1.  All applications for Carey Act lands which are prepared and submitted in accordance with the regulations of the Division and of the Department of the Interior must be referred to the State Engineer. The State Engineer shall submit a written report which includes information regarding the water supply, the status of the water right, and other data necessary to enable the State Registrar of Lands Under the Carey Act to make the proper application and certification required by the Bureau of Land Management in such cases.

2.  No application on which the State Engineer has reported adversely may be approved by the Division. If the State Engineer reports favorably on an application, the Division shall, at its earliest convenience, consider the application. If the Division approves the application, or if the applicant accepts and the Division approves a modified application, the State Registrar of Lands Under the Carey Act shall file in the proper office of the Bureau of Land Management a request for the segregation of the lands described.