text: “Working interest owner” means a person owning a working interest.

article: 5.5. Subsidence


kind: section

code: PRC

text: “Royalty interest” means a right to or interest in oil and gas produced from any lands or in the proceeds of the first sale thereof other than a working interest.

history: (History: Added by Stats. 1958, 1st Ex. Sess., Ch. 73.)

division: 3. OIL AND GAS

chapter: 1. Oil and Gas Conservation

article: 5.5. Subsidence

path: 3. OIL AND GAS > 1. Oil and Gas Conservation > 5.5. Subsidence


text: “Royalty interest owner” means a person owning a royalty interest.

article: 5.5. Subsidence


text: “Unit operator” means the person or persons designated by the unit agreement or in accordance with subdivisions (g) and (j) of Section 3322 as operator or operators of the unitized area.

article: 5.5. Subsidence


text: “Land” means both surface and mineral rights.

article: 5.5. Subsidence


citation: PRC § 3317

text: This article applies only to lands, referred to in Section 3315, overlying or immediately adjacent to a producing pool or pools, when such lands are subsiding, portions of which lands are subject to threat of inundation from the sea and which subsidence is endangering the life, health and safety of persons or which is damaging or is threatening to cause damage to, any surface or underground improvements located on such lands overlying or immediately adjacent to such pool or pools. The area within the exterior boundaries established pursuant to Section 3336 shall be known as a “subsidence area.”

article: 5.5. Subsidence


citation: PRC § 3318

text: An order of the supervisor which involves tide or submerged lands which may have been granted to any city, county, or city and county, or district, shall prohibit any impairment of the public trust for commerce, navigation, or fisheries to which the granted lands are subject. The Legislature hereby finds and declares that compliance with any such order containing such prohibition will not impair the public trust for commerce, navigation, or fisheries to which the granted lands are subject, and that any acts or things done pursuant to the terms thereof or resulting therefrom are consistent with and not in violation of the terms and conditions of any such grant or of any trusts, restrictions, or conditions of appertaining thereto. No such order shall effect or result in, or be construed to effect or result in a revocation of or change in any trust pertaining to the granted lands, or in any grant, conveyance, alienation, or transfer of the granted lands, or any part thereof, to any other individual, firm, or corporation, even though such order provides for the pooling of oil, gas, or other hydrocarbon substances produced from the granted lands with oil, gas, or other hydrocarbon substances produced from other lands, or results in the migration of any oil, gas or other hydrocarbon substances between the granted lands and other lands. If any of the granted lands are contained in any unit created or approved by an order of the supervisor, and, when applicable, the State Lands Commission, then any trust, restrictions, or conditions pertaining to any production from the granted lands included within such a unit, or to any proceeds from such production, shall apply only to that part of the production or that part of the proceeds therefrom which is allocated to such city, county, or city and county or district on account of the granted lands under any such order, and shall not apply to any other production or the proceeds therefrom, whether or not the same may have been produced from the granted lands or other lands.

article: 5.5. Subsidence


citation: PRC § 3319

text:
(a) The supervisor, upon the supervisor’s own motion, may, or shall, upon the application of any city, county, or city and county, any part of which is in a subsidence area, or any contractor or lessee for the production of oil or gas therefor, or any person having a working interest therein, who has submitted therewith an engineering report and plan for fieldwide repressuring operations in the pool or pools in a field in order to arrest or ameliorate subsidence therein, prepared by a petroleum engineer licensed by the state, hold a public hearing. The public hearing shall, at a minimum, consider the need for repressuring operations in all of the pool or pools in order to arrest or ameliorate subsidence. The supervisor may order applications relating to the same field to be consolidated for the public hearing thereon.

(b) Before any application shall be considered, each applicant shall pay to the supervisor for deposit in the General Fund a sum of money estimated by the supervisor to be equivalent to the amount of costs necessary to publish and mail notices, to employ stenographic reporters, to prepare a daily transcript of such hearing for use by the supervisor, to pay any rental that may be necessary to provide quarters for the hearing and to reimburse the Department of Conservation for any charges imposed upon it for the services of a hearing officer or members of the Attorney General’s staff in conjunction with the hearing. If more than one application is filed, the costs shall be equally charged and assessed to and paid by the respective applicants. The costs, when finally determined, if in excess of the amount theretofore deposited shall be paid equally by the applicant or applicants. Any money remaining on deposit after final determination and payment of costs shall be refunded to the applicant or applicants equally. If, after a public hearing and from the evidence adduced therefrom, and from such engineering studies as the supervisor may have ordered made and which have been presented and considered at the hearing, the supervisor finds that repressuring operations of the pool or pools will tend to arrest or ameliorate subsidence, the supervisor shall by order adopt a fieldwide repressuring plan and specifications of the work to be done thereunder, if, in the judgment of the supervisor, the fieldwide plan and specifications are necessary, and will not substantially reduce the maximum economic quantity of oil or gas ultimately recoverable from the pool or pools under prudent and proper operations.

(c) Any fieldwide repressuring plan and general specifications shall be based upon a competent engineering study of all the pools in the field and shall provide for repressuring operations designed to most effectively arrest or ameliorate subsidence with respect to those land areas overlying or immediately adjacent to a producing pool or pools. The plan and specifications may provide that they may be carried out by one or more units made up of the pool, groups of pools, or portions thereof, or by individual persons, or by cooperative agreements between two or more persons or by any combinations of the foregoing which in the judgment of the supervisor shall be feasible. The study may be reviewed from time to time by the supervisor, and if it be determined, from an analysis of the collected data, that consideration should be given to the alteration or modification of the plan and specifications, the supervisor shall order the holding of the requisite hearing for the purpose of determining whether the change should be incorporated into the plan and specifications by an amended order. The supervisor may amend a fieldwide repressuring plan and general specifications of the work to be done in the same manner as herein provided for the initial adoption of the plan and specifications.

history: (History: Amended by Stats. 1992, Ch. 999, Sec. 16. Effective January 1, 1993.)

article: 5.5. Subsidence


text:
Prior to the adoption of a fieldwide repressuring plan and general specifications of the work to be done thereunder, as provided in Section 3319, the supervisor, upon the application of any city, county, city and county, any part of which is in a subsidence area, or any contractor or lessee for the production of oil or gas therefor, or any person having a working interest therein, who has submitted therewith an engineering report and plan for pressure restoration or pressure maintenance of a particular pool or pools, or portion thereof underlying a certain described area or portion of such field, designed for the purpose of arresting or ameliorating subsidence therein, prepared by a petroleum engineer licensed by the State, shall hold a public hearing to consider the need for repressuring operations in such pool or pools, or portion thereof, in order to arrest or ameliorate subsidence. Applications relating generally to the same described area or portions of such field may be ordered consolidated by the supervisor for such public hearing thereon.

The procedure and method prescribed in Section 3319, with reference to the determination of amount, assessment, payment and refunding of costs, in conjunction with the holding of the hearing therein provided, are hereby incorporated with reference to the determination of amount, assessment, payment and refunding of costs as a condition precedent to the holding of the hearing herein provided.

If, after a public hearing and from the evidence adduced therefrom, and from such engineering studies as he may have ordered made and which have been presented and considered at such hearing, the supervisor finds that repressuring operations of such pool or pools or portions thereof will tend to arrest or ameliorate subsidence, he shall by order adopt a repressuring plan and specifications of the work to be done thereunder in such pool or pools or portions thereof, if in his judgment such plan and specifications are necessary and will not substantially reduce the maximum economic quantity of oil or gas ultimately recoverable from such pool or pools under prudent and proper operations.

Any such repressuring plan and specifications adopted in furtherance thereof shall be designed to most effectively arrest or ameliorate subsidence with respect to those affected land areas overlying or immediately adjacent to such pool or pools, or portions thereof. The supervisor may amend such repressuring plan and specifications in the same manner as herein provided for the initial adoption of said repressuring plan and specifications.

