(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 a publication of general circulation in Montana.

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

(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.

(3) Any person who wishes to nominate any tract of state land for an oil and gas lease shall make application for oil and gas leasing on the form currently in use by the department. Blank forms for such applications may be secured from the department at no cost.

(a) A $15.00 application fee shall be submitted with the application, and is the only payment required to be submitted with the application.

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

(c) The department shall accept applications until 77 days prior to the date fixed for sale, as provided for in 77-3-411(2), MCA.

(d) Any application made may be withdrawn by the applicant if request for such withdrawal is received by the department prior to the withdrawal date indicated in the letter that is sent to the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 $15.00 application fee will not be refunded.

(e) 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.

(f) If the first applicant for a tract withdraws the application as provided 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.

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

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

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