Opinion ID: 889911
Heading Depth: 1
Heading Rank: 4

Heading: The Leasing Statutes.

Text: ¶ 29 Section 77-6-302, MCA, outlines the process that leaseholders must follow to receive compensation for improvements. The new lessee shall pay to the former [leaseholder] the reasonable value of the improvements. Section 77-6-302(1), MCA. The next part provides that the parties must initiate arbitration when they cannot agree on the reasonable value of the improvements. Section 77-6-302(2), MCA. ¶ 30 The statute's final subsection (3) addresses how the parties must handle movable improvements. Section 77-6-302(3), MCA. The former leaseholder may obtain a license from the Department to enter the leasehold to remove any movable improvements that still remain on the leasehold after the expiration of the lease. Id. The former leaseholder must remove any movable improvements that still remain on the leasehold within 60 days after the expiration of the lease or the improvements become the property of the State. Id. The former leaseholder, in addition, must reimburse the State for the period of time that the movable improvements remain on the land after the expiration of the lease. Id. ¶ 31 Section 77-6-303, MCA, provides the method for valuing the improvements and directs the Department to consider  all actual improvements. Section 77-6-303, MCA. (emphasis added). Section 77-6-303(1), MCA, directs the Department to value all improvements based on, among other things, the original cost, the present condition, the improvements' usefulness to the land, and the desirability to the new lessee. Grenz contends that this clear statutory language requires a new lessee to pay the former leaseholder for all improvements made on the leasehold, regardless of whether they are movable or permanent. Grenz notes that § 77-6-303, MCA, fails to distinguish between movable improvements and permanent improvements. ¶ 32 Section 77-6-302(3), MCA, denotes specific treatment, however, for movable improvements at the expiration of the lease. In subsection (3), where the statute addresses movable improvements, the legislature states that [t]he [D]epartment shall charge the former [leaseholder] for the period of time that the improvements remain on the land after the termination of the lease. Section 77-6-302(3), MCA. Admin. R.M. 36.25.125(6) provides that [w]hen the new lessee or licensee does not wish to purchase the movable improvements and fixtures, then the former lessee or licensee shall remove such improvements immediately. ¶ 33 We must determine whether Admin. R.M. 36.25.125(6) directly conflicts with the leasing statutes by looking first to the plain language of the statutes and the regulation. Giacomelli, ¶ 18, 221 P.3d 666. The statutes outline a method that the Department must follow to value improvements. Although the statutes direct that consideration must be given to all improvements, the statutes also denote special treatment for movable improvements. Section 77-6-302(3), MCA. The statutes also allow the Department to consider the improvements' desirability for the new lessee when valuing improvements. Section 77-6-303(1), MCA. Admin. R.M. 36.25.125(6) allows a new lessee to decide whether to purchase a former leaseholder's movable improvements. The rule provides a workable method that the lessees must follow to deal with movable improvements at the expiration of the lease. ¶ 34 Grenz and the Dissent argue that Admin. R.M. 36.25.125(6) wrongly vests the discretion of whether to purchase movable improvements in the new lessee. Nothing in the leasing statutes direct that the new lessee must purchase all movable improvements regardless of their desirability to the new lessee. The leasing statutes expressly allow the Department to consider the new lessee's preferences. Section 77-6-303(1), MCA. ¶ 35 Grenz and the Dissent base their conclusion on the statute's direction that all improvements must be considered in the valuation process. Section 77-6-303, MCA. The Department properly considers all improvements when it allows the new lessee to determine what movable improvements the new lessee wishes to purchase. Admin. R.M. 36.25.125(6) provides a workable method for valuing movable improvements. We do not believe that the plain language of Admin. R.M. 36.25.125(6) directly conflicts with the leasing statutes.