deeds.

(4) An instrument of conveyance or deed must be signed on behalf of a cemetery company by the person having proper authority to sign the instrument of conveyance or deed.

Section 14. Preexisting cemeteries. A cemetery or cemetery company that is in existence on January 1, 1998, shall obtain the necessary permits required by [sections 3 through 16] in order to continue operation and is subject as of January 1, 1998, to the provisions of [sections 3 through 16].

Section 15. Prearranged funeral plans. Where applicable, the provisions of Title 72, chapter 37, part 1, apply to persons subject to the provisions of [sections 3 through 16].

Section 16. Penalty -- injunction. (1) A person who violates a provision of [sections 3 through 16] is guilty of a misdemeanor and upon conviction shall be fined not more than $500 or imprisoned for not more than 90 days, or both.

(2) The board may enforce any provision of [sections 3 through 16] by injunction or any other appropriate proceeding.

Section 17. Repealer. Sections 35-21-101, 35-21-102, 35-21-103, 35-21-201, 35-21-202, 35-21-203, 35-21-204, 35-21-205, 35-21-206, 35-21-207, 35-21-208, 35-21-209, 35-21-210, 35-21-211, 35-21-212, 35-21-213, 35-21-214, 35-21-215, 35-21-216, 35-21-217, 35-21-301, 35-21-302, 35-21-303, 35-21-304, 35-21-305, 35-21-306, 35-21-307, 35-21-401, 35-21-402, 35-21-403, 35-21-404, 35-21-405, 35-21-406, 35-21-407, 35-21-408, 35-21-409, 35-21-410, 35-21-411, 35-21-412, 35-21-413, 35-21-414, 35-21-415, 35-21-416, 35-21-417, 35-21-418, 35-21-419, 35-21-420, 35-21-421, 35-21-422, 35-21-423, 35-21-424, 35-21-425, 35-21-426, 35-21-427, 35-21-428, 35-21-429, 35-21-430, 35-21-431, 35-21-432, 35-21-433, 35-21-501, 35-21-502, 35-21-503, 35-21-601, 35-21-602, 35-21-603, 35-21-604, 35-21-605, 35-21-606, 35-21-607, 35-21-608, 35-21-609, 35-21-610, 35-21-611, 35-21-612, 35-21-613, 35-21-614, 35-21-615, 35-21-616, 35-21-617, 35-21-618, 35-21-619, 35-21-620, 35-21-621, 35-21-622, 35-21-623, 35-21-624, 35-21-625, 35-21-626, 35-21-701, 35-21-702, 35-21-703, 35-21-704, 35-21-705, 35-21-706, 35-21-707, 35-21-708, 35-21-710, 35-21-711, 35-21-712, and 35-21-713, MCA, are repealed.

Section 18. Codification instruction. [Sections 3 through 16] are intended to be codified as an integral part of Title 37, chapter 19, and the provisions of Title 37, chapter 19, apply to [sections 3 through 16].

Section 19. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.

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