(1) A person who desires to lease or license unleased or unlicensed state land may apply on the standard application form prescribed by the department. The application form must be returned to the department and must be accompanied by a nonrefundable application fee. Such application shall be deemed an offer to lease or obtain a license on the land described therein at a rental rate which reflects the fair market value of the lease or license.

(2) (a) When the department receives an application to lease or obtain a license on an unleased or unlicensed tract of land or on a tract which has been reclassified, it shall advertise for written bids on the tract according to the procedures set forth in (c) , except in the following circumstances:

(i) where grazing land is reclassified to agricultural land upon application of the existing lessee; or

(ii) where land is reclassified and a licensee applies for a lease on the land for the same use for which he was formerly licensed, or a lessee applies for a license to use the land for the same use for which he formerly leased the land; or

(iii) where the application is for a cabinsite lease or license on a tract of land which was subject to a cabinsite lease or license on or before October 1, 1983.

(b) The department may advertise for bids according to the procedures set forth in (c) in any of the above circumstances where such procedures are deemed by the department to be in the best interests of the state.

(c) When advertisement for bids is called for under this rule, the department shall advertise for written bids on the tract once a week for 2 weeks in the official county newspaper of the county in which the tract lies. The tract will be leased or licensed to the highest bidder unless the board determines that the bid is not in the best interests of the state. All bids shall be sealed bids and will not be opened until a specified time and place. If the high bid is rejected, the board will issue its reason for the rejection in writing. The lease or license shall then be issued, at the fair market value determined by the board, to the first bidder willing to pay the board-determined rental whose name is selected through a random selection process from all bidders on the tract.

(3) The lessee or licensee shall sign and return the lease or license to the department within 30 days of receipt of the lease or license. If the lease or license is not signed and returned to the department within 30 days, the department may re-advertise the lease or license.

(4) Cabinsite leases issued on previously unleased land shall be subject to the bid rental rate for the full term of the lease unless, after 5 years, 5% of the adjusted rental rate as determined by ARM 36.25.110 is higher, and then the lessee or licensee shall pay the higher rate.

(5) When a lease or license is canceled by the board or department or surrendered by the lessee or licensee, the department shall attempt to release or relicense the land. The department shall advertise for written bids on the tract, and application and bid forms will be mailed to all persons who have expressed in writing an interest in leasing or licensing the land. The department shall receive applications and bid forms from potential lessees or licensees for a reasonable time after the date on which the first such application and bid form is mailed, and the land will be leased or licensed in accordance with (1) and (2) .

(6) Any person who has had his lease or license canceled and not reinstated by the board or department for any reason except nonpayment of rentals shall not be allowed to bid upon the lease or license or upon any lease or license for land managed by the department. If no other bids are received, the former lessee or licensee may be allowed to bid, but the board may reject any or all bids from a lessee or licensee who has had his lease canceled in the past.