Any order of the supervisor adopting a repressuring plan and specifications of the work to be done thereunder with respect to a particular pool, or pools, or portions thereof, shall be expressly conditioned so as to provide that such plan and specifications shall be subject to amendment or modification if, after the holding of a public hearing thereon, it be determined that such amendment or modification is necessary in order to conform such plan and specifications with the subsequently adopted fieldwide repressuring plan and general specifications as provided for in Section 3319.

article: 5.5. Subsidence


citation: PRC § 3320

text:
(a) The policy of conducting voluntary repressuring operations in a pool or pools, or portions thereof, in order to arrest or ameliorate subsidence, or for any other lawful purpose, whether individually or by unit or co-operative agreement, shall be encouraged by the supervisor. Nothing contained in this article shall be deemed to prohibit the supervisor from approving voluntary repressuring operations in any pool or pools, or part thereof, pursuant to this article or any other provision of Division 3 (commencing at Section 3000) of the Public Resources Code prior to adoption of a repressuring plan and specifications under Section 3319 or 3319.1, if in his judgment such repressuring operations are not detrimental to the intent and purposes of this article to arrest or ameliorate subsidence, or are not otherwise unlawful. At any time after the adoption of a repressuring plan and specifications therefor, as provided in Section 3319.1, or the adoption of the fieldwide repressuring plan and specifications therefor, as provided in Section 3319, and prior to the issuance of a unit order, the supervisor shall, upon request being made therefor, analyze any such currently conducted repressuring operations, and any proposed plan of repressuring operations to determine whether such operations are or would be in conformity, or could be made to conform, with either of the foregoing adopted repressuring plans and specifications. If the supervisor determines that such existing or proposed repressuring operations do conform, or if he determines that such operations can be made to conform, and the respective party or parties thereto agree to the recommended modifications, he shall approve such voluntary repressuring operations. Upon such approval by the supervisor, the party or parties thereto shall be entitled to continue or proceed with such repressuring operations without specific direction or order from the supervisor, except as provided in subdivision (c) hereof.

The provisions of Section 6879 shall apply to any such voluntary or co-operative agreement which includes tide and submerged lands of the State which have been granted to a city, county, city and county or district by a grant which does not except and reserve to the State all deposits of minerals, including oil and gas, in said lands.

(b) In the event any proposed plan of repressuring operations is not commenced or any proposed unit or co-operative agreement which has been approved by the supervisor, is not executed and operations commenced thereunder by the respective parties thereto within the time specified in the order of the supervisor approving the same, or within any extension thereof granted by the supervisor, for good cause shown, but in no event longer than 90 days from the expiration date specified in the order of approval, the order of the supervisor shall be deemed automatically revoked, without further action, and the supervisor shall take such appropriate action as authorized by this article.

(c) The supervisor shall, at all times, have access to and may inspect all repressuring operations referred to in subdivision (a) hereof for the purpose of determining that performance is being conducted in accordance with the repressuring plan or plans and specifications of work to be done thereunder adopted pursuant to Section 3319 or 3319.1, or in accordance with the orders of the supervisor approving repressuring operations, and shall have power to require such operations to conform to the said repressuring plan or plans and specifications of work to be done thereunder adopted by, or orders theretofore made by the supervisor, and to otherwise enforce compliance with this article.

article: 5.5. Subsidence


text:
(a) An agreement for the management, development and operation of two or more tracts in a pool or pools, or portions thereof, in a field as a unit without regard to separate ownerships for the production of oil and gas, including repressuring operations therein, and for the allocation of benefits and costs on a basis set forth in the agreement, shall be valid and binding upon those who consent thereto and may be filed with the supervisor for approval.

Any agreement for the cooperative management, development and operation of two or more tracts in a pool or pools, or portions thereof, in a field for the production of oil or gas, including repressuring operations therein, shall be valid and binding upon those who consent thereto and may be filed with the supervisor for approval.

If in the judgment of the supervisor a unit agreement or cooperative agreement filed for approval is not detrimental to the intent and purposes of this article to arrest or ameliorate subsidence, or otherwise unlawful, the supervisor may approve the agreement. No such agreement approved by the supervisor hereunder or heretofore approved pursuant to applicable law prior to the enactment of this article shall be held to violate any of the statutes of this state prohibiting monopolies or acts, arrangements, agreements, contracts, combinations or conspiracies in restraint of trade or commerce.

(b) In the event that at the time of the approval by the supervisor of a unit or cooperative agreement under subdivision (a), the supervisor makes written findings of all of the following:

(1) A primary purpose of the unit or cooperative agreement is the initiation and conduct of repressuring operations in the area covered thereby for the purpose of arresting or ameliorating subsidence.

(2) The initiation and conduct of repressuring operations in the area covered by the unit or cooperative agreement are feasible and compatible with the purposes of this article.

(3) The persons who are entitled to 75 percent of the proceeds of production of oil and gas within the area covered by the unit or cooperative agreement (measured by the production of oil and gas therein in the last calendar year preceding the date of such approval) have become parties to such agreement by signing or ratifying it.

(4) It is necessary, in order to initiate and conduct repressuring operations, that the properties of nonconsenting persons who own working interests or royalty interests in lands within the area covered by the unit or cooperative agreement become subject to the agreement.

(5) The agreement is fair and reasonable, and contains appropriate provisions to protect and safeguard the rights of all persons having an interest in oil and gas production in the area covered thereby.

Then the supervisor shall make and enter an order which shall provide that unless the nonconsenting persons, within 30 days after service upon those persons of the order in the manner specified by the supervisor, become parties to the agreement by signing or ratifying the agreement, the right of eminent domain may be exercised as provided in subdivision (c) for the purpose of acquiring the properties of the nonconsenting persons which are found by the supervisor to be necessary for the initiation and conduct of the repressuring operations.

If the supervisor makes findings in accordance with the foregoing, the findings shall be prima facie evidence of all of the following:

(A) Of the public necessity of the development and operation of the properties in accordance with the unit or cooperative agreement and of the repressuring operations to be initiated and conducted pursuant to the agreement.

(B) That the acquisition of the properties of the nonconsenting persons which are designated by the supervisor is necessary therefor.

(C) That the repressuring and other operations to be initiated and conducted pursuant to the agreement, and the improvements to be made in connection therewith are planned or located in the manner which will be most compatible with the greatest public good and the least private injury.

The acquisition and use of land, including oil and gas rights therein, and personal property used in the production of oil and gas within a subsidence area for the purposes and by the persons mentioned in this section under the circumstances herein specified, are public uses on behalf of which the right of eminent domain may be exercised.

(c) Subject to the provisions of subdivision (b), the right of eminent domain for the purposes therein mentioned may be exercised by any city, county, or city and county, which has agreed to commit the properties to be acquired to such unit or cooperative agreement, or which has agreed to convey all or a portion of said properties upon acquisition, for a price not less than the cost of acquiring the same, to working interest owners who are parties to such unit or cooperative agreement and who have agreed to commit such properties to said agreement.

Except as otherwise provided in subdivisions (b) and (c), any condemnation action brought hereunder shall be governed by Title 7 (commencing with Section 1230. 010) of Part 3 of the Code of Civil Procedure.

If a condemnation action or actions to acquire the properties of the nonconsenting persons are promptly commenced and diligently prosecuted to final judgment by which the properties are acquired, no compulsory unit order affecting the area covered by the agreement shall be made by the supervisor under Section 3321 with respect to that area.

history: (History: Amended by Stats. 1984, Ch. 193, Sec. 100.)

article: 5.5. Subsidence


text:
If the supervisor determines that sufficient of the working interest owners and royalty interest owners to make repressuring operations feasible in any pool or pools, or portions thereof, for which a repressuring plan and specifications have been adopted by the supervisor, have not prior thereto, or within the time designated in the order of the supervisor adopting such plan and specifications, entered into a unit agreement or co-operative agreement, or have not taken individual action under which the repressuring operations contemplated by such plan will be satisfactorily initiated and conducted, the supervisor shall have power to compel the unitization of all interests in such pool or pools, or portions thereof, in the manner and subject to the limitations set forth in this article.

If the supervisor shall compel the unitization of the interests in any pool or pools, or portions thereof, in a field as provided in Section 3321, the supervisor shall have power to order repressuring operations to be initiated and conducted in the unit area in accordance with the applicable repressuring plan and specifications previously adopted by the supervisor; provided, however, that no order compelling unitization or order requiring the initiation and conduct of repressuring operations in the unit area shall be made unless the supervisor shall find:

(1) That the initiation and conduct of such repressuring operations will not substantially reduce the maximum economic quantity of oil or gas ultimately recoverable from the unit area as a whole under prudent and proper operations.

(2) That the estimated cost of initiating and carrying out such repressuring operations within the unit area as a whole, including both capital and operating costs, will not exceed the estimated value of the increased production resulting therefrom.

