(1) As to agricultural lands, all leases shall 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. For purposes of this rule a district means the county or counties where the leased lands are located. "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 such special crop share rentals" as per 77-6-501, MCA.

(2) The department may authorize a lease or license upon other basis than cropshare, but in these cases the rental shall at least equal the value of the usual landlord share prevailing in the district. This may only be accommodated once during the term of the lease unless changes in crops are contemplated. Such rental rate consideration may only be approved by the director upon proper written application by lessee or licensee.

(3) The rental rate for all grazing leases and licenses shall be on the basis of the animal-unit-month carrying capacity of the land to be leased or licensed.

(a) For grazing leases issued or renewed prior to July 1, 1993, until the first date of renewal after July 1, 1993, the minimum rental rate per A.U.M. is the weighted average price per pound of beef cattle on the farm in Montana as determined by the Montana agricultural statistics service of the US department of agriculture for the previous year multiplied by 6.

(b) For grazing leases issued or renewed between July 1, 1993 and June 30, 2001, until the first date of renewal after July 1, 1993, the minimum rental rate per A.U.M. is the weighted average price per pound of beef cattle on the farm in Montana as determined by the Montana agricultural statistics service of the US department of agriculture for the previous year multiplied by 6.71.

(c) For all grazing leases issued or renewed after June 30, 2001, and all grazing licenses, the minimum rental rate per A.U.M. is the weighted average price per pound of beef cattle on the farm in Montana, as determined by the Montana agricultural statistics service of the US department of agriculture for the previous year, multiplied by 7.54.

(d) The department shall appraise and reappraise the classified grazing lands and grazing lands within classified forest lands under its jurisdiction in accordance with 77-6-201, MCA, to determine the carrying capacity and shall maintain records of such appraisals in its files. Such determination shall be made from time to time as the department considers necessary, but at least once during the term of every lease or license.

(4) When a lease or license term begins after February 28 but before July 1 during the first year of the lease or license, the lessee or licensee shall pay a rental price equal to the rental price for an entire year. When the lease or license term begins after June 30 but before February 28 of the next year, the lessee or licensee shall pay a rental price equal to 1/2 of the yearly annual rental. Summer fallowing shall not entitle any lessee or licensee to a refund or reduction of the rental.

(5) A lessee or licensee who grazes the stubble of harvested crops or hayland, or who grazes unharvested or damaged crops or hayland, shall contact the department regarding payment for such grazing on classified agricultural land. The department shall determine the number of animal unit months of grazing available on the land and shall bill the lessee or licensee for the grazing use based on the minimum grazing rental established under 77-6-507, MCA.   Failure or refusal to pay said rental or to notify the department of such grazing may be cause for cancellation of the lease.

(6) Effective January 1, 2001, and retroactive to those cabinsite leases issued between January 1, 1999 and December 31, 2000, and except as provided in (6) (a) , the minimum rental rate for a cabinsite lease or license is the greater of 5% of the appraised market value of the land, excluding improvements, as determined by the department of revenue pursuant to 15-1-208, MCA, or $250. This rate takes into account all those factors in 77-1-106, MCA reflecting the costs to the lessee of leasing state land.

(a) For cabinsite leases or licenses expiring after January 1, 2001, and for those leases and licenses whose rates are reviewed from 2003 through 2007, the department shall, when issuing a new lease or license at a rental rate greater than $250 for the same cabinsite, or in reviewing an existing lease or license, calculate the minimum rental rate as 5% of the appraised market value of the land; and:

(i) in the first year of the new lease or license, or of the lease or license review, the department shall collect a rental rate equivalent to the rental rate paid in the last year of the expired lease or license, plus 20% of the difference between:

(A) the rental rate paid in the last year of the expired lease or license or lease review; and

(B) the calculated rental rate of 5% of the appraised market value of the land.

(ii) in the second year of the lease or license, or of the lease or license review, the department shall collect a rental rate equivalent to the rental rate paid in the last year of the expired lease or license, or lease or license review, plus 40% of the difference between:

(A) the rental rate paid in the last year of the expired lease or license, or lease or license review; and

(B) the calculated rental rate of 5% of the appraised market value of the land.

(iii) in the third year of the lease or license, or lease or license review, the department shall collect a rental rate equivalent to the rental rate paid in the last year of the expired lease or license, or lease or license review, plus 60% of the difference between:

(A) the rental rate paid in the last year of the expired lease or license, or lease or license review; and

(B) the calculated rental rate of 5% of the appraised market value of the land.

(iv) in the fourth year of the lease or license, or lease or license review, the department shall collect a rental rate equivalent to the rental rate paid in the last year of the expired lease or license, or lease or license review, plus 80% of the difference between:

(A) the rental rate paid in the last year of the expired lease or license, or lease or license review; and

(B) the calculated rental rate of 5% of the appraised market value of the land.

(v) in each subsequent year for the remaining term of the lease or license, the department shall collect a rental rate equivalent to 5% of the appraised market value of the land.

(b) For cabinsites only:

(i) Any lessee or licensee has 60 days from the expiration or cancellation of the lease or license to remove all improvements from the leased or licensed premises. The removal of improvements must be conducted within the terms of a new land use license, for a fixed sum of 1/6 of the most recent year's lease or license fee or $50, whichever is the greater.

(ii) If the lessee or licensee does not wish to remove the improvements, but rather chooses to be compensated for the improvements, the lessee or licensee shall be responsible for any applicable tax assessments.

(iii) If, after two years of the expiration or cancellation of the lease or license, no new lessee or licensee is found, the department shall provide written notice to the former lessee or licensee that unless the improvements are removed within 60 days, the improvements will become the property of the state.

(iv) If a new lessee or licensee is found within two years of the expiration or cancelation of the lease or license, during the pendency of the improvement valuation process, including arbitration and appeal, the new lessee shall place in escrow an amount equal to the assessed value of the improvements as per department of revenue assessment, plus any applicable tax assessment. Nothing herein will prevent the department from issuing a lease or license to the new lessee or licensee during the pendency of the valuation process.

(v) If, during the two-year period described above, the prior lessee or licensee wishes to remove the improvements, the removal can occur only during those times when the leased or licensed property is not being offered for competitive bid.

(vi) Determination of compensation for improvements through the arbitration process shall utilize standard appraisal procedures giving full consideration to the improvements condition, its contribution to the value of the property for residential purposes, remaining economic life, and shall be the estimated cost to construct, at current prices, a building with equivalent utility as of the date of the lease or license's expiration.

(7) All other leases of class 4 land other than cabinsite leases shall be based on a determination of fair market value made by the department.   This determination shall be made at least once during the term of every lease, and a record made thereof.