1. Upon approval by the Secretary of the Interior of the application for a segregation,
the Division must enter into a contract with the applicant for the segregation. The contract must contain:
(a) Such complete specifications with respect to the system of irrigation works proposed
to reclaim the lands of the segregation as the Division prescribes by regulation.
(b) The price, conditions and terms per acre at which the irrigation works and perpetual
water rights will be sold to settlers.
(c) The price, terms and conditions on which the State is to dispose of the lands
(d) Such additional requirements and stipulations as are necessary to protect the
good reputation of the State and the rights of all parties in interest from the date
of the contract to the complete consummation of the enterprise.
2. The contract must not be entered into until the contractor has filed a satisfactory
bond in a penal sum equal to 5 percent of the estimated cost of the works which is
conditioned upon the faithful performance of the contract with this state.
3. If, within 3 months after notice by the Division to the applicant, by registered
or certified letter addressed to the applicant’s last known address, that the segregation
has been approved by the Secretary of the Interior, the applicant or his or her agent
fails to appear and execute a contract with the State and supply the bond as required,
the applicant defaults his or her interest in the land to the State, unless the Division
grants an extension of time which may not exceed 30 days. The Division may advertise the interest of the applicant for sale and sell it to
the highest bidder under such regulations as the Division prescribes, and sell the
interest and enter into a contract covering the segregation with the purchaser. In such a case the State Engineer shall transfer the application for the water right
to the purchaser. The proceeds of the sale must be used to reimburse the Division for the costs of
the advertisement and sale. The surplus, if any, must be deposited in the Carey Act Account.
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