The supervisor shall have continuing jurisdiction to review the results of repressuring operations previously ordered by the supervisor and to make such further orders as may be necessary or desirable under the provisions of this article.

article: 5.5. Subsidence


text:
In determining, as required by Section 3320.2, whether the estimated cost of initiating and conducting such repressuring operations will exceed the estimated value of the increased production resulting from such operations, the supervisor shall exclude from consideration that portion of the cost of initiating and conducting such repressuring operations which any interested person or persons agree to bear, in addition to the portion of the cost of such operations which such person or persons would otherwise be obligated to bear pursuant to the provisions of subdivision (e) of Section 3322 under arrangements for the conditional repayment of such excess portion from increased production as follows:

(a) Each person bearing a part of such excess portion of the cost of initiating and conducting such repressuring operations shall recover the amount so borne, plus interest on the unpaid balance thereof at the rate of 312 percent per annum compounded semiannually by receiving, until fully repaid, his pro rata share, based upon his proportionate contribution from an amount not less than 60 percent or more than 90 percent, which, in the judgment of the supervisor, shall from time to time be determined to be fair and reasonable to all persons concerned, of that proportion of the increased production thereafter produced that the said excess portion of the cost of initiating and conducting such repressuring operations bears to the total cost of initiating and conducting such repressuring operations.

(b) If the supervisor shall find the offer of such person or persons to bear the excess portion of the cost of initiating and conducting such repressuring operations to be feasible, fair and reasonable, any order for repressuring operations made by the supervisor, in addition to its other provisions, shall set forth the time, manner and terms upon which such excess portion of the cost of initiating and conducting repressuring operations shall be borne by such person or persons until repaid to such person or persons from increased production as above provided.

article: 5.5. Subsidence


text:
In order to encourage the initiation and conduct of repressuring operations with the greatest possible speed in a subsidence area, the State, or any city, or county, city and county, or other political subdivision, deriving revenues from oil or gas produced from tide or submerged lands may expend such revenues for the purpose of bearing that portion of the cost of initiating and conducting repressuring operations in such subsidence area:

(1) In excess of that share of such costs which would otherwise be borne by such person pursuant to subdivision (e) of Section 3322 as a participant in a unit created by order of the supervisor pursuant to Section 3322 under arrangements for conditional repayment as above provided, or

(2) In excess of that share of such costs which would otherwise be borne by such person as a participant in a unit under a unit agreement voluntarily entered into under arrangements for conditional repayment satisfactory to such person and the other working interest owners interested in said unit.

article: 5.5. Subsidence


text: No working or royalty interest owner shall be liable for any loss or damage resulting from repressuring or other operations connected with the production of oil and gas which are conducted, without negligence, pursuant to and in accordance with a co-operative or unit agreement ordered or approved by the supervisor pursuant to this article.

article: 5.5. Subsidence


citation: PRC § 3321

text:
(a) Subject to the limitations specified in this article, the supervisor shall have the power to issue a compulsory unit order upon the petition of a city, county, city and county, any part of which is in a subsidence area, or any contractor or lessee for the production of oil or gas therefor, or any person or persons owning working interests in the area affected by such order. The supervisor shall, prior to the issuance of each compulsory unit order, schedule a public hearing thereon. Such hearing may embrace all or a portion of those land areas, and the pool or pools, or portions thereof, underlying such areas, which have been theretofore included in one of the repressuring plans referred to in Section 3319 or 3319.1, except those areas, and the pool or pools, or portions lying thereunder, which are currently devoted to repressuring operations pursuant to an approved repressuring plan in accordance with the procedure prescribed in subdivision (a) of Section 3320. Such hearing shall be set not later than 60 days from the date of the filing of such petition.

(b) If, after such public hearing and from the evidence adduced therefrom, and from such engineering studies as he may have ordered made and which have been presented and considered at such hearing, or at any prior hearing held for the purpose of considering a repressuring plan, the supervisor finds: 1. That repressuring operations of such pool or pools, or portions thereof, will tend to arrest or ameliorate subsidence; and2. That compulsory repressuring operations are required by reason of the failure, refusal or inability of the respective parties within the affected area to agree upon and initiate approved repressuring operations; and3. That subsidence of land overlying or immediately adjacent to such pool or pools is injuring or imperiling valuable buildings, or other improvements, or harbor installations or is interfering with commerce, navigation and fishery, or substantial portions of such lands may be inundated if subsidence continues, thereby endangering life, health, safety, peace, welfare and property; and4. That unit operation of such pool or pools, or portions thereof, is reasonably necessary to carry out repressuring operations in accordance with the theretofore adopted pressuring plan; and5. That the creation of the unit is feasible, necessary and justifiable under all conditions affecting the unit at the time of its creation or which can be reasonably anticipated by the supervisor at such time; then the supervisor shall issue an order requiring unit operation of such pool or pools, or portions thereof, on such terms and conditions as may be determined from the evidence to be fair, reasonable, equitable and in conformance with said repressuring plan.

article: 5.5. Subsidence


citation: PRC § 3322

text:
An order of the supervisor requiring unit operation, pursuant to Section 3321, may include lands owned by any person as defined in Section 3316.1, and shall contain such provisions as may be necessary or proper to protect, safeguard, and adjust the respective rights and obligations of the persons affected, including but not limited to lessees, operators, independent contractors, lien claimants, owners of mineral rights, royalties, working interests, production payments, mortgages, or deeds of trust. The order shall include:

(a) A description of the area embraced, termed the “unit area”;

(b) A general statement of the nature of the applicable repressuring plan and the specifications therefor adopted by the supervisor to arrest or ameliorate subsidence to be prescribed in a separate order of the supervisor requiring repressuring operations;

(c) That as a condition to the continued production by the owners or operators of oil or gas from such pool or pools, they shall initiate and conduct such repressuring operations as shall be prescribed in a separate order or orders of the supervisor;

(d) A formula for the apportionment and allocation of the unit production among and to the several separately owned tracts within the unit area such as reasonably will permit persons otherwise entitled to share in or benefit by the production from such separately owned tracts to produce or receive, in lieu thereof, their fair, equitable and reasonable share of the unit production or other benefits thereof. A separately owned tract’s fair, equitable, and reasonable share of the unit production shall be measured by the value of each such tract for oil and gas purposes and its contributing value to the unit in relation to like values of other tracts in the unit, taking into account acreage, the quantity and quality of oil and gas recoverable therefrom, location on structure, its probable productivity of oil and gas in the absence of unit operations, the burden of operation to which the tract will or is likely to be subjected, or so many of such factors, and such other pertinent engineering geological, or operating factors as may be reasonably susceptible of determination;

Pending the adoption of a final formula for apportionment and allocation of unit production as above provided (which final formula must be adopted not later than 18 months from the effective date of the order of the supervisor requiring unit operation), an interim formula may be adopted based upon the gross oil production in the unit area during the calendar year preceding the date of such order of the supervisor, which shall be effective until the adoption of the final formula as above provided. The final formula, when adopted, shall be retroactive to the effective date of the order requiring unit operation and adjustment shall be made in the apportionment and allocation of production during such interim period in accordance with the final formula so adopted.

(e) Provisions for financing the unit and the further development and operation of the unit area and the basis, terms, and conditions on which the cost and expense thereof shall be apportioned among and assessed against the tracts and all interests therein, including a detailed accounting procedure governing all charges and credits incident to all operations within the unit. The expense of unit operation shall be chargeable to the separately owned tracts in the same proportion that such tracts share in the unit production, and the expenses chargeable to a tract shall be paid by the person who in the absence of unit operation would be responsible for the expense of developing and operating such tract. Subject to such terms and conditions as to time and rate of interest as may be fair to all concerned, reasonable provisions shall be made in the order for carrying or otherwise financing persons who are unable promptly to meet their financial obligations in connection with the unit repressuring operations, and upon application made prior to the entry of the order, for carrying a nonassenting working interest owner affected by a final order of the supervisor under Section 3321;

(f) A provision for the credits and charges to be made in the adjustment among the owners or operators of tracts within the unit area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributed to the unit operation by the respective owners or operators. The net amount chargeable against the owner or operator of a separately owned tract shall be considered expenses of unit operation chargeable against such tract;

(g) A provision appointing an operating committee to have general overall management and control of the unit, including voting procedures, the conduct of its business and affairs and the operations to be carried on by it for the primary purpose of ameliorating or arresting subsidence, subject to the applicable repressuring plan, the specifications therefor and the unit order adopted by the supervisor. Such operating committee shall be composed of the persons primarily liable for the payment of the expenses of unit operation, or their representatives, which committee shall, within the time specified in the order, appoint a person to be known as the “unit operator,” who shall, under the direction and supervision of the operating committee, be responsible for the management and conduct of the unit operation;

