A. The state land department shall determine:

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1. Whether the land applied for can be reclaimed by means of the proposed irrigation project.

2. Whether according to records of the department of water resources there are sufficient water rights vested in the applicant, or sufficient unappropriated water in the source of supply.

3. Whether the capacity of the project is adequate.

4. Whether the proposed cost of construction is reasonable, and the lands proposed to be irrigated are desert in character and may properly be set apart.

B. The application for selection of lands shall then be submitted to the director of water resources who shall make a written report and make recommendations upon the application to the land department. The director of water resources shall make a survey or examination to provide an accurate report if requested by the department to do so.

C. If the application is approved, the state land department shall file in the local land office a request for withdrawal from entry of the land described in the application. If disapproved, the parties shall be notified and given reasons for the disapproval. The parties shall have sixty days in which to submit another proposal, or further time if allowed by the department.