(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.