(1) As provided by 85-2-101, MCA: "It is the policy of this state... to provide for the wise utilization, development, and conservation of the waters of the state for the maximum benefit of its people with the least possible degradation of the natural aquatic ecosystems." While it is the policy of this state to recognize and confirm all existing rights to the beneficial use of any waters of the state, Montana must be responsive to the need for establishing options for future diversionary uses of Montana's water resource and for maintaining stream flows for the protection of existing water rights, aquatic life, and water quality.

(2) The water reservation process, as provided by 85-2-316 and 85-2-331, MCA, is a means by which this policy can be implemented. The statute provides for the establishment of reservations of water by governmental entities for beneficial uses that are necessary and shown to be in the public interest.

(3) The purpose of these rules is to provide guidelines and procedures for the preparation and processing of correct and complete water reservation applications and for the adoption and implementation of water reservations in order to ensure, to the fullest extent possible, that the proposed use of reserved water is not speculative.

(4) The water reservations are intended to be administered in accordance with the above policy and as provided in 85-2-316 and 85-2-331, MCA. These rules are intended to be implemented to provide reservants reasonable time for compliance with department orders.

Unless the context requires otherwise, in these rules:

(1) "Act" means the Montana Water Use Act, Title 85, chapter 2, parts 1 through 4, MCA.

(2) "Applicant" means an entity that has submitted an application to reserve water pursuant to 85-2-316 and 85-2-331, MCA.

(3) "Application for permit" means an application for beneficial water use permit, form no. 600.

(4) "Department" means the Department of Natural Resources and Conservation provided for in 2-15-3301, MCA.

(5) "Direct benefits" means all benefits to the reservant derived from applying reserved water to the use for which it is granted.

(6) "Direct costs" means all costs to the reservant resulting from applying reserved water to beneficial use for the purpose granted.

(7) "Diversionary use" means a water use occurring outside of a stream channel or requiring development of a project in order to apply water to a beneficial use. This includes stockwater use and development of projects that will augment an instream use.

(8) "Economic feasibility" means that indirect and direct project benefits exceed indirect and direct project costs.

(9) "Entity" means the state, any political subdivision or agency of the state, or the United States or any agency of the United States that is qualified to reserve water pursuant to 85-2-316 and 85-2-331, MCA.

(10) "Financial feasibility" means that financing for a water reservation project can be secured and that project costs will be recovered:

(a) from project revenues generated over the project life;

(b) through available subsidies; or

(c) from any combination of (a) and (b).

(11) "Firm yield" means the volume of water, including reasonable carry-over storage that will be available from a storage facility during a specified critical dry period to meet water needs under a predetermined demand schedule. Reasonable carry-over storage is determined on a case-by-case basis by considering such factors as type of beneficial use; relation of amount of the carry-over storage to project size; the impacts of water shortage on project operation; and other demands on the water resource.

(12) "Indirect benefits" means the benefits of applying reserved water to beneficial use that accrue to other uses or to parties other than the reservant.

(13) "Indirect costs" means the costs of applying reserved water to beneficial use that accrue to other uses or to parties other than the reservant.

(14) "Instream use" means a water use that requires water to remain within a stream channel and does not require the development of a project in order to apply water to a beneficial use.

(15) "Irrigable lands" means lands with the soil, topographic, and water supply conditions needed to sustain irrigated agriculture on an economically feasible basis under foreseeable economic conditions.

(16) "Management plan" means a detailed plan that accompanies a reservation application and that will be used to guide a reservant in the application of reserved water to beneficial use.

(17) "Modify" means to alter a term or condition of an order establishing a water reservation issued pursuant to 85-2-316 and 85-2-331, MCA.

(18) "Net benefits" means indirect and direct benefits less indirect and direct costs.

(19) "Objective" means the purpose, the need, the amount, and the public interest of a water reservation.

(20) "Period of use" means the time period in a calendar year, expressed in days and months, during which reserved water will be used.

(21) "Periodic review" means the department review required to determine whether the objectives of a reservation are being met.

(22) "Project" means any water storage and/or diversion facility. Water storage and/or diversion facilities include, but are not limited to:

(a) dams;

(b) water spreading systems;

(c) diversion canals;

(d) laterals;

(e) waste and drainage canals;

(f) dikes;

(g) wells;

(h) pumping units;

(i) mains;

(j) pipelines;

(k) power generators; and

(l) waterworks systems needed for application of reserved water to beneficial use.

