Administrative Rules of the State of Montana

DEPARTMENT OF COMMERCE

OF THE STATE OF MONTANA

In the matter of the adoption of New Rules I through IX, regarding the Movie and TV Industries and Related Media-Tax Incentives

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION

TO: All Concerned Persons

1. On February 21, 2013, at 1:00 p.m., the Department of Commerce will hold a public hearing in Room 226 of the Park Avenue Building at 301 South Park Avenue, at Helena, Montana, to consider the proposed adoption of the above-stated rules.

2. The Department of Commerce will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Commerce no later than 5:00 p.m., February 15, 2013, to advise us of the nature of the accommodation that you need. Please contact Bonnie Martello, Department of Commerce, 301 South Park Avenue, P.O. Box 200501, Helena, Montana 59620-0501; telephone (406) 841-2596; fax (406) 841-2701; TDD 841-2702; or e-mail [email protected].

3. The rules as proposed to be adopted provide as follows:

NEW RULE I INTRODUCTION (1) A production company may not receive the tax credits allowed under 15-31-907 and 15-31-908, MCA unless the production has been certified by the Department of Commerce and has applied to the Department of Revenue for the tax credits as provided in 15-31-906, MCA.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE II DEFINITIONS As used in these rules, the following words and phrases have the following meanings:

(1) "Department" means the Department of Commerce.

(2) "Production" means a nationally or regionally distributed feature-length film, short film, documentary, television series or segment, television pilot, magazine advertising, other than advertising for tobacco products, or commercial made in Montana, in whole or in part, for theatrical, television, video, internet, or other viewing. The term does not include the production of television coverage of news and athletic events or a film, video, internet production, television series, magazine advertising, or commercial that:

(a) contains any obscene material or performance as described in 45-8-201(2), MCA; or

(b) is produced in whole or in part with money received for tobacco product placement, advertisement, or other tobacco use in the production.

(3) "Production company" means a company engaged in the business of producing nationally or regionally distributed productions.

(a) The term does not include a company owned, affiliated, or controlled by, in whole or in part, a company or person that is in default on a loan made by this state or a loan guaranteed by this state or a company or person that has filed for bankruptcy.

(4) "State-certified production" means a production certified by the department as provided in 15-31-904, MCA and produced by a production company that has a national or regional distribution plan, including but not limited to a major theatrical exhibition, film festival, television network, cable television programming, magazine advertising, or video or internet distribution.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE III APPLICATION (1) The department shall provide a precertification application to a production company seeking state certification of a production.

(2) The application must include, but is not limited to:

(a) the production company's name, primary home address, business address, telephone and fax numbers, incorporation information, and federal tax identification number;

(b) the address and telephone and fax numbers of the production company's Montana office;

(d) a statement that the production company meets the definition of a production company under 15-31-903, MCA;

(e) the title of the production;

(f) the type of production;

(g) the proposed dates of production from preproduction to the start and completion of principal photography;

(h) a copy or synopsis of the production script;

(i) a list of the production locations;

(j) a statement that the proposed production does not contain any material or performance that would be considered obscene under 45-8-201(2), MCA or will not receive any money for tobacco product placement, advertisement, or other tobacco use in the production; and

(k) if the production is a feature-length film, a statement that the production will include a line in the production's film credits that the production was filmed in Montana.

(3) The application must be completed and signed by a manager, agent, president, vice president, or other person authorized to represent the production company.

(4) The application must be submitted to the department before the start of principal photography.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE IV FEATURE-LENGTH FILM (1) If the production is a feature-length film, the production company and the department, prior to the issuance of a certification number, shall enter into an agreement that the production company will comply with the provisions of [NEW RULE III]. The agreement may provide for remedies if the production company violates the agreement.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE V CERTIFICATION (1) The department shall approve an application that complies with the requirements of [NEW RULES III and IV]. Approval qualifies the production as a state-certified production.

(2) The department shall deny an application that fails to comply with the requirements of [NEW RULES III and IV].

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE VI NOTIFICATION (1) The department shall notify the production company in writing within 30 days of receiving the application whether the application is approved or denied.

(2) If the application is approved, the department shall include in the written notification a certification number. The department shall provide a copy of the notice to the Department of Revenue.

(3) If the application is denied, the department shall provide the production company with written notification explaining the denial.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE VII REVIEW (1) A production company may request a review of a denied application.

(2) The request must be in writing and filed with the department within 30 days from the date of denial.

(3) The request must explicitly state the production company is requesting a review and explain the reason the application should be approved.

(4) A review panel comprised of three film office staff members shall review the request and determine whether the application was properly denied.

(5) If the panel determines the application was properly denied, the department shall confirm the denial.

(6) If the panel determines the application was improperly denied, the department shall approve the application.

(7) The department shall notify the production company of the panel's determination in writing within 14 days of receiving the request.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE VIII REVOCATION (1) If the department determines that the production company has violated the provisions of [NEW RULE III] the department may revoke certification.

(2) If the department revokes certification, the department shall promptly notify the Department of Revenue.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

NEW RULE IX CONTESTED CASE (1) The revocation of certification may be contested in the manner prescribed in ARM 1.3.211 through 1.3.233.

(2) In a contested case before the department, the burden of proof shall be on the production company to establish by clear and convincing evidence that certification should not have been revoked.

AUTH: 15-31-904, MCA

IMP: 15-31-904, MCA

REASON: The proposed administrative rules are designed to bring the Department of Commerce into compliance with the legislative mandates of 15-31-904, MCA. In addition, the proposed rules are designed to establish formal policies and procedures, ensuring the legislative intent behind 15-31-904, MCA is applied consistently and objectively.

4. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Bonnie Martello, Paralegal, Montana Department of Commerce, P.O. Box 200501, Helena, MT 59620-0501; telephone (406) 841-22596; fax (406) 841-2701; or e-mail [email protected], and must be received no later than 5:00 p.m., February 28, 2013.

5. Garrett R. Norcott, Attorney, Montana Department of Commerce, has been designated to preside over and conduct this hearing.

6. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 4 above or may be made by completing a request form at any rules hearing held by the department.

7. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

8. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.

/s/ G. MARTIN TUTTLE /s/ MEG O'LEARY

G. MARTIN TUTTLE MEG O'LEARY

Rule Reviewer Director

Department of Commerce

Certified to the Secretary of State January 22, 2013.