The Department of Natural Resources (DNR) manages a number of different categories of land, each for a specific purpose and under different management requirements. This includes approximately 3 million acres of federally granted lands and state forestlands, which the DNR manages to support common schools, counties, and other public institutions.
The DNR has the authority to lease state lands for various purposes, including commercial, industrial, residential, agricultural, and recreational uses, in order to obtain a fair-market rental return to the state or appropriate trust.
The DNR generally may not lease state lands for longer than 10 years, although longer leases are specifically authorized in multiple instances. Lands leased for general agricultural purposes may not exceed 25 years, and leases for tree fruit or grape production may be for up to 55 years. Share crop leases may not exceed 10 years.
When a state land lease for agricultural or grazing purposes includes a nondefault or early termination provision, the DNR must provide advance written notice of at least 180 days to the lessee prior to termination of the lease. In addition to the 180-day advance written notice that the DNR must provide prior to terminating an agricultural or grazing lease, the DNR must also provide the lessee with written documentation demonstrating that the DNR has included the leased land in a plan for higher and better use, a land exchange, or a sale.
The DNR is not required to include a nondefault or early termination provision in any state land lease for agricultural or grazing purposes. The DNR is not prohibited from allowing a lessee to surrender the leasehold subject to the terms provided in the lease. The DNR is not prohibited from executing other lease provisions designed to protect the interests of the lessee in the event that the lease is terminated under a nondefault or early termination provision.
In the event the Department of Natural Resources (DNR) exercises a nondefault or early termination provision in a state land lease for agricultural or grazing purposes, the DNR shall compensate the lessee according to the following schedule:
For both grazing leases and agricultural leases, the DNR must make payments to the lessee on an annual basis for the remaining term of the terminated lease, unless the DNR and the lessee agree to an alternate schedule of payments. If payments are made on any schedule other than on an annual basis, the DNR must subject any advance payments to an appropriate discount rate in order to reflect the net present value of the compensation owed by the DNR.
For both grazing leases and agricultural leases, if the lessee has placed any authorized improvements on the land that is subject to the lease, the DNR is responsible for compensating the lessee for the fair market value of the improvements. In the event that an agreement cannot be reached between the DNR and the lessee on the fair market value of the improvements, the valuation must be determined by a board of appraisers as prescribed in an existing statute.
If the DNR's exercise of a nondefault or early termination provision results in the removal of fencing from the land subject to the lease, the DNR is responsible for ensuring the replacement of any removed fencing.
If the DNR's exercise of a nondefault or early termination provision causes the lessee to incur a financial penalty as a result of an early withdrawal from a Natural Resources Conservation Service program, the DNR is responsible for reimbursing the lessee for payment of the financial penalty.
The compensation available to a lessee under the bill is the sole financial remedy available to the lessee based on the DNR's exercise of a nondefault or early termination provision in an agriculture or grazing lease.
(In support) The bill carefully approaches situations where the Department of Natural Resources (DNR) terminates a lease. It protects the DNR's fiduciary responsibility, and it also protects farmers and ranchers. In agriculture, it is essential to have stability. This bill comes to a wonderful conclusion. Nobody's profit should ever cause another person's loss. This bill is likely to lead to more competitive bidding for leases of lands managed by the DNR.
The bill helps encourage lessees to make investments in the land that they might not otherwise make, which fosters good stewardship. The bill is fair and reasonable to both the DNR and to farmers. Farmers need some certainty for the inputs they put into the land they are leasing.