(23) "Qualified reservant" means any entity to which a reservation may be reallocated or transferred.

(24) "Reallocate" means to convey an instream flow reservation or a portion of an instream flow reservation from a reservant to another qualified reservant.

(25) "Reservant" means an entity that has been granted a reservation of water pursuant to 85-2-316 and 85-2-331, MCA.

(26) "Reservation term" means the period of years established by an order during which reserved waters must be applied to beneficial use.

(27) "Revoke" means to repeal all or a portion of a water reservation.

(28) "Subordinate" means to place a water reservation with a senior priority date to a permit in a lower position than the permit in the prior appropriation system of "first in time-first in right".

(29) "Substantial accordance" means compliance with the terms of a reserved water use authorization, allowing for minor variations from those terms if the variation will not cause injury to other appropriators or otherwise does not warrant changing the department's water use records. A variation may reduce the authorized rate, volume or acres irrigated but in no way can they be increased under the reserved water use authorization.

(30) "Transfer" means for a reservant to convey ownership of all or any part of a reservation to a qualified reservant.

(31) "Volume" means a quantity of water expressed in acre-feet per year.

(1) The necessary forms for the administration of these rules are available from the Water Resources Division of the department, P.O. Box 201601, Helena, Montana 59620-1601. The following forms must be used in the administration of these rules:

(a) Form No. 600, Application for Beneficial Water Use Permit;

(b) Form No. 606, Application for Change of Appropriation Water Right;

(c) Form No. 608, Water Right Transfer Certificate, or other ownership update form provided by the department;

(d) Form No. 610A, Application for Reservation of Water–Diversionary Uses; and

(e) Form No. 610B, Application for Reservation of Water –Instream Uses.

(1) Each application for reservation of water shall be accompanied by a completed Form 610A or 610B. A fee of $1500 shall be submitted with the application.

(2) An applicant may request the department to provide assistance in preparing a reservation application. Department assistance in the preparation of reservation applications shall not require the department to support such applications pursuant to ARM 36.16.107A.

(1) The summary shall identify the applicant(s) including a showing of the applicant's authority to reserve water; a map of sufficient detail to identify where the requested reservation will be applied to use; and a brief description of the purpose of the reservation, the amount requested, and any proposed projects.

(2) The purpose section of the application shall describe the beneficial use or uses to which the water granted pursuant to the reservation will be applied, and identify the beneficiaries of the reservation.

(1) The application shall present an analysis of why the reservation is needed. The analysis shall include the following, where appropriate:

(a) a description of potential competing water uses that could consume, degrade, or otherwise affect the water available for the proposed reservation; or

(b) where information regarding the effect of potential competing water uses on a proposed reservation is not available, or where the applicant may not be eligible to apply for a water right permit, a description of the water resource values associated with the reservation that warrant protection; or

(c) where the applicant is otherwise eligible to obtain a water right permit, an explanation of constraints to project development that restrict the applicant from perfecting a permit for the proposed reservation purpose. These constraints may include the inability to finance a project in the near-term, lack of increased demand for water until some time in the future, or the need for additional project planning before water can be applied to beneficial use; or

(d) where the water reserved in a basin designated in 85-2-316(2) (a) , MCA would be diverted for beneficial use in another designated basin, a discussion of why stored water for leasing under 85-2-141, MCA would not be considered reasonably available for the proposed use.

(1) The amount of water for the reservation being sought must be expressed in terms of volume, rate, and period of use. An application shall contain an explanation of the methods and assumptions used to calculate the amount of water to be reserved. The firm yield of any proposed reservoir, as required in ARM 36.16.106(1)(a), shall be considered when determining the desired amount. Where an applicant is already served by existing projects, the total amount requested shall take into account the cost-effectiveness of increasing water-use efficiencies of the existing projects.

(a) The amount of water for municipal uses must be established by:

(i) identifying the historical peak daily use, the historical peak annual use, and the current per capita water use;

(ii) describing population growth projections or other assumptions underlying the application for additional water in the proposed local service area;

(iii) determining future peak daily use and future total and per capita use consistent with the assumptions described in (ii); and

(iv) determining the additional amount of water required to be reserved based on the information provided in (i), (ii), and (iii), in terms of volume, rate and period of use.

(b) The amount of water for future full-service and supplemental irrigation uses must be determined on the basis of monthly crop irrigation requirements, conveyance and on-farm delivery system efficiencies, and the acreage of irrigable land to be served.

