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HELENA — On his second trip to Helena, H.W. Burns vowed never to bid on a state grazing lease again.

"The process leaves a lot to be desired," Burns said Monday, after a state Land Board hearing at which Burns explained for a second time why he thinks he — the highest bidder on a piece of state land — should have been given the lease.

Last fall, Burns entered a secret bid of $3,685 a year to rent 305 acres of school trust land near his Big Timber ranch. That's a lot of money, Burns said, but this particular piece of ground abutted Big Timber Creek, and in a time of drought, the promise of guaranteed water for his cows was worth it.

The current lease holder, Don Tetlie, also a Big Timber rancher, put in the lowest of the four bids. By state law, the current holder of a state land lease is allowed to match the highest bidder and keep the lease. Tetlie did just that. But then he petitioned the state land commissioner to reduce the cost of the lease he had just won by matching the high bid.

Bud Clinch, head of the Department of Natural Resources and Conservation and state land commissioner, set Tetlie's rent at $1,235 a year — more than $2,000 below Burns' high bid and below every other bid on the land.

Burns appealed. The state Land Board heard his appeal — and others like it — on Monday and, in an unusual move, threw out Clinch's recommended lower rent for the contested 305 acres. The board, made up of the governor, attorney general, secretary of state, state auditor and superintendent of public instruction, upheld every other contested grazing lease in which a lease holder matched the high bid, then had his rent reduced.

The board members did not award the lease to Burns, however, nor did they set a new, higher price for Tetlie. Instead, they decided to look into the matter more and make a decision at their next meeting.

Burns isn't the only one to have a problem with the way state lands are leased out.

Roy Andes is the lawyer and vice president for Montanans for the Responsible Use of the School Trust — MonTRUST — a watchdog group that follows the management of state assets held in trust for public education. He told the Land Board Monday that his group opposes every action in which the rancher holding a lease is allowed to match the high bid, then turn around and have his state land rent cut.

State lands are supposed to be managed with an eye toward maximizing return for the benefit of the state's public schools, he said. But by allowing ranchers to rent lands for thousands a year less than the highest bid for that land, Montana's schools are losing what could amount to millions of dollars every year, Andes said.

Harley Harris, a Helena lawyer representing William Broadbent, a Connecticut man who owns a ranch near Geyser, also takes issue with the arrangement.

"It certainly doesn't instill a high level of credibility in the competitive bid process," he said.

Broadbent bid $2,921 to rent 640 acres near his ranch. Gale "Shorty" Harlow, the rancher who already held the bid, matched it, then petitioned to have the rent reduced. Clinch set the new rate at $1,336 for the year, less than half of Broadbent's high bid.

Broadbent appealed and his case was heard Monday. The Land Board upheld the reduced rate that Clinch recommended.

As Clinch explained it to the board Monday, there's more to establishing rental rates for state land than just giving the lease to the highest bidder. While DNRC is charged with getting a maximum amount of money for the state's school trust, they are also charged with looking out for the long-term health of the land. If a rent is too high, a rancher might be inclined to run more cattle on it, thus hurting the range, he said. Plus, there is a good argument to be made for allowing for long-term leases, encouraging a rancher to take care of the land because it will pay off for him down the road.

And someone has to be the arbiter over what Clinch called "spite bids," or bids made when one rancher tries to outbid another for reasons other than genuine interest in use of the land.

John Bloomquist, a lawyer for the Montana Stockgrowers Association, also spoke at Monday's hearing. He said the state's grazing fees are "probably the most defensible fees the state receives."

"If you can have a tenant with a long-term investment in the asset and an investment in the productivity of the asset, that's the kind of tenant you want to have," he said, arguing in favor of practice of letting ranchers who hold grazing leases the opportunity to meet the high bid and keep the lease.

Rob Bergmeier, president of MonTRUST, said in an interview after the hearing that he can see the wisdom in offering incentives to ranchers to take good care of school trust land. But he said the current system, with Clinch as the sole arbiter of disputes and few criteria for what constitutes the best bid on school land, is flawed.

Bergmeier said his group is considering whether to take the matter to court or try to resolve the problem some other way.

Harris said he, too, is not sure how he will proceed.

"I'll talk it over with my client," he said.

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