Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF NATURAL RESOURCES

AND CONSERVATION OF THE STATE OF MONTANA

In the matter of the amendment of ARM 36.25.205 pertaining to Oil and Gas Leases on State Lands

)

NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

To: All Concerned Persons

1. On May 27, 2021, at 1:00 p.m., the Department of Natural Resources and Conservation (department) will hold a public hearing in the Montana Room (ground floor), at the Department of Natural Resources and Conservation, 1539 Eleventh Avenue, Helena, Montana, and via Zoom to consider the proposed amendment of the above-stated rule.

The Zoom information is as follows:

Topic: MAR 36-22-200 Oil and Gas Online Sales hearing

Time: May 27, 2021 01:00 PM Mountain Time (US and Canada)

Join Zoom Meeting

https://mt-gov.zoom.us/j/98601244102?pwd=MkZBb3N2Rm9yRUwzOG92bHNpeEU3dz09

Meeting ID: 986 0124 4102

Password: 500039

Dial by Telephone

+1 646 558 8656 or +1 406 444 9999

Meeting ID: 986 0124 4102

Password: 500039

Find your local number: https://mt-gov.zoom.us/u/afWGxLDIZ

Join by SIP

[email protected]

Join by H.323 (Polycom)

162.255.37.11##98601244102

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 department no later than 5:00 p.m. on May 20, 2021, to advise us of the nature of the accommodation that you need. Please contact Trevor Taylor, Department of Natural Resources and Conservation, 1539 Eleventh Avenue, P.O. Box 201601, Helena, Montana 59620-1601; telephone (406) 444-3843; fax (406) 444-2684; email [email protected].

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

36.25.205 PROCEDURES FOR ISSUE OF LEASE (1) A sale of oil and gas leases on state lands ~~normally~~ will be ~~held~~ scheduled 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. For in-person auctions, the date of sale is the day on which the auction will be held. For online auctions, the date of sale will be the last day of online bidding. ~~It will be in t~~The department's has discretion to waive or postpone 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 and on the department's website. Notice will also be sent to stakeholders on the department's oil and gas lease sale mailing list.

(2) Sale of each lease will be by competitive~~, oral~~ in-person or online bidding.

(a) through (c) remain the same.

(d) The successful bidder shall pay the first year's rental, the bonus amount, and the issuance fee to the department. For online auctions, the successful bidder may also be required to pay an online service fee and any fees associated with payment processing or wire transfers.

(3) through (6) remain the same.

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

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

REASONABLE NECESSITY: The department, through its Trust Lands Management Division, has a statutory and constitutional duty to generate revenue for the trust beneficiaries, primarily common schools. In 2019, the Montana State Legislature, through Senate Bill (SB) 41, modified 77-3-411, MCA, to allow oil and gas lease auctions on state land to be conducted in alternate formats aside from in-person oral auctions. SB 41 was drafted to give the department latitude to hold online sales so that the department could cast a wider net for bidders, increase competition among bidders, and, as a result, potentially generate more revenue for trust beneficiaries. The proposed amendment sets a framework to implement the intent of SB 41 by allowing the department flexibility as needed to conduct auctions through the services of online marketplaces which may reach more bidders and make the bidding process more efficient. The online service fee is anticipated to be a percentage of the total bid amount, as agreed to by the department with any online service provider with whom the department contracts, and, as such, is not known. As best as can be anticipated by the department, the service fee will be applied by the service provider to all successful bidders during each lease sale where the department utilizes an online service provider.

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 in writing to: Trevor Taylor, Department of Natural Resources and Conservation, 1539 Eleventh Avenue, P.O. Box 201601, Helena, Montana 59620-1601; fax (406) 444-2864; email [email protected], and must be received no later than 5:00 p.m., May 28, 2021.

5. Trevor Taylor, Bureau Chief, Minerals Management Bureau, Department of Natural Resources and Conservation, has been designated to preside over and conduct this hearing.

6. 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 for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to Aliselina Strong, 1539 Eleventh Avenue, P.O. Box 201601, Helena, MT 59620; fax (406) 444-2684; e-mail [email protected]; or may be made by completing a request form at any rules hearing held by the department.

7. The bill sponsor contact requirements of 2-4-302, MCA, do apply and have been fulfilled. The primary bill sponsor was contacted on April 1, 2021, via email.

8. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rule will not significantly and directly impact small businesses.

/s/ Amanda Kaster /s/ Bradley Jones

AMANDA KASTER BRADLEY JONES

Director Rule Reviewer

Natural Resources and Conservation

Certified to the Secretary of State April 20, 2021.