(i) Irrigable lands shall include those lands as defined in ARM 36.16.102(15) for which landowners have expressed an interest in developing new or supplemental irrigation.

(ii) Interest may be determined from a survey of all potential irrigators in the area that would be affected by the proposed reservation; or by other methods acceptable to the department.

(iii) The following lands may only be included in an application if the application also includes an explanation as to how landowner interest in developing irrigation on these lands was determined:

(A) lands for which no survey of landowners was taken;

(B) lands to which no response to the survey was received; and/or

(C) lands to which a negative response to the survey was received.

(c) The amount of water for future industrial uses must be determined on the basis of estimated water requirements for the proposed industrial process as reflected by the preliminary design plans required in ARM 36.16.106.

(d) The amount of water for hydroelectric generation uses must be determined on the basis of preliminary estimates of head (feet), generating capacity (megawatts), and generating facility design as required in ARM 36.16.106.

(e) The amount of water for other diversionary uses must be calculated using a methodology approved by the department for determining water requirements.

(f) The amount of water for instream uses such as water quality, recreation, and fish and wildlife, must be determined using methodologies that estimate the amount of water needed to maintain instream benefits at the applicants' desired level. A justification for selecting the methodology used must be presented, including a literature review on the chosen methodology. Where such a methodology indicates a range of flows in a specified river reach, the applicant shall present the factors considered in selecting the requested flow.

(2) An analysis of the physical availability of flows or aquifer yields must be provided. The department may, upon written request, assist in the design of this analysis subject to available budget and personnel.

(a) For gaged streams where there is a record sufficient to identify long-term hydrologic conditions, the physical availability of flows on a monthly basis must be demonstrated using available water resources data. Statistical information on streamflows must include monthly means and 20th, 50th, and 80th percentile exceedance frequency flows. Consideration shall be given to the need for adjusting flows to a prescribed level of development.

(b) For drainages in which gaging records are not sufficient or available, monthly flows must be calculated using a flow estimation technique approved by the department.

(c) For applications involving the use of ground water, estimates of aquifer supplies must be based on information collected from the aquifer(s) involved.

(i) Where available, descriptions and maps of pertinent hydrologic information, including but not limited to aquifer extent, stratigraphic relationships, and aquifer transmission capability shall be presented.

(ii) Where this information is not available, a study plan must be presented in the application showing steps that will be taken to develop the information.

(1) In making a showing that the reservation is in the public interest, the application shall contain the following:

(a) An analysis of the direct benefits and costs associated with applying reserved water to the proposed beneficial use.

(b) A discussion of the indirect benefits and costs associated with applying water to beneficial use that considers the following:

(i) effects on future economic activity;

(ii) effects on the environment;

(iii) effects on public health and safety; and

(iv) the economic opportunity costs that the requested flow may have to parties other than the reservant.

(c) A discussion of the effects of not granting the reservation, including a description of reasonable alternative actions that could be taken if the reservation is not granted.

(d) Where the reservation would require withdrawal and transport for use outside the state, a discussion of:

(i) whether the reserved water could otherwise be transported to alleviate water shortages within Montana;

(ii) the demand on the available water supply in the state where the water will be applied to use; and

(iii) the effect of the proposed out-of-state water use on the welfare of Montana citizens.

(1) A management plan shall accompany all reservation applications for diversionary uses. Plans for diversionary uses shall contain the technical information needed to adequately define project size and function. The plan must be accompanied by maps or drawings showing the project locations, including, where applicable, point(s) of diversion, place(s) of storage, main delivery systems, and place(s) of water use, indicated to an accuracy of the nearest ¼ ¼ ¼ section. Such maps shall include section, township, and range numbers. All project plans shall demonstrate a consideration of water conservation measures.

(a) Plans for storage facilities shall include prefeasibility studies estimating firm yield of the proposed reservoir. If the reservoir is planned to supply the demand on a non-firm basis, information shall be included to estimate how often the demand is successfully met. Consideration of Montana dam safety laws and federal dam safety funding requirements shall also be demonstrated in the storage facility plans. Ownership of lands that would be inundated by a proposed storage facility must be indicated.

(b) The management plan shall include an analysis of the financial feasibility of the project(s). The ability to finance project costs through bond sales, commercial loans, project revenues, or other means must be addressed. If the project is not financially feasible using these means, the application shall contain a discussion of how financial feasibility might be achieved. Among the factors to be considered are the availability of subsidies, or changes in interest rates, commodity prices, and production and installation costs.