(h) A provision specifying the method of voting upon any motion before the operating committee and the majority in number of votes necessary in order to carry a motion;

(i) That each vote upon a motion by the operating committee shall have a value corresponding to the percentage of the expense of unit operation borne by the person voting or his principal pursuant to the provisions of subdivision (e) of this section;

(j) If the operating committee fails to appoint the unit operator within the time specified in an order issued pursuant to this article, the supervisor shall appoint the unit operator;

(k) The time the unit operation shall commence, and the manner in which and the circumstances under which the unit operation shall terminate;

(l) Such additional provisions not inconsistent with this article which the supervisor deems appropriate for the accomplishment of the proposed plan of repressuring operations for the purpose of arresting or ameliorating subsidence within the unit area and the protection of all interested parties.

article: 5.5. Subsidence


text: No order of the supervisor creating a unit and prescribing the plan of unitization applicable thereto shall become effective unless and until the plan of unitization has been signed, or in writing ratified or approved, by working interest owners who are entitled to 65 percent of the proceeds of production of oil and gas, prior to the payment of royalties, within the proposed unit area, measured by the production from such area in the calendar year preceding the date of the order of the supervisor creating such unit, and the supervisor has made a finding either in the order creating the unit or in a supplemental order that the plan of unitization has been so signed, ratified or approved by persons owning the required percentage interest in and to the unit area. Where the plan of unitization has not been so signed, ratified or approved by persons owning the required percentage interest in and to the unit area at the time the order creating the unit is made, the supervisor shall, upon petition and notice, hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by persons owning the required percentage interest in and to such unit area and shall, in respect to such hearings, make and enter a finding of his determination in such regard. In the event persons owning the required percentage interest in and to the unit area have not so signed, ratified or approved the plan of unitization within a period of six months from and after the date on which the order creating the unit is made, the order creating the unit shall cease to be of further force and effect and shall be revoked by the supervisor.

article: 5.5. Subsidence


citation: PRC § 3323

text: Notice of the time and place of any hearing to be held by the supervisor shall be given by publication in a newspaper of general circulation printed and published in the county in which the subsidence is alleged to be taking place, and notice thereof sent, in the manner prescribed by Section 3303 to the persons mentioned in such section within the area which will be the subject of his order.

article: 5.5. Subsidence


citation: PRC § 3324

text:
At hearings all persons interested are entitled to be heard and present evidence, both oral and written. All such persons shall be sworn, and a transcript of the proceedings shall be kept. The procedure to be followed by the supervisor with respect to the administering of oaths, applying for subpoenas for witnesses and for the production of books, records, well logs, production records, and other documents, the taking of depositions, and the penalties attaching for failure to comply with any order of the supervisor or subpoena issued, shall be in the manner as in this division provided. On the request of the supervisor, a hearing officer in the Office of Administrative Hearings may be assigned to assist in conducting the proceedings as provided in Section 11370.3 of the Government Code. The officer, however, shall not make the determination specified in Section 3321.

The provisions of Section 3234 prohibiting the giving of testimony as to the contents of records on file shall not apply to this article. All of these records shall be available and may be received in evidence in any public hearing or in any judicial proceeding herein provided for.

history: (History: Amended by Stats. 2004, Ch. 183, Sec. 288. Effective January 1, 2005.)

article: 5.5. Subsidence


citation: PRC § 3325

text: The supervisor shall make and enforce all rules and regulations necessary or proper to accomplish the purposes of this article or to administer or enforce any order issued pursuant thereto. Such rules and regulations shall be adopted in accordance with the provisions of Chapter 4 (commencing at Section 11370), Part 1, Division 3, Title 2 of the Government Code.

article: 5.5. Subsidence


citation: PRC § 3326

text: An order requiring unit operation may be amended for good cause by a subsequent order entered by the supervisor, except that no such order or amendment shall change the percentage of oil and gas allocated to a separately owned tract by the original order except with the consent of all persons who might be adversely affected thereby. Before issuing any such order, he shall make similar findings as are required for an original order, and such new order shall be subject to the same requirements and restrictions that are applicable to an original order. The provisions of this section shall not prohibit the establishment of an interim formula for the apportionment and allocation of unit production pursuant to subdivision (d) of Section 3322.

article: 5.5. Subsidence


citation: PRC § 3327

text: Subject to the limitations in this article governing the creation of the unit previously established, the supervisor, by entry of a new order after a public hearing, may require unit operation in a pool, or a portion thereof, which embraces a unit area established by a previous order. Such new order, in providing for allocation of unit production from the enlarged unit area, shall first treat the unit area previously established as a single tract, and the portion of unit production so allocated thereto shall then be allocated among the separately owned tracts included in such previously established unit area in the same proportions as those specified therefor in the previous order.

article: 5.5. Subsidence


citation: PRC § 3328

text:
(a) The portion of unit production allocated to a separately owned tract shall be deemed, for all purposes, to have been actually produced from such tract, and operations conducted pursuant to the order of the supervisor shall be deemed for all purposes, to be the conduct of operations for the production of oil and gas from each separately owned tract in the unit area in the fulfillment of all the express or implied obligations, trust or otherwise, of the owner or any person interested in such tract under a lease, or any contract, or any trust or trust obligations applicable to such tract, insofar as they relate to the pool, or pools, or portions thereof, covered by such order.

(b) Such unit production shall be distributed among or the proceeds thereof paid to the several persons entitled to share in the production from such separately owned tract in the same manner, in the same proportions, and upon the same conditions that they would have participated and shared in the production or proceeds thereof from such separately owned tract had not said unit been organized. The share of the unit production allocated to each separately owned tract shall be delivered in kind to the persons entitled thereto by virtue of ownership of oil and gas rights therein or by purchase from such owners, subject to the right of the unit operator to a lien thereon for payment of unit expenses pursuant to the order of unitization.

(c) Operations carried on under and in accordance with the order of unitization shall be regarded and considered as a fulfillment of and compliance with all of the provisions, covenants, and conditions, express or implied, of the several oil and gas leases, contracts, other agreements or trusts pertaining to the development of lands included within the unit area. Wells drilled or operated on any part of the unit area no matter where located shall, for all purposes, be regarded as wells drilled on each separately owned tract within such unit area.

article: 5.5. Subsidence


citation: PRC § 3329

text:
The unit operator shall be authorized on behalf of and for the account of all the respective owners or possessors of the mineral rights within the unit area to supervise, manage and conduct the further development and operations for the production of oil, gas and other hydrocarbon substances from the unit area pursuant to the powers conferred, and subject to the limitations imposed by the provisions of this article and by the order of unitization.

The obligation or liability of the lessee or other owners of the mineral rights in the several separately owned tracts for the payment of unit expense shall at all times be several and not joint or collective and in no event shall a lessee or other owner of the mineral rights in the separately owned tract be chargeable with, be obligated or liable, directly or indirectly, for more than the amount apportioned, assessed or otherwise charged to his interest in such separately owned tract pursuant to the order of unitization and then only to the extent of the lien provided for in this section.

Subject to the provisions in the order of unitization, the unit operator shall have a lien upon all drilling and production equipment in and to each separately owned tract, and upon the portion of the unit production allocated to the working interest therein, to secure the payment of the amount of the unit expense chargeable to and assessed against such separately owned tract. Such lien may be enforced by the unit operator, as the agent of the respective owners or possessors of the mineral rights within the unit area, as against noncarried working interest owners, in the manner set forth in Section 3330. The interest of the lessee or other person who by lease, contract or otherwise is obligated or responsible for the costs and expenses of developing and operating a separately owned tract for the production of oil, gas and other hydrocarbon substances in the absence of unitization shall be solely responsible for and chargeable with any assessment for unit expense made against such tract.

