Montana Administrative Register Notice 36-22-141 No. 7   04/15/2010    
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In the matter of the amendment of ARM 36.25.205 regarding procedures for the issuance of state oil and gas leases









To:       All Concerned Persons


            1.  On May 12, 2010 at 1:00 p.m., the Department of Natural Resources and Conservation will hold a public hearing in the Director's Conference Room (third floor) at the Department of Natural Resources and Conservation, 1625 Eleventh Avenue, Helena, Montana, to consider the proposed amendment of the above-stated rule.


            2.  The department 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 agency no later than 5:00 p.m. on April 30, 2010, to advise the department of the nature of the accommodation that you need.  Please contact Tommy Butler, Department of Natural Resources and Conservation, 1625 Eleventh Avenue, Helena, MT; telephone (406) 444-3776; fax (406) 444-2684;  e-mail tbutler@mt.gov.


            3.  The rule as proposed to be amended provides as follows, stricken matter interlined, new matter underlined:


36.25.205 PROCEDURES FOR ISSUE OF LEASE  (1)  A sale of oil and gas leases on state lands normally will be held once each quarter, on the first or second Tuesday of March, June, and December, and on a day in September that will not conflict with the Labor Day holiday. It will be in the department's discretion to waive a sale on any of these dates if insufficient applications have been received or to postpone if circumstances warrant. In such event a notice of "no sale" will be published in the Montana oil journal or in a publication of general circu­lation in Montana as provided for in (2).

            (2)  Sale of each lease will be by competitive, oral bidding., and sale

            (a)  Sale will be made and a lease executed to the qualified bidder who makes the highest bid.

            (b)  In the absence of any bid at such sale, on a particular tract, a lease will be issued to the person who first made application therefore in accordance with these rules.

            (c)  The department reserves the right to reject any and all bids on any tract offered for lease.

(2) (3)  Any person who wishes to nominate  desires that any tract of state lands be offered for an oil and gas leasing at lease sale as above described shall make application for oil and gas leasing on the form currently in use by the department prescribed by the department and then in current use. Blank forms for such applications may be secured from the department at no cost. Such application shall be, in form, an application for the issuance of an oil and gas lease to the applicant, shall contain, among other things, an adequate and sufficient descrip­tion of the land sought to be leased, and shall be deemed and considered for all purposes an offer to lease the lands de­scribed therein and a bid therefor in the amount of the minimum required first year's rental.

            (a)  There A $15.00 application fee shall be submitted with the application, payment of a $10.00 application fee, and this and is shall be the only payment required to be submitted with the applica­tion. ; however each application shall constitute an undertaking to pay, within 10 days after the lease sale, the required first year's rental for the leaseif at the lease sale the first applicant is the successful bidder therefor.

            (b)  Each application shall be an offer and constitute an undertaking to pay the required first year's rental for the lease within ten days following the lease sale if the applicant is the successful bidder, or if no one bids at the lease sale.  The application shall contain an adequate and sufficient description of the land sought to be leased. 

            (i)  If at the lease sale the successful bidder at the lease sale is a person other than the first applicant, the that person shall submit within 10 days after the sale the required first year's rental within ten days following the sale. 

            (c)  In order to permit the neces­sary time for notice of sale as herein provided, applications should be filed with the department at least 40 The department shall accept applications until 77 days prior to the date fixed for sale, as provided for in 77-3-411(2) whenever possible.

            (d)  Any application made may be withdrawn by the applicant if request for such withdrawal is received by the department prior to the withdrawal date indicated in the letter that is sent to the applicant by the department.  However, the time when the second notice of the sale, as hereafter provided, is sent to the publisher, but the ten dollar $15.00 application fee will not be re­funded.

            (e)  Where If more than one application is filed on any one tract, the department shall notify each person submitting an application subsequent to receipt of the first qualified appli­cation, that there is a prior application for that tract.  The department will return the application fee(s) to those subsequent applicants. and shall return the application fee.

            (f)  Where If the first applicant for a tract withdraws his the application as provided above in (d), and subse­quent applications for that tract have been received, the tract shall be offered for lease regardless of the withdrawal. In such cases, the opening bid must not be less than the minimum rental required by ARM 36.25.208. If no bids are made, the tract will not be leased.

(3) Notice of each sale shall be given by publications in the Montana oil journal, published in Billings, Montana, or in a publication of general circulation in Montana. There shall be at least 2 publications of notice, the first of which shall be within 15 days after the previous oil and gas lease sale, and need contain only the date and place of sale, as its purpose is to allow applicants to submit their applications prior to the 40 day deadline provided above. Other publications, the first of which shall be not more than 40 days prior to the date of the oil and gas lease sale, shall state the exact time and place of the forthcoming sale, shall state that all sales will be by competitive oral bidding, and shall describe each tract sepa­rately that will be offered for lease. 

            (4)  The department will comply with 77-3-411(3), (4), and (5), MCA, to provide notification of the oil and gas lease sale.

            (4) (5) The department will maintain an interested parties mailing list of prospective oil and gas lessees who request, in writing, that their names be placed on the list. At least 2 two weeks before each sale, the department will send mail to each addressee a copy of the sale notice of sale to each interested party.

(6)  The department shall provide notify the surface owners as provided for in 77-3-411(6) and (7), MCA.


            AUTH:   77-1-302, 77-3-402, 77-3-411, MCA

            IMP:  77-1-302, 77-3-411, MCA


REASONABLE NECESSITY:  These amendments are reasonably necessary to correct the application filing fee listed in ARM 36.25.205 to reflect the amount listed in ARM 36.2.1003, which became effective January 15, 1988.  The amendments also implement the oil and gas lease sale notification requirements of SB 475 (codified in 77-3-411, MCA) from the 2009 legislative session and update outdated department procedures and language.


            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 Tommy Butler, Department of Natural Resources and Conservation, 1625 Eleventh Avenue, Helena, MT; telephone (406) 444-3843; fax (406) 444-2684; or e-mailed to tbutler@mt.gov, and must be received no later than 5:00 p.m. on May 13, 2010.


            5.  Tommy Butler, Department of Natural Resources, has been designated to preside over and conduct the public hearing.


            6.  An electronic copy of this Notice of Public Hearing on Proposed Amendment is available through the department's web site at http://www.dnrc.mt.gov.  The department strives to make the electronic copy of this Notice of Public Hearing on Proposed Amendment 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.


            7.  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 that the person wishes to receive notices regarding conservation districts and resource development, forestry, oil and gas conservation, trust land management, water resources, or a combination thereof.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be sent 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.


            8.  The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The bill sponsor was contacted by e-mail on February 26, 2010.





/s/  Mary Sexton                                                         /s/  Tommy Butler

MARY SEXTON                                                        TOMMY BUTLER

Director                                                                      Rule Reviewer

Natural Resources and Conservation



Certified to the Secretary of State on April 5, 2010.



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