(c) For applications involving irrigation, the following must be clearly identified:

(i) north arrow;

(ii) scale bar;

(iii) section corners and numbers;

(iv) township and range numbers;

(v) all proposed points of diversion;

(vi) all proposed places of use;

(vii) proposed reservoir locations;

(viii) proposed water distribution systems;

(ix) proposed drainage systems;

(x) the location of irrigated and irrigable lands in the project areas. For irrigable lands, the map shall delineate soil classifications using the U.S. Soil Conservation Service's soil mapping units, the department's land classification standards, or other methods acceptable to the department. A narrative describing the criteria used for selecting irrigable lands shall be included in the application. Soil suitability for irrigation must be based on standards acceptable to the department; and

(xi) the ownership of land proposed to be irrigated with reserved water and lands underlying project of facilities. A table that lists ownership locations may be substituted for this requirement. Additional maps must be submitted if the information on one map cannot convey the required information clearly and must be of the same scale so that they can be overlain.

(d) Municipal applicants must submit preliminary engineering feasibility plans that define the service area, project design, water system capacity, and location. The plan must include preliminary plans or designs for metering the system.

(e) Capability of proceeding with reasonable diligence must be documented by presenting a schedule of activities needed to apply reserved water to beneficial use including target dates or years when financing will be available, facilities built, and the water applied to beneficial use.

(f) Where individual users or groups of users will be responsible for applying reserved water to beneficial use, the applicant must present a set of administrative procedures that describes who shall qualify to use the reserved water, the steps such users must take to apply the reserved water to beneficial use and, as appropriate, the means by which the reserved waters would be allocated during shortages.

(2) A management plan shall accompany all reservation applications for instream use(s), as defined in ARM 36.16.102(14), and shall include an explanation of how reserved instream flows will be protected from future depletions by later priority users.

(1) The department will, upon request, assist the applicant by responding to questions regarding the interpretation and requirements of these rules. The department may review draft applications prior to final submittal. The department shall provide access to and assistance in the interpretation of water rights records, water availability information, or other needed data maintained by the department.

(2) The department shall determine if an application is correct and complete within 180 days after an application has been submitted along with the required application fee. A water reservation application will be deemed correct and complete if a permit applicant's information, required to be submitted by ARM 36.16.104, 36.16.105, 36.16.105A, 36.16.105B, 36.16.105C, and 36.16.106, conforms to the standard of substantial credible information and all the necessary parts of the application form requiring the information, including any required addendums, have been filled in with the required information. A determination that an application is correct and complete is in no way a judgment on the part of the department on the merits of the reservation proposal. The department must notify the applicant in writing of any deficiencies.

(a) The department shall determine whether an application for a water reservation is correct and complete by reviewing:

(i) information that is publicly available within its expertise; and

(ii) that information which is submitted in the application.

(b) If the department determines the application does not contain the information required in ARM 36.16.104 through 36.16.106, the applicant will be notified in one deficiency letter of any defects and the administrative rule(s) not met will be identified in the letter.

(c) If all of the requested information in the deficiency letter is not postmarked or submitted within 120 days of the date of the deficiency letter, the water reservation application will be terminated and the application fee will not be refunded.

(3) An application deemed correct and complete can advance to the next stage of the application process.

(a) An application deemed correct and complete does not entitle an applicant to a water reservation.

(b) Providing correct and complete information is not the same as meeting the statutory requirements.

(4) As provided by 85-2-316(3), MCA, a correct and complete application for reservation of water will be processed in accordance with 85-2-307 through 85-2-309, MCA. Public notice of the application and a public hearing on objections to the application, if any, are required.

(5) After an application has been found correct and complete, the department shall prepare an environmental impact statement, if required, in accordance with 75-2-101 through 75-2-207, MCA.

(1) The department may approve, deny, or condition any requested reservation subject to such terms it considers appropriate. The department may grant a reservation for less than the amount of water requested in an application, but in no case may it grant a reservation for more water than is requested.

(2) If an order reserving water is issued with conditions, the department shall allow the applicant a prescribed period of time to revise its management plan in response to those conditions.

