This week the Montana Board of Land Commissioners, known as the Land Board, pulled what may be a first for the state. Comprised of the top five statewide elected officials, the Board primarily oversees management of the state's school trust lands. Now, however, the Board has decided it has the power to appropriate tens of millions of dollars. Only one problem: The power to appropriate state funds is constitutionally granted to the Legislature—and the Legislature was left out of the picture.
This strange tale begins some years back when the state launched a lawsuit against the owners of hydroelectric dams on Montana's major rivers. For a century, Montana Power Company (MPC) churned out the electrons and profits from the cheapest source of energy around—water running downhill. After stuffing a deregulation bill through the Legislature in 1997, however, MPC sold its dams and coal-fired power plants to an out-of-state mega-corporation, Pennsylvania Power and Light (PPL). Without skipping a beat, PPL decided that the days of regulated power—which gave Montanans the sixth cheapest power in the nation—were over. They would charge what the market could bear. Too bad for Montanans.
In politics, as in physics, every action has an equal and opposite reaction, albeit often long delayed. Since the out-of-state corporation decided to rip off Montanans (we now pay the highest electric rates in the region), former Attorney General Mike McGrath decided to fight back. He filed a lawsuit alleging that PPL and others who own large dams on Montana's navigable rivers owed the state rent for the use of the riverbeds where their dams are located.
The idea isn't outlandish. Farmers and ranchers pay rent to lease state lands for crops and grazing. Cabin owners pay rent for the state lands on which their cabins are located. Basically, if you use state lands, even if just for bird watching or hiking, you pay for that use and the proceeds go to fund education and state institutions. The dam owners, however, were a conspicuous exception to that rule.
To make a long, complex story a lot shorter, McGrath won in District Court and PPL appealed that decision to the Montana Supreme Court, which ruled in favor of the state. The price of the back rent, plus interest, came to a healthy $41 million, which PPL is now legally obligated to pay the state. The corporation hasn't made the payment yet, however, because it may decide to appeal the decision to the U.S. Supreme Court.
Nonetheless, Gov. Brian Schweitzer decided that the money PPL owed could be spent—or at least obligated to be spent when and if it came in—to purchase tens of thousands of acres of land formerly owned by Plum Creek Timber Co. and now owned by the Nature Conservancy, which very much wants to recoup its investment from the $500 million Montana Legacy Project.
But here's where it gets very weird. The Land Board has very limited authority to spend state funds. Primarily, they get to decide what to sell and buy through the land banking program, which operates as a revolving pool of funds that come from selling isolated state parcels and using the proceeds to purchase other lands that are more easily and profitably managed. The program has statutory sidebars set by the Legislature, but comes nowhere near giving the Board the authority to spend $41 million dollars on a land purchase.
Now, in a rushed maneuver that reeks of political intrigue, Schweitzer and his fellow commissioners voted unanimously to approve a resolution authorizing the use of PPL rent money to buy Plum Creek's former holdings. The highly controversial move has left plenty of legislators and others scratching their heads.
The Legislature's chief legal counsel, Greg Petesch, questioned the Land Board's authority to appropriate the money in a communication to the state attorney who advises the Land Board. Petesch exhaustively outlined the legal background of court decisions that basically say the power to appropriate almost all state funds is held by the Legislature alone. Cutting to the chase, Petesch bluntly writes: "I do not understand how this is 'nonstate money'. If you could please explain to me how this is not 'state money' I would greatly appreciate it."
In a memo, this one to Rep. Llew Jones and Sen. Carol Williams, Legislative Fiscal Analyst Barb Smith echoes Petesh's concerns, writing: "Initial review indicates that the resolution misclassifies these funds as non-state funds and inappropriately avoids the need for a legislative appropriation of the approximately $41 million awarded by the Court. Non-state funds, as defined in statute, are those funds from a non-state source that are restricted by law or agreement, such as a contract, trust agreement or donation."
Unfortunately, Smith's May 13th e-mail came up with the same result as Petesch's: "As of this writing no response has been received," Smith wrote. Nor had any response been received when the Land Board voted this week.
It is no secret that Schweitzer has had an often-stormy relationship with the Legislature. It is also no secret that our form of government has three distinct branches for a purpose—to provide checks and balances. It is likewise no secret that the 2011 legislative session will be tight on money and might decide the $41 million would be better spent on education than buying the former Plum Creek lands.
Whether the Land Board's rushed effort to pass the resolution with virtually no time for public review or comment will be challenged in court remains unknown. But one thing seems certain: It is a serious digression from the way Montana's government has operated throughout the state's history. That no response from the executive branch has been offered to the Legislature's questions is definitely not a good sign. And that other Land Board members, like Attorney General Steve Bullock, for instance, didn't delay the process until its constitutionality was fully clarified is simply inexcusable.
Helena's George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at email@example.com.