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Montana Administrative Register Notice 42-1009 No. 24   12/27/2019    
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BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 42.12.501 through 42.12.505 pertaining to competitive bidding processes for retail all-alcoholic beverage licenses

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NOTICE OF AMENDMENT

 

TO: All Concerned Persons

 

1. On November 8, 2019, the Department of Revenue published MAR Notice No. 42-1009 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 1994 of the 2019 Montana Administrative Register, Issue Number 21.

 

2. On December 4, 2019, a public hearing was held to consider the proposed amendment. No proponents were present, no proponent oral testimony was received, and the department received no written comments in support. The following person appeared as an interested party to the rulemaking and provided oral and written comments: Cary Hegreberg, Montana Banker's Association (MBA).

 

3. The department has amended the following rules as proposed: ARM 42.12.501, 42.12.502, 42.12.503, and 42.12.505.

 

4. The department has amended the following rule as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:

 

42.12.504 DETERMINATION OF SUCCESSFUL COMPETITIVE BIDDER AND SUBMISSION OF COMPLETED APPLICATION (1) through (3) remain as proposed.

(4) The department shall notify the highest bidder in writing. The department shall also notify all other bidders that the highest bidder was notified.

(5) through (10) remain as proposed.

 

AUTH:  16-1-303, 16-4-105, 16-4-201, 16-4-204, 16-4-420, MCA

IMP:  16-4-105, 16-4-201, 16-4-204, 16-4-401, 16-4-420, 16-4-430, MCA

 

5. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:

 

COMMENT 1: The MBA requests additional rule amendment requiring the department to notify a bank submitting an irrevocable letter of credit (ILOC) on behalf of an unsuccessful bidder that the bank is officially released from the commitment.  MBA stated the regulatory and operational burdens a bank encounters when keeping these unfunded commitments on its books because the bank must have the capital to support the ILOC for a year, even when it is evident the bidder was unsuccessful. Further, when banks are required to carry these unfunded commitments for extended periods of time, it impacts a bank's ability to provide loans to other creditworthy loan applicants.

 

RESPONSE 1The department thanks Mr. Hegreberg and the MBA for its comments. While the department appreciates the issues that financial institutions may encounter when issuing an ILOC for a prospective license bidder, the proposed rule amendments implement 16-4-430, MCA, and the department cannot potentially compromise competitive bid process confidentiality through additional, required correspondence with third parties.  However, the department has amended ARM 42.12.504(4) based on these comments to provide that the department will notify all other bidders in addition to the highest bidder. An unsuccessful bidder may then forward that department notice to their financier for the purpose of terminating an ILOC without any undue delay associated with the statutory bid process or without violating bid confidentiality. And if the events described in ARM 42.12.504(10) occur, the next highest bidder and their bank may pursue a replacement ILOC if the original letter of credit was cancelled.

 

 

/s/ Todd Olson                                              /s/ Gene Walborn                                        

Todd Olson                                                   Gene Walborn

Rule Reviewer                                              Director of Revenue

           

Certified to the Secretary of State December 17, 2019.

 

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