(3) The applicant must prove, by a preponderance of the evidence, that:

(a) the purpose of the reservation is a beneficial use as defined in 85-2-102(4), MCA; and

(b) the reservation is needed, as required in 85-2-316(4)(a)(ii), MCA, through evidence that:

(i) there is a reasonable likelihood that future instate or out-of-state competing water uses would consume, degrade, or otherwise affect the water available for the purpose of the reservation; or

(ii) if information regarding the effect of future water uses on a proposed reservation is not available;

(A) the applicant is not eligible to apply for a water use permit and water resource values warrant reserving water for the requested purpose; or

(B) the applicant would be eligible for a permit, but that there are constraints that would restrict the applicant from perfecting a water permit for the intended purpose of the reservation; or

(c) the amount requested is needed to fulfill the purpose of the reservation, as required in 85-2-316(4)(a)(iii), MCA, through evidence that:

(i) the methodologies and assumptions used to determine the requested amount are accurate and suitable;

(ii) water-use efficiencies associated with diversionary uses are reasonable, and there are no other reasonable cost-effective measures that could be taken within the reservation term to increase the use efficiency and lessen the amount of water required for the purpose of the reservation; and

(iii) for instream flow purposes on gaged streams, the amount does not exceed the limit provided by 85-2-316(6), MCA; and

(d) the reservation is in the public interest, as required in 85-2-316(4)(a)(iv), MCA, based on evidence and analysis of each of the following factors:

(i) whether the expected benefits of water to beneficial use are reasonably

likely to exceed the costs where:

(A) benefits include all direct and indirect benefits where any non-market benefits are quantified and valued to the extent reasonably possible;

(B) costs include all direct and indirect costs where any non-market costs are quantified and valued to the extent reasonably possible; and

(C) benefits and costs that may not be reasonably quantified are considered;

(ii) whether the net benefits associated with granting a reservation exceed the net benefits of not granting the reservation;

(iii) whether there are no reasonable alternatives to the proposed reservation

that have greater net benefits;

(iv) whether failure to reserve the water will or is likely to result in an irretrievable loss of a natural resource or an irretrievable loss of a resource development opportunity;

(v) whether there are no significant adverse impacts to public health, welfare, and safety; and

(vi) any other relevant considerations based on the evidence.

(4) If the purpose of the reservation proposes the withdrawal and transport of water for use outside the state, in addition to (3), the applicant must prove by clear and convincing evidence that the proposed out-of-state use of water is not contrary to water conservation in Montana and is not detrimental to the public welfare of citizens of Montana by considering the following factors:

(a) whether there are present or projected water shortages within the state of Montana;

(b) whether the water that is the subject of the application could feasibly be transported to alleviate water shortages within the state of Montana;

(c) the supply and sources of water available to the applicant in the state where the applicant intends to use the water; and

(d) the demands placed on the applicant's supply in the state where the applicant intends to use the water.

(5) A department order reserving water must make findings regarding the applicant's proof regarding the applicable factors of (3) and (4). A department order reserving water must also find:

(a) the applicant is qualified to reserve water pursuant to 85-2-316, MCA;

(b) the reservation, as proposed for adoption, will not adversely affect existing water rights, including reservations; and

(c) the applicant is capable of exercising reasonable diligence toward financing projects contemplated in the application and applying the reserved water to beneficial use in accordance with a management plan as required in ARM 36.16.106(1).

(6) If the purpose of the reservation requires the diversion of water from one of the basins designated in 85-2-316(2)(a), MCA, for use in another of the designated basins, a department order reserving water must find that stored water under the water leasing program is not reasonably available for the proposed use because the applicant(s) project does not meet the statutory terms, conditions, or requirements of a lease under 85-2-141, MCA.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) A reservant may use water in accordance with the order granting the reservation and the administrative procedures developed in ARM 36.16.106(1)(f), as approved or amended by the department.

(2) A conservation district reservant shall set a deadline by which an individual holding a reserved water use authorization shall file a certified statement notifying the district the project is complete pursuant to 85-2-316(8), MCA. Upon receipt of the certified statement the district shall determine whether the project is in substantial accordance with the water use authorization. The department may assist the district in conducting an inspection if necessary to make this determination within staffing and budgeting limitations.

(3) A reservant must file an annual report with the department that summarizes the progress made in complying with provisions of the order reserving water, except where otherwise required by law.

(4) All applications made for changes to or transfers of a granted reservation must be submitted to the department in accordance with the procedures outlined in ARM 36.16.118.

(5) The reservant shall adhere to all filing requirements for the periodic review under ARM 36.16.120.