article: 5.5. Subsidence


citation: PRC § 3330

text: When unit expenses incurred by a unit operator on behalf of the unit have not been paid, the unit operator may, in order to secure payment of the amount due the unit operator, fix a lien upon the interest of the debtor in all drilling and production equipment of the debtor on the premises and upon his allocated portion of the unit production as and when produced from the unit area, by filing for record, with the recorder of the county where the property or a portion thereof involved is located, an affidavit setting forth (1) in general terms the kind of materials, tools, equipment or supplies furnished, labor or services performed, or expenditure incurred, and (2) a description of the land involved, the name of the debtor and his interest in the production from the unit area, and (3) the amount which is still due and unpaid, and (4) a statement that at least 20 days prior to the date of the affidavit the unit operator gave written notice to the debtor by registered mail at his last known address, setting forth the information required under subdivisions (1), (2) and (3) above. Any such affidavit shall be filed for record not later than 90 days after the delivery of the property or the completion of the labor or the incurring of the expenditure. The lien shall not be construed as constituting a lien upon real property as such, except as to the recoverable oil and gas lying thereunder, but otherwise shall be of the same nature and subject to foreclosure in the same manner and within the same time as mechanics’ liens. In any case where a unit operator is in possession of the production which is subject to the lien, he may sell such production or so much thereof as may be necessary to satisfy said lien; provided, that he shall hold or arrange for the holding of the proceeds of such sale for appropriate distribution upon the determination of the controversy.

article: 5.5. Subsidence


citation: PRC § 3331

text: Any order issued by the supervisor pursuant to this article, from its effective date, shall be binding upon each person owning or claiming any legal or equitable interest in the area which is the subject of such order or in the oil and gas produced or to be produced therefrom or a right to participate in a share of the proceeds thereof. From the effective date of such an order it shall be unlawful for a person to drill, redrill, operate, work on or produce any well within such area otherwise than in conformity with the order.

article: 5.5. Subsidence


citation: PRC § 3332

text: Within 30 days after the written notice of the entry of a final order of the supervisor, or within such further time as the supervisor may grant for good cause shown, but in no event shall such time be extended more than 60 days from the written notice of entry of such final order, any person affected thereby may file with the supervisor an application for a rehearing in respect to any matter determined by such order, setting forth the particulars in which such order is considered to be objectionable. The supervisor shall grant or deny any such application in whole or in part within 30 days from the date of the filing thereof, and failure to act thereon within such period shall constitute a denial of such application. In the event that a rehearing is granted, notice to such effect shall be given to all persons affected by such order, advising them of the date of such rehearing and of their right to appear and be heard thereon. The date set for any such rehearing shall be not less than 30 days nor more than 60 days from the date the application for rehearing is granted, unless, upon good cause shown, the time is extended by the supervisor, but in no event shall such time be extended more than 90 days from the date such application for rehearing is granted. The supervisor may enter an amended order or a new order after the rehearing as may be required under the circumstances. The provision of Article 6 (commencing with Section 3350) of Chapter 1 of Division 3 relating to appeals and review shall not apply to this article.

history: (History: Amended by Stats. 1974, Ch. 765.)

article: 5.5. Subsidence


citation: PRC § 3333

text:
(a) A final order of the supervisor shall be subject to judicial review by filing a petition for a writ of mandate in accordance with the provisions of Chapter 2 (commencing at Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure in the superior court of any county in which all or any part of the area affected is located, except that any such proceedings shall be instituted within 30 days from the date that a certified copy of the transcript of the proceedings before the supervisor has been delivered to the applicant; otherwise, the findings and determination of the supervisor shall be deemed final and conclusive. Any action so filed shall incorporate therein a certified copy of the transcript of the proceedings before the supervisor.

(b) Notice of intention to petition the superior court for judicial review shall be filed by the applicant or applicants with the supervisor within 60 days after the entry of the final order complained of or within 60 days following the final disposition of any application for rehearing. The notice must identify the order and state the grounds of objection thereto. Immediately upon the filing of such notice the supervisor shall certify to the applicant or applicants the estimated cost of preparing the transcript of the proceedings before the supervisor. The amount of the estimated cost shall be deposited with the supervisor within 10 days after the mailing of the certification of such cost to the applicant or applicants. Upon the deposit of the cost the supervisor shall order the preparation of the transcript. A certified copy of the transcript shall be delivered to the applicant or applicants within 60 days from the date of the filing of said notice of intention unless such time is extended for good cause by the supervisor, but in no event later than 90 days from the date of filing of such notice.

article: 5.5. Subsidence


citation: PRC § 3334

text: The pendency of actions before the superior court or proceedings for review before any other court of competent jurisdiction of itself shall not stay or suspend the operation of any order; however, the superior court or such other court in its discretion, upon its own motion or upon proper application of any party thereto, may, for good cause, stay or suspend, in whole or in part, the operation of any order pending consideration or review thereof.

article: 5.5. Subsidence


citation: PRC § 3335

text: If an action for judicial review has not been commenced within the time prescribed for such action, or, if filed, the time within which to process an appeal by the petitioner from any judgment or order rendered therein has expired, or if such an appeal has been timely perfected and there has been an affirmance of such judgment or order, the supervisor may order that the production by noncomplying owners or operators of oil or gas from any pool or pools or portions thereof cease or be curtailed until such noncomplying owners or operators comply with said unit order.

article: 5.5. Subsidence


citation: PRC § 3336

text: The supervisor upon his own motion may, or shall upon the application of any interested person, hold a public hearing for the purpose of determining and establishing the exterior boundaries encompassing the lands referred to in Section 3317. If, after a public hearing and from the evidence adduced therefrom, the supervisor determines that the lands, or a portion thereof, come within the category of those lands referred to in Section 3317, he shall adopt an order fixing and establishing the exterior boundaries thereof. The supervisor shall retain jurisdiction in this regard, and shall, if it be made to appear necessary, hold further hearings for the purpose of determining whether the boundaries previously established should be enlarged or otherwise altered. Any such change or alteration in said boundaries shall be made by order of the supervisor.

article: 5.5. Subsidence


citation: PRC § 3337

text: The division shall exercise surveillance over all repressuring operations in the state.

history: (History: Repealed and added by Stats. 1975, Ch. 1049.)

article: 5.5. Subsidence


citation: PRC § 3341

text: At the termination of oil and gas production from a unit area established or approved pursuant to this article and the abandonment of attempts to obtain production therefrom, any interested municipal corporation or other public agency may acquire by eminent domain, in the manner provided by law for the condemnation of property for public use by the state, municipal corporation or other public agency, such oil production properties or facilities within the unit area as such municipal corporation or other public agency may deem necessary or essential to the maintenance of such pressures as will continue to arrest or ameliorate subsidence.

history: (History: Amended by Stats. 1975, Ch. 1240.)

article: 5.5. Subsidence


citation: PRC § 3342

text:
To the extent necessary to conform to the provisions and requirements of this article, and to any order of unitization or other order, rule or regulation of the supervisor, made and adopted pursuant hereto, all leases, contracts, and all other rights and obligations shall be regarded as modified and amended, but otherwise to remain in full force and effect. Nothing contained in this article shall be construed to extend the term of any lease or other agreement.

Nothing contained in this article shall be construed to require a transfer to or vesting in the unit operator, or in persons other than those owning the same at the time of the creation of the unit, of title to the separately owned tracts or to any leases or other drilling and operating agreements thereon within the unit area, other than the right to use and operate the same to the extent set out in the order of unitization; nor shall the unit operator or the working interest owners jointly be regarded as owning the unit production. Each respective share of the unit production and the proceeds from the sale thereof shall be severally owned by the persons to whom the same is allocated pursuant to the order of unitization. All property, whether real or personal, which the unit operator may in any way acquire, hold or possess, the cost of which is chargeable to the working interest owners, shall not be acquired, held or possessed for the unit operator for his own account but shall be so acquired, held and possessed by the unit operator for the account of and as agent for each of the several working interest owners and shall be the property of each of such persons as their respective interests may appear under the order of unitization, subject, however, to the right of the unit operator to the possession, management, use or disposal of the same in the proper conduct of the affairs of the unit, and subject to any lien the unit operator may have thereon to secure the payment of unit expense.

No unit order made by the supervisor shall be construed to have the effect of, result in, or in any manner require or provide for the alienation, transfer, conveyance or change of any title or ownership, whether legal or equitable, of any person in or to any separately owned tract of land included in the said order, or to the mineral rights therein, to any other person owning or possessing a separately owned tract of land which may likewise be included in said unit order.

article: 5.5. Subsidence


citation: PRC § 3343

text:
(a) Any person who willfully violates any provision of this article or any rule, regulation or order of the supervisor, shall be subject to a penalty of one thousand dollars ($1,000) for each act of violation and for each day that the violation continues.

(b) The penalty provided in this section shall be recoverable by suit filed by the Attorney General in the name and on behalf of the supervisor in the superior court of the State of California for the county in which the defendant resides, or in which any defendant resides, if there is more than one defendant, or in the superior court of any county in which the violation occurred. The payment of the penalty shall not operate to relieve a person on whom the penalty is imposed from liability to any other person for damages arising out of the violation. The penalty, when recovered, shall be paid to the State Treasurer and shall be deposited to the credit of the Oil, Gas, and Geothermal Administrative Fund.

