Department of Lands proposes new rules

In June, 2007, the State Land Board directed the Department of Lands (IDL) to study problems with current lease rules and involve the stakeholders in the process of negotiated rulemaking. The Land Board wanted to avoid continued lawsuits and reduce costs to IDL.

On Wednesday, IDL representatives presented rules on new procedures to award leases on state endowment lands and to govern conflict auctions. About 45 people attended the joint presentation to the Senate Resources & Environment Committee and the House Resources and Conservation Committee in the spacious Senate auditorium.

IDL’s proposed changes include:
- Expanding the scope of the rules to include grazing, farming, conservation, communications and non-commercial recreation
- Requiring applicants in conflict auctions to agree to lease provisions, including management plans for the land. If agreement on provisions cannot be reached, the application will be denied.
- Allocating credit for improvements to the land based on the value of the improvements, including appreciation- over the length of the lease.

IDL representatives fielded a number of questions from the joint committee:

If a lease was put up for bid because of delinquent payments, would a person who was behind on something like child care payments, and owed the state, be ineligible to bid on a lease? Current processes wouldn’t pick up on this delinquency, but only on delinquencies on money due to the Department of Lands.

How do you monitor such disparate entities who could have leases under this expanded scope? Changes in the rule would require a meeting with the department to discuss proposed uses of the lands. Financial considerations to the proposed use and monitoring would be taken into account as well as potential conflicts between multiple leases.

How often would you monitor how agreed upon criteria is being met? The department manages 2.5 million acres of endowment lands, they would weigh, on a case by case basis, whether and how they would monitor this based upon the use and the subsequent costs to monitor. In some cases, they would require self monitoring and reporting back to the department.

Some of these leases have multiple purposes, some have timber and also grazing. How do you determine that one use is not in conflict with the other? What’s the criteria you’re going to use to evaluate that? IDL would determine what resource values or revenues would be at risk when reviewing the application. Area staff, based upon its knowledge of those lands, would perform this risk assessment based upon site specific conditions. For example, a lease would have to mitigate for fire prevention, if necessary, in the area.

If that’s the case, are you prepared to manage to that level? Are you going to go back every year, or once every 10 years? Depending upon the type of mitigation, it would be necessary to provide more oversight and cost recovery for additional inspections or administrative costs incurred by certain uses.

What is meant by the “valuation of improvements” and how is that different from current language? The term replaces the definition of “appraisal” clarifying that the department in conducting reviews is not serving as qualified appraisers. Regarding “permanent improvements” and how they’re handled in the lease contract itself, the language is not specifically related to the valuation process but the disposition of improvements if the lease is terminated.

Is this a change from the way it was handled before in considering whether to approve or disapprove the lease? Improvement credit is allowed in certain cases either through land sale or through conflict auction. The value of such improvements would be determined in the contract if, in the future, the holder were to lose the lease.

What about the time frame for lease to go through mitigation measures? Those appeals that go to the State Land Board have no time frames associated with them but would be handled on a case-by-case basis.

What would be an example of a cause to give notice of 180 days to terminate a contract? What if the department were approached for a “higher and better” use that would generate more revenue on the existing endowed land? Change of land-use would be a cause to terminate an existing lease.

Is there any compensation for the lease for improvements? Compensation is covered in the improvement section.

If you are leasing land to graze cattle at a cost of $5 per unit, can you change that price during the time the lease is in effect? Yes, those figures are recalculated and adjusted every year.

Public testimony included support for the rules with some suggestions for changes by the Idaho Cattle Association:

· Grazing Management Plans are a useful tool, but will have little or no effect on the department’s ability to manage the lease
· Idaho Department of Lands should not shift the cost of noxious weeds on the backs of the grazers.
· The IDL and the leasees need to continue to work together to manage for the long term needs of the endowment lands.

Both committees voted to accept the rules but rejected certain sections.