(1) The necessity for an EIS must be evaluated for each reservation application as required by the Montana Environmental Policy Act (Title 75, chapter 1, MCA), the Montana Water Use Act (Title 85, chapter 2, MCA), and department rules (ARM Title 36, chapter 2, subchapters 5 and 6).

(2) An EIS, if required, shall be prepared by the department sufficiently in advance of any action on the reservation application to allow for full public review and comment. If necessary, the department may require the applicant to submit information needed to assess the impacts of the proposed reservation.

(1) As required by ARM 36.16.104, a $1500 fee must be paid to the department when filing an application for reservation of water.

(2) In addition to the $1500 fee, as required by 85-2-316, MCA, the following must be paid by the applicant, excepting the cost of department personnel's salaries: department's cost of giving notice; holding the hearing; conducting investigations; and making records incurred in acting upon the application to reserve water. The applicant is also required to pay a reasonable portion of the department's costs for EIS preparation.

(a) An applicant shall consult with the department prior to submitting an application to develop a preliminary estimate of department costs that must be paid by the applicant pursuant to 85-2-316(3), MCA. Within 30 days of a correct and complete determination by the department, the applicant must pay the department ten percent of the preliminary estimate to prepare a scope of work for completing any EIS and any other detailed work plans required in acting upon the applications.

(b) After a scope of work for the EIS and any other detailed plans for acting upon the application have been completed, the department will notify applicants of the maximum cost they will be individually assessed to process their applications.

(i) Applicants shall be notified of the maximum cost within 90 days of the department's receipt of the final application.

(ii) The estimated ten percent prepayment will be included in this amount and deducted from each applicant's future obligations.

(iii) The terms of payment for such fees will be negotiated and set forth in a contract between each applicant and the department.

(iv) For applications involving the construction of diversion facilities, the costs attributable to EIS preparation shall not exceed the limits provided in 85-2-124, MCA.

(c) An applicant may appeal to the department to have its fees reduced.

(d) Any payments made to the department in excess of what is actually expended shall be remitted to the applicant.

(3) The reservant or applicant shall be required to pay the notice costs when the department provides notice of a proposed department action on an existing water reservation by first class mail and publication in a newspaper of general circulation.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) An application for change of appropriation water right shall be filed with the department pursuant to 85-2-402, MCA, by the reservant or other entity.

(2) An application for change shall include the information required under ARM 36.16.104 through 36.16.106.

(3) The department shall process the application for change pursuant to 85-2-402 and 85-2-316, MCA.

(4) Any water reservation authorized to be changed shall maintain the priority date of the original water reservation.

(5) A reservant may voluntarily transfer all or any portion of its reservation to a transferee without loss of priority if the transfer is approved by the department.

(6) A water right transfer certificate shall be filed by the reservant with the department pursuant to 85-2-424, MCA.

(7) The transfer certificate shall include an affidavit from the entity receiving the water reservation that:

(a) the entity qualifies to reserve water under 85-2-316(1), MCA;

(b) the entity agrees to comply with the requirements of 85-2-316, MCA, and the conditions of the water reservation; and

(c) the entity can meet the objectives of the reservation as granted or will be able to meet the objectives under an authorized change in the water reservation.

(8) An Application for Change of Appropriation Water Right must be filed in accordance with (1) through (6) if a transfer of water reservation involves a change in the original reservations' criteria under 85-2-316(4), MCA.

(9) All decisions regarding changes and transfers shall reflect a consideration of the decision criteria listed in 85-2-316(4), MCA, and ARM 36.16.107A.

(1) Except as provided in 85-20-1401, MCA, the department may:

(a) modify an existing or future order originally adopted to reserve water for the purpose of maintaining minimum flow, level, or quality of water; and

(b) reallocate the reservation, or a portion of the reservation, to an applicant that is a qualified reservant.

(c) The department may not reallocate reserved water on any stream or river more than once every five years.

(2) A qualified reservant shall apply to the department for a reallocation by filing a petition on a form prescribed by the department. The petition must include the information required under ARM 36.16.104 through 36.16.106, and the following:

(a) an analysis of the need for the reserved water showing that the need of the petitioner is greater than that identified by the original reservant for the instream flows, and

(b) an analysis showing that all or part of the reservation is not required for its purpose.