(c) Any person knowingly aiding or abetting any other person in the violation of any provision of this article, or any rule, regulation or order of the supervisor shall be subject to the same penalty as that prescribed by this section for the violation by the other person.

history: (History: Amended by Stats. 2003, Ch. 240, Sec. 14. Effective August 13, 2003.)

article: 5.5. Subsidence


citation: PRC § 3344

text:
(a) Whenever it appears that any person is violating or threatening to violate any provision of this article, or any rule, regulation or order of the supervisor, the supervisor may bring suit against the person in the superior court of any county where the violation occurs or is threatened, to restrain the person from continuing the violation or from carrying out the threat of violation. Upon the filing of the suit, summons issued to the person may be directed to the sheriff or his or her deputies. In the suit, the court has jurisdiction to grant to the supervisor such prohibitory and mandatory injunctions either preliminary or final as the facts may warrant.

(b) If the supervisor fails to bring suit to enjoin a violation or threatened violation of any provision of this article, or any rule, regulation or order of the supervisor within 10 days after receipt of written request to do so by any person who is or will be adversely affected by the violation, the person making the request may bring suit in the person’s own behalf to restrain the violation or threatened violation in any court in which the supervisor might have brought suit. If in the suit, the court should hold that injunctive relief should be granted, then the supervisor shall be made a party and shall be substituted for the person who brought the suit, and the injunction shall be issued as if the supervisor had at all times been the plaintiff.

(c) No civil action for damages shall lie against any person for the violation of this article or any rule, regulation or order of the supervisor, except against an owner of the working interest, and particularly no such suit or action shall lie against any lessor, royalty owner, contractor or purchaser of the oil and gas, and no such suit or action shall lie against an owner of the working interest, except suits or actions for damages occurring subsequent to the entry of an order or decision of the supervisor which result from a failure to comply with the order or decision.

(d) If the supervisor brings a suit or action pursuant to this article, no defendant or intervenor shall be permitted to cross-complain or otherwise bring an action in the same proceeding against any other person for damages or for any other purpose.

history: (History: Amended by Stats. 1982, Ch. 517, Sec. 350.)

article: 5.5. Subsidence


citation: PRC § 3345

text: No finding or determination made by the supervisor under the provisions of this article or by any court in proceedings involving the enforcement or review of the orders of the supervisor shall be received in evidence or be binding upon any person in any other proceeding not directly related to the making, enforcement or review of the orders of the supervisor under this article.

article: 5.5. Subsidence


citation: PRC § 3346

text: The provisions of this article shall supersede any conflicting provisions contained in any legislative grant of tide and submerged lands, or in any law amendatory or supplemental thereto, or any other laws affecting such granted lands.

article: 5.5. Subsidence


citation: PRC § 3347

text: If any section, subsection, subdivision, sentence or clause of this article is adjudged to be unconstitutional or invalid, such adjudication shall not affect the validity of the remaining portion of this article. It is hereby declared that this article would have been passed, and each division, section, subsection, subdivision, sentence or clause thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences or clauses might be adjudged to be unconstitutional, or for any other reason invalid.

article: 5.5. Subsidence


citation: PRC § 3350

text:
(a) The operator of a well or a production facility to whom the supervisor or district deputy has issued an order pursuant to this chapter may file a notice of appeal from that order. The notice of appeal shall be in writing and shall be filed with the director. The operator shall file the appeal within 10 days of the service of the order, or within 10 days of the posting of a copy of an order made pursuant to Section 3308. Failure of the operator to file an appeal from the order within the 10-day period shall be a waiver by the operator of its rights to challenge the order. If the order, other than an order made pursuant to Section 3308, is served by mail, the time for responding shall be determined as provided in Section 1013 of the Code of Civil Procedure.

(b) (1) The filing of a written notice of appeal shall operate as a stay of the order, except when an order is issued as an emergency order pursuant to Section 3226. If the order is an emergency order, the operator shall immediately perform whatever work is required by the order to alleviate the emergency or shall permit the agents appointed by the supervisor to perform that work. If the order is an emergency order to cease injection, then the operator shall cease injection as soon as it is safe to do so.

(2) If an emergency order is set aside or modified on appeal, the supervisor shall refund the reasonable costs incurred by the operator for whatever work is not required by the set-aside or modified order or shall not impose costs for work performed by the supervisor or the supervisor’s agents if the work is excluded from the modified order or the order is set aside. Only the costs of work performed shall be refunded, and there shall be no reimbursement for lost profits or increased production costs.

(3) (A) The costs to be refunded pursuant to paragraph (2) by the supervisor shall be determined in a hearing before the director after the exhaustion of appeals. The operator shall have the burden of proving the amount of costs to be refunded.

(B) A determination by the director as to the amount of costs to be refunded pursuant to paragraph (2) may be appealed by the operator pursuant to subdivision (a) of Section 3354.

(4) If the operator believes that it will be irretrievably injured by the performance of the work required to alleviate the emergency pending the outcome of the appeal, the operator may seek an order from the appropriate superior court restraining the enforcement of the order pending the outcome of the appeal.

history: (History: Amended by Stats. 2016, Ch. 274, Sec. 4. (AB 2756) Effective January 1, 2017.)

article: 6. Appeals and Review

path: 3. OIL AND GAS > 1. Oil and Gas Conservation > 6. Appeals and Review


citation: PRC § 3351

text:
(a) A hearing shall be provided in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code only in an appeal from an order in the following circumstances:

(1) Issued pursuant to a Section 3237 finding that the operator’s wells are deserted and should be plugged and abandoned.

(2) Imposing civil penalties totaling more than twenty-five thousand dollars ($25,000).

(3) Rescinding an entire injection project approval for a project that has already commenced.

(4) Imposing a life-of-well bond or a life-of-production facility bond.

(b) An order issued pursuant to Section 3225 shall satisfy the substantive requirements of an accusation pursuant to Section 11503 of the Government Code and may be filed when scheduling a formal hearing in accordance with this chapter and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. All applicable formal hearing deadlines do not commence until a formal hearing is scheduled. When scheduling a formal hearing after an appeal from an order under this chapter, the supervisor is not required to send a Notice of Defense statement and the operator is not required to request a hearing.

(c) For an appeal of an order that is not described in subdivision (a), a hearing shall be conducted by the director in accordance with Sections 3352 and 3353.

(d) For an appeal of an order that is described in subdivision (a) and is also an emergency order, a hearing shall be conducted by the director in accordance with Sections 3352 and 3353 for the limited purpose of considering the reasonableness of the supervisor’s determination that an emergency exists. All other penalties and requirements imposed by the order shall be considered at a hearing provided in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

history: (History: Amended by Stats. 2016, Ch. 274, Sec. 5. (AB 2756) Effective January 1, 2017.)

article: 6. Appeals and Review


citation: PRC § 3352

text:
(a) A hearing conducted by the director shall adhere to the following:

(1) When an order is not issued as an emergency order, within 30 days from the date of the service of the notice of appeal, the director shall provide to the operator notice of the time and place of the hearing. The hearing shall take place within 30 days after the date of the director’s notice. The notice shall inform the operator that the director may extend the date of the hearing for up to 60 days for good cause upon his or her own motion, or an application of the operator or the supervisor.

(2) When an order has been issued as an emergency order, within 10 days from the date of the service of the notice of appeal, the director shall provide to the operator notice of the time and place of the hearing. The hearing shall take place within 20 days after the date of the director’s notice. The notice shall inform the operator that the director may extend the date of the hearing for up to 30 days for good cause upon his or her own motion, or an application of the operator or the supervisor.

(b) The director shall conduct the hearing within the district where the majority of the wells or production facilities that are the subject of the order are located, or the hearing may be conducted at a location outside of that district upon application of the operator. The hearing shall be reported by a stenographic reporter.

(c) The notice of hearing shall inform the operator of its right to file a written answer to the charges no later than 10 days before the date of the hearing. The notice also shall inform the operator that it has the right to present oral and documentary evidence at the hearing.

(d) Upon a verified and timely petition of the operator, the director may order the testimony of a witness at the hearing. The petition shall be served upon the director and the other party within five days after the filing of an appeal and shall set forth the name and address of the witness whose testimony is requested, to the extent known; a showing of the materiality of the testimony; and a showing that the witness cannot be compelled to testify absent an order of the director. The supervisor may file an opposition to the petition within five days after the petition is served. The director shall either deny or grant the petition within 10 days after receipt of the petition. Upon granting a petition, the director shall issue a subpoena pursuant to Section 3357 compelling the testimony of the witness at the hearing. Obtaining subpoenas may be considered good cause to extend the date of the hearing under paragraph (1) or (2) of subdivision (a).

