Opinion ID: 889911
Heading Depth: 1
Heading Rank: 5

Heading: The legislative history and prior case law.

Text: ¶ 36 The Dissent and Grenz fail to recognize the legislative history and prior case law that contradict their conclusion. We have recognized that a party who leases state land for a ten-year period likely would construct both permanent improvements and temporary improvements on the land. See Montrust I, ¶¶ 43-49. The legislature's distinction between movable improvements and permanent improvements supports this interpretation. Section 77-6-302(3), MCA. The Dissent overlooks any purpose for this distinction. ¶ 37 The Court in Montrust I invalidated two leasing statutes that addressed the Board's treatment of movable improvements, §§ 77-6-304 and -305, MCA. The Court held that the statutes improperly had allowed former leaseholders to postpone the transfer of leases. Montrust I, ¶ 49. The two invalidated statutes had the combined effect of delaying the transfer of leases until the former leaseholder had received payment from the new lessee for movable improvements. These invalidated statutes had thwarted the effect of Admin. R.M. 36.25.125(6). The invalidated statutes allowed former leaseholders to leverage the new lessee to buy unwanted movable improvements to avoid delays in the transfer of the lease. Montrust I, ¶¶ 49, 55. ¶ 38 The Court first struck down former § 77-6-304, MCA, that allowed a former leaseholder up to 60 days after the lease terminates to remove movable improvements without charge. Montrust I, ¶ 51. The Board contended that the 60-day grace period allowed the Department time to inventory improvements on state trust lands and had no quantifiable impact on the trust. The Court disagreed. The policy plainly granted former leaseholders to remain free of charge on state trust lands for up to 60 days while they removed their movable improvements. Montrust I, ¶ 49. The Court cited the Department's practice of postponing the issuance of new leases until the former leaseholder had removed the movable improvements. Id. The Department's practice recognized that the statute's effect of allowing former leaseholders to remove improvements, including houses, cabins, and fences, after the end of the lease would deprive new lessees of quiet enjoyment and possession of their leasehold. Id. ¶ 39 The Court next struck down former § 77-6-305, MCA, on the grounds that it violated the Board's fiduciary duty by allowing a former leaseholder to forestall a new lease until the new lessee had established that the former leaseholder had been paid for improvements or that the former leaseholder had elected to remove the improvements. Montrust I, ¶¶ 55-58. The Court recognized that a statute that allowed a former leaseholder to hijack the transfer of a leasehold to a new lessee violated the Board's fiduciary duty. Id. at ¶ 58. ¶ 40 Montrust I prompted the Department to ask the legislature to revise the laws governing state trust lands. Mont. Sen. Comm. on Nat. Resources, Testimony on Sen. 31, 57th Legis., Reg. Sess. (January 17, 2001). The legislature responded to Montrust I by repealing §§ 77-6-304 and -305, MCA. The legislature also added subsection (3) to § 77-6-302, MCA, to require former leaseholders to remove movable improvements within 60 days of the end of the leasehold. Mont. Sen. 31, L.2001, Ch. 270, Sec. 5, 1275-76 (April 20, 2001). These changes eliminated the former leaseholder's ability to forestall the transfer of a lease to the new lessee. ¶ 41 Admin. R.M. 36.25.125(6), with its requirement that former leaseholders remove movable improvements not wanted by the new lessee, was in full force and effect at the time that the legislature amended the leasing statute. We presume that the legislature acts with knowledge of the previous construction of similar statutes or related rules and to have adopted that construction when it amends a statute. Hovey v. Dept. of Revenue, 203 Mont. 27, 33, 659 P.2d 280, 283 (1983); State v. Brown, 2009 MT 452, ¶ 10, 354 Mont. 329, 223 P.3d 874. Admin. R.M. 36.25.125(6) represents a long-standing rule that has survived multiple amendments to the leasing statutes. Admin. R.M. 36.25.125(6) governed the method for dealing with movable improvements before the 2001 amendments. ¶ 42 The legislature's 2001 amendments to the statute addressed the problem of leaseholders leaving movable improvements on state leaseholds indefinitely. The new statute, § 77-6-302(3), MCA, essentially codified the portion of Admin. R.M. 36.25.125(6) that directs the former leaseholder to remove movable improvements. Admin. R.M. 36.25.125(6) reflects the legislature's intent. It provides a method that former leaseholders must follow to receive compensation for improvements and to remove movable improvements from state trust land that the new lessee does not want. Admin. R.M. 36.25.125(6) is consistent with and reasonably necessary to effectuate the legislature's leasing statutes. ¶ 43 Neither the Dissent nor Grenz believe that movable improvements must be removed. Dissent, ¶¶ 83-84. Grenz assumes from the legislature's use of the discretionary word may in § 77-6-302(3), MCA, that the Department does not have to allow a former leaseholder to remove movable improvements even if the former leaseholder would like to remove the movable improvements. The former leaseholder can apply for a license, according to Grenz, and the Department must decide whether the former leaseholder can remove the movable improvements or must receive monetary compensation instead. ¶ 44 We agree that the statute requires the former leaseholder to obtain permission from the Department before entering the leasehold after the expiration of the lease. This Court in Montrust I invalidated a practice whereby the former leaseholder could delay indefinitely the transfer of a lease until the new lessee had paid for the improvements. Montrust I, ¶ 58. The lease transfers immediately to the new lessee. The former leaseholder would have no legal authority to enter the leasehold at that point absent the license granted by the Department. Section 77-6-302(3), MCA. ¶ 45 We disagree that § 77-6-302(3), MCA, vests in the Department the power to decide whether a former leaseholder must remove movable improvements or accept compensation instead. This interpretation directly conflicts with Admin. R.M. 36.25.125(6). The administrative rule affords the new lessee the discretion whether to purchase movable improvements from the former leaseholder. The rule pre-dated the legislature's 2001 amendments to § 77-6-302(3), MCA. The Dissent believes the Court wrongly has elevated the regulation over a statute. Dissent, ¶ 78. ¶ 46 We must presume, however, that the legislature acts with deliberation and full knowledge of all existing laws on a subject when it amends the law. Brown, ¶ 10. The legislature has amended § 77-6-302, MCA, multiple times since the Department adopted Admin. R.M. 36.25.125 in 1987. The Dissent highlights the 2005 amendments that added the requirement in § 77-6-302(1), MCA, that lessees must provide a list of their improvements and the improvements' value to the Department. Dissent, ¶ 87. This 2005 amendment provided yet another opportunity for the legislature to have assessed and amended the law regarding improvements if it believed that Admin. R.M. 36.25.125(6) negatively had affected Montana ranchers or the transfer of state leases. No legislators, or ranchers for that matter, expressed any concern with Admin. R.M. 36.25.125(6) when the legislature amended § 77-6-302(1), MCA, in 2005. ¶ 47 Grenz and the Dissent suggest that there are only two options before the Department: (1) the former leaseholder can remove movable improvements ( if the Department allows), or (2) the former leaseholder must leave the movable improvements and receive monetary compensation. This interpretation also makes no sense in light of the provision in § 77-6-302(3), MCA, that the former leaseholder's failure to remove the movable improvements within 60 days after the expiration of the lease results in the improvements reverting to State ownership. Movable improvements never would revert to State ownership if the new lessee must purchase the movable improvements left behind by a former leaseholder. This interpretation renders § 77-6-302(3), MCA, meaningless. ¶ 48 This interpretation also cannot stand in light of the fact that this Court and the Legislature have scrutinized the leasing provisions dealing with valuation of improvements and Admin. R.M. 36.25.125(6) has survived numerous amendments to the leasing statutes. We do not believe that the Board's rule that allows a new lessee to chose whether to purchase a former leaseholder's movable improvements directly conflicts with the plain language of the statute or ignores the legislative directive in §§ 77-6-302, or -303, MCA.