(3) Upon receipt of a petition the department shall notify the original reservant for instream flows that a petition for reallocation has been filed. The department may require the original reservant to submit appropriate information in accordance with ARM 36.16.105, 36.16.105A, 36.16.105B, and 36.16.105C, such as whether the amount of water needed for the instream flow reservation has changed due to new or refined methodologies for determining flow needs. The department may require the reservant to submit revised estimates of instream flow needs based on these new or refined methodologies.

(4) The department shall set a date for a hearing and direct the petitioner to establish that the reservation criteria under 85-2-316(4), MCA, the reallocation criteria under 85-2-316(11), MCA, and the requirements of this rule will be met under a reallocation of reserved water. The department shall:

(a) provide notice by first class mail on persons who, according to the records of the department, may be affected by the proposed reallocation; and

(b) publish such notice at least once in a newspaper of general circulation in each county within the basin 60 days prior to the hearing.

(5) A person wishing to intervene in the hearing must file a notice with the department 30 days prior to the hearing.

(6) The petitioner for reallocation shall pay for notice and publication of hearing and proposed action under this rule as required under ARM 36.16.114.

(7) To reallocate an instream reservation the department must find that all or part of the reservation is not required for its purpose and that the need for the reallocation has been shown by the petitioner to outweigh the need shown by the original reservant. In making such determinations, the department must follow the criteria defined under ARM 36.16.107A.

(1) Except for reservations for the purposes of maintaining a minimum flow, level, or quality of water or a reservation provided in 85-20-1401, MCA, the department shall review water reservations at least once every ten years to determine if the objectives of the reservation are being met.

(2) The department shall issue an order for the review, which includes the information that must be submitted by the reservant and the deadline for its submittal.

(3) All reservants shall submit a report reviewing the objectives of the reservation and how they are being met, including but not limited to the following:

(a) a summary of the amount granted, allocated to date, any change in the amount required to satisfy the purpose and need of the reservation, and any change in the methodology originally used to determine the amount;

(b) whether the purpose remains the same as identified in the application and order;

(c) whether the need still exists as identified in the application and order;

(d) whether the amount is still appropriate in accordance with the application and order; and

(e) whether the reservation remains in the public interest as identified in the application and order.

(4) All reservants shall provide information evidencing compliance with the order granting the reservation. The information shall include a list of all compliance documents such as general plans, detailed plans, annual and biennial reports and their submittal dates.

(5) If a diversionary reservation has not reached the development level projected, the reservant shall provide information explaining:

(a) what factors have deterred the progress towards perfecting the water reservation; and

(b) what actions will the reservant take to ensure perfection of the reservation.

(6) The department shall consider the following when determining whether the objectives are being met:

(a) all information above and as ordered, by the department;

(b) the period of time which has elapsed since the date of the order granting the reservations and whether the reservant's actions reflect reasonable diligence in the perfection of the water reservation;

(c) new or changed circumstances, information, or values; and

(d) any other considerations set out in the order granting the reservation.

(7) Reasonable diligence is demonstrated by actions of the reservant in investment of time and money in the perfection of the reservation, including but not limited to:

(a) partial development of water reservation; and

(b) completion of additional studies, project design plans, promotional efforts, or environmental assessments.

(i) Upon review of a water reservation, if the department determines the objectives of the reservation are not being met the department may:

(A) extend the time period to complete the appropriation of water;

(B) modify the reservation; or

(C) revoke the reservation.

(8) If the department determines the objectives of a reservation are not being met; or at the request of the entity holding the water reservation, it shall:

(a) set a date for hearing and require the reservant to show cause why the proposed department action should not be taken;

(b) provide notice of the proposed action by first class mail on persons who according to the records of the department may have an interest in the reservation; and

(c) publish such notice at least once in a newspaper of general circulation in each county within the basin 60 days prior to the hearing.

(9) Any person wishing to intervene in the hearing must file a notice with the department 30 days prior to the hearing date.

(10) The reservant shall pay for notice and publication of hearing and proposed action under this rule as required under ARM 36.16.114.

(11) Reasons a water reservation may be modified or revoked include but are not limited to:

(a) a reservant is unable to meet the objectives of the water reservation or show reasonable diligence in perfecting the water reservation as determined under ARM 36.16.120(8);

(b) a reservant relinquishes all or a portion of its water reservation; or

(c) failure of the reservant to comply with the order granting the reservation.

(12) A reservation term may be extended for a reasonable period of time to enable the reservant to meet the objectives of the reservation. An extension may be considered at the request of the reservant or on the department's own motion.

This rule has been repealed.

This rule has been repealed.