(e) The director may convert a hearing pursuant to this section to a formal hearing conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code in any of the following circumstances:

(1) The operator makes a showing satisfactory to the director that the order being appealed is likely to result in termination of an established oil or gas producing or injection operation.

(2) It appears to the director that the hearing will involve complex evidentiary or procedural issues that will cause more than minimal delay or burdens.

(3) The operator and the supervisor agree and stipulate to convert the hearing to a formal hearing.

(f) The conversion of a hearing pursuant to this section to a formal hearing shall be conducted in accordance with Article 15 (commencing with Section 11470.10) of Chapter 4.5 of Part 1 of Division 3 of Title 2 of the Government Code. If a hearing for an appeal of an emergency order is converted to a formal hearing, the supervisor shall endeavor to schedule and notice a formal emergency hearing as soon as reasonably possible and, notwithstanding Section 11517 of the Government Code, the director shall only have 30 days from receipt of the administrative law judge’s proposed emergency hearing decision to act as prescribed in subparagraphs (A) to (E), inclusive, of paragraph (2) of subdivision (c) of Section 11517 of the Government Code.

(g) The director or his or her designee shall permit inconspicuous personal recording devices to be used by persons during a hearing pursuant to this section to make sound recordings as personal notes of the proceedings. A person proposing to use a recording device shall provide advance notice to the director or his or her designee. The recordings may not be used for any purpose other than as personal notes.

history: (History: Amended by Stats. 2016, Ch. 274, Sec. 6. (AB 2756) Effective January 1, 2017.)

article: 6. Appeals and Review


citation: PRC § 3353

text:
(a) Within 30 days after the close of a hearing conducted by the director, the director shall issue a written decision affirming, setting aside, or modifying the order from which the appeal was taken. The director’s written decision shall be based upon the preponderance of the evidence and shall set forth the director’s factual findings, legal conclusions, and rationale for the result. The director may extend the 30-day period for issuing the written decision if the extension is agreed to by the operator.

(b) The director shall file the written decision with the supervisor and serve it on the operator as soon as the decision is complete, at which time the decision shall be deemed final. The director’s decision shall supersede the order of the supervisor from which the appeal was made. If the director affirms or modifies the order, the director shall retain jurisdiction until the operator completes the work required to be performed by the order.

history: (History: Repealed and added by Stats. 2010, Ch. 264, Sec. 10. (AB 2453) Effective January 1, 2011.)

article: 6. Appeals and Review


citation: PRC § 3354

text:
(a) Following a hearing conducted by the director pursuant to Sections 3352 and 3353 or subdivision (b) of Section 3350, the operator may obtain judicial review of the decision of the director by filing a petition for writ of administrative mandamus in the superior court of the county where the division’s district office from which the order was issued is located. The operator shall file the petition within 30 days after the date the operator was served with the decision.

(b) Following a hearing conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, the operator may obtain judicial review of the decision pursuant to Section 11523 of the Government Code.

history: (History: Repealed and added by Stats. 2010, Ch. 264, Sec. 12. (AB 2453) Effective January 1, 2011.)

article: 6. Appeals and Review


citation: PRC § 3355

text: When an operator seeks judicial review of a decision of the director, including a decision following a hearing conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, the court shall hear the cause on the record before the director or an administrative law judge. New or additional evidence shall not be introduced in court. The court’s inquiry shall extend to whether the director acted without or in excess of jurisdiction, whether there was a fair hearing, and whether there is any prejudicial abuse of discretion. Abuse of discretion is established if the administrative proceeding has not been conducted in the manner required by law, the decision is not supported by the findings, or the findings are not supported by substantial evidence in light of the whole record.

history: (History: Repealed and added by Stats. 2010, Ch. 264, Sec. 14. (AB 2453) Effective January 1, 2011.)

article: 6. Appeals and Review


citation: PRC § 3356

text:
(a) If the operator does not appeal an order, if the operator does not timely seek judicial review of a decision affirming or modifying an order within the time provided in Section 3354, or if the operator has timely sought and obtained judicial review and the court has affirmed the decision, then any charge, including penalty and interest, that the decision permits the supervisor to impose on the operator for work performed by the supervisor or the supervisor’s agents, and any civil penalties imposed under Section 3236.5 shall constitute a state tax lien against the real and personal property of the operator pursuant to Section 3423.

(b) In addition to a state tax lien, the supervisor may apply to the appropriate superior court for a clerk’s judgment. The application, which shall include a certified copy of the final agency order or decision, shall constitute a sufficient showing to warrant the issuance of the judgment. The court clerk shall enter the judgment immediately in conformity with the application. The judgment so entered shall have the same force and effect as, and shall be subject to all the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court.

history: (History: Amended by Stats. 2016, Ch. 274, Sec. 7. (AB 2756) Effective January 1, 2017.)

article: 6. Appeals and Review


citation: PRC § 3357

text:
(a) In any proceeding before the director, and in any proceeding instituted by the supervisor for the purpose of enforcing or carrying out the provisions of this division, or for the purpose of holding an investigation to ascertain the condition of any well or wells complained of, or which in the opinion of the supervisor may reasonably be presumed to be improperly located, drilled, operated, maintained, or conducted, the supervisor and the director shall have the power to administer oaths and may apply to a judge of the superior court of the county in which the proceeding or investigation is pending for subpoenas for witnesses to attend the proceeding or investigation. Upon the application of the supervisor or the director, the judge of the superior court shall assign a case number for the proceeding or investigation, shall issue an order prescribing the nature and scope of the proceeding or investigation, and shall retain jurisdiction for the limited purpose of enforcing subpoenas issued in the proceeding or investigation. Upon the assigning of a case number, the attorney of record for the supervisor or director may issue subpoenas directing witnesses to attend the proceeding or investigation, and those persons shall be required to produce, when directed, all records, surveys, documents, books, or accounts in the witness’ custody or under the witness’ control; except that no person shall be required to attend upon the proceeding unless the person resides within the same county or within 100 miles of the place of attendance. The attorney of record for the supervisor or the director may in that case cause the depositions of witnesses residing within or without the state to be taken in the manner prescribed by law for like depositions in civil actions in superior courts of this state under Title 4 (commencing with Section 2016.010) of Part 4 of the Code of Civil Procedure, and may issue subpoenas compelling the attendance of witnesses and the production of records, surveys, documents, books, or accounts at designated places within the limits prescribed in this section.

(b) (1) In conducting a proceeding or investigation specified in subdivision (a), the supervisor or director may require an owner or operator to furnish, under penalty of perjury, technical or monitoring reports that the supervisor or director requires. The burden, including costs, of any report shall bear a reasonable relationship to the need for the report and the benefits to be obtained from the report. In requiring a report, the supervisor or director shall explain in writing to the owner or operator the need for the report, and shall identify the rationale that supports requiring that owner or operator to provide the report.

(2) When requested by the owner or operator furnishing the report, neither the division nor the department shall make available to the public for inspection portions of a report that might disclose trade secrets, well data granted confidential status pursuant to Section 3234, or other confidential or privileged information. The division or department shall make that confidential or privileged information available to other public agencies as needed for regulatory purposes and in accordance with a written agreement with the other public agency regarding the sharing of the information.

(c) In conducting a proceeding or investigation pursuant to subdivision (a), the supervisor or director, or his or her inspector, may inspect the well site or production facilities of any owner or operator to ascertain whether the owner or operator is complying with the requirements of, or authorized by, this division. The inspection shall be made with the consent of the owner or operator or, if consent is withheld, with a warrant duly issued pursuant to the procedure set forth in Title 13 (commencing with Section 1822.50) of Part 3 of the Code of Civil Procedure. In the event of an emergency affecting the public health or safety, an inspection may be performed without consent or a warrant. This subdivision is in addition to any other inspection authority granted or authorized by this division.

history: (History: Amended by Stats. 2017, Ch. 561, Sec. 204. (AB 1516) Effective January 1, 2018.)

article: 6. Appeals and Review


citation: PRC § 3358

text: Witnesses shall be entitled to receive the fees and mileage fixed by law in civil causes, payable from the Oil, Gas, and Geothermal Administrative Fund.

history: (History: Amended by Stats. 2003, Ch. 240, Sec. 15. Effective August 13, 2003.)

article: 6. Appeals and Review


citation: PRC § 3359

text:
In case of the failure or neglect on the part of any person to comply with any order of the supervisor or the director, or any subpoena, or upon the refusal of any witness to testify to any matter regarding which he may lawfully be interrogated, or upon refusal or neglect to appear and attend at any proceeding or hearing on the day specified, after having received a written notice of not less than 10 days prior to such proceeding or hearing, or upon his failure, refusal, or neglect to produce books, papers, or documents as demanded in the order or subpoena upon such day, such failure, refusal, or neglect shall constitute a misdemeanor. Each day’s further failure, refusal, or neglect is a separate and distinct offense.

The district attorney of the county in which the proceeding, hearing, or investigation is to be held, shall prosecute any person guilty of violating this section by continuous prosecution until the person appears or attends or produces such books, papers, or documents, or complies with the subpoena or order of the supervisor or the director.

article: 6. Appeals and Review


citation: PRC § 3400

text: The charges directed to be levied by this article are necessary in the exercise of the police power of the State and to provide a means by which to supervise and protect deposits of oil and gas within the State, in which deposits the people of the State have a primary and supreme interest.

history: (History: Enacted by Stats. 1939, Ch. 93.)

article: 7. Assessment and Collection of Charges

path: 3. OIL AND GAS > 1. Oil and Gas Conservation > 7. Assessment and Collection of Charges


citation: PRC § 3401

text:
(a) The proceeds of charges levied, assessed, and collected pursuant to this article upon the properties of every person operating or owning an interest in the production of a well shall be used exclusively for the support and maintenance of the department charged with the supervision of oil and gas operations, for the State Water Resources Control Board and the regional water quality control boards for their activities related to oil and gas operations that may affect water resources, and for the support of the State Air Resources Board and the Office of Environmental Health Hazard Assessment for their activities related to oil and gas operations that may affect air quality, public health, or public safety.

(b) Notwithstanding subdivision (a), the proceeds of charges levied, assessed, and collected pursuant to this article upon the properties of every person operating or owning an interest in the production of a well undergoing a well stimulation treatment, may be used by public entities, subject to appropriation by the Legislature, for all costs associated with both of the following:

(1) Well stimulation treatments, including rulemaking and scientific studies required to evaluate the treatment, inspections, any air and water quality sampling, monitoring, and testing performed by public entities.

(2) The costs of the State Water Resources Control Board and the regional water quality control boards in carrying out their responsibilities pursuant to Section 3160 and Section 10783 of the Water Code.

history: (History: Amended by Stats. 2016, Ch. 341, Sec. 5. (SB 840) Effective September 13, 2016.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3402

text: There shall annually be imposed upon the person operating each oil well in this state, or owning royalty or other interests in respect to the production from the well, a charge which shall be payable to the Treasurer and which shall be computed at a uniform rate per barrel of oil produced from the well for the preceding calendar year. The charge shall be apportioned among all of those persons in fractional amounts proportionate to their respective fractional interests in respect to the production of the well, but the whole of the charge shall be payable by the operator, who shall withhold their respective proportionate shares of the charge from the amounts otherwise payable or deliverable to the owners of royalty or other interests. In the case of a penalty for late payment as provided in Section 3420, no apportionment shall be made.

history: (History: Amended by Stats. 1988, Ch. 1077, Sec. 9.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3403

text: There shall annually be imposed upon the person operating each gas well in this state, or owning royalty or other interests with respect to the production from the well, a charge, which shall be payable to the Treasurer, based upon the amount of gas produced in the preceding calendar year, other than gas which is used for recycling or otherwise in oil-producing operations, and which shall be computed at a uniform rate per ten thousand cubic feet. The charge shall be apportioned among all of those persons in fractional amounts proportionate to their respective fractional interests with respect to the production of the well, but the whole of the charge shall be payable by the operator, who shall withhold the respective proportionate shares of the charge from the amounts otherwise payable or deliverable to the owners of royalty or other interests. In the case of a penalty for a late payment as provided in Section 3420, no apportionment shall be made.

history: (History: Amended by Stats. 1988, Ch. 1077, Sec. 10.)

article: 7. Assessment and Collection of Charges


text:
(a) The Legislature finds that there are underground storage facilities for gas that utilize depleted or partially depleted oil or gas reservoirs. Purchased gas, usually from out of state, is injected for storage and withdrawn during peak load periods. The supervisor is required to maintain surveillance over these facilities to ensure that the original reserves are not lost, that drilling of new wells is conducted properly, and that no damage occurs to the environment by reason of injection and withdrawal of gas.

(b) In order to help support the regulatory effort of the supervisor, there shall be imposed an annual charge on operators of underground gas storage facilities to defray the regulatory costs incurred by the state in conducting the activities described in subdivision (a). Each underground gas storage facility operator shall pay a proportionate share of the total regulatory costs projected for each fiscal year based on the field capacity and number of wells for each underground gas storage facility. For each underground gas storage facility, the portion owed by the operator shall be computed by multiplying the operator’s field capacity by the number of the operator’s wells, and dividing that product by the statewide sum across all underground gas storage facilities of the product of the field capacity of each individual underground gas storage facility multiplied by the number of wells at that facility.

(c) In order to defray the costs of the response effort of the division in the event of a large, uncontrolled release of gas from an underground storage facility that poses a significant present or potential hazard to public health and safety, property, or to the environment, there shall be an additional charge imposed entirely on the operator of the underground storage facility at which the uncontrolled leak or release of gas occurred. The charge shall be in the amount of the total directly associated costs incurred by the division in the previous calendar year in the course of responding to the release, including personnel hours, travel expenses, contracting costs, and any other directly associated costs incurred by the division.

(d) For purposes of this section, the following terms have the following meanings:

(1) “Field capacity” means the total gas storage capacity, including base and working gas capacity, of an underground gas storage facility, in cubic feet.

(2) “Wells” means all wells associated with an underground gas storage facility except those that have been plugged and abandoned pursuant to Section 3208 before the preceding calendar year.

history: (History: Amended by Stats. 2016, Ch. 673, Sec. 4. (SB 887) Effective January 1, 2017.)

article: 7. Assessment and Collection of Charges


text:
(a) For the purposes of this section, “gravity-based energy storage well” has the same meaning as set forth in Section 3190.

(b) To support the regulatory effort of the supervisor, there shall be imposed an annual charge on operators of gravity-based energy storage wells to defray the regulatory costs incurred by the state in maintaining surveillance of these wells, ensuring that testing is conducted properly, and ensuring that no damage occurs to the environment by reason of conversion. Each gravity-based energy storage well operator shall pay a proportionate share of the total regulatory costs for each fiscal year based on the operator’s number of gravity-based energy storage wells. For each gravity-based energy storage well, the portion owed by the operator shall be computed by dividing the statewide sum of reasonably incurred regulatory costs across all gravity-based energy source wells by the number of gravity-based energy storage wells.

(c) This section shall remain in effect only until January 1, 2035, and as of that date is repealed.

history: (History: Added by Stats. 2025, Ch. 419, Sec. 2. (SB 567) Effective January 1, 2026. Repealed as of January 1, 2035, by its own provisions.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3404

text: The charges authorized by this article are in addition to any and all charges, taxes, assessments, or licenses of any kind or nature paid by or upon the properties assessed hereunder.

article: 7. Assessment and Collection of Charges


citation: PRC § 3405

text: The department shall prescribe the form and contents of all reports for making the charge or for other purposes to carry out the intent and provisions of this article.

history: (History: Amended by Stats. 2024, Ch. 1002, Sec. 8. (AB 218) Effective September 30, 2024.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3406

text: Every person chargeable under this article, shall on or before March 15th of each year, file a report with the department. The report shall show all items of information demanded by the report, which are necessary to carry out this article. The report shall be verified by such person or officer as the department may designate.

history: (History: Amended by Stats. 1967, Ch. 529.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3407

text: The department may, for good cause shown, by order entered upon its records, extend for not exceeding thirty days, the time for filing any report required by this article.

article: 7. Assessment and Collection of Charges


text: If the person filing the report required under Section 3406, by error or otherwise fails to include the full amount of oil or gas production in the report, the department shall make an estimate of the deficit, based on the monthly production reports filed by such person under Section 3227, and add it to the report. The department shall make a reasonable effort to reconcile the yearly report filed under Section 3406 with the data filed on the regular monthly production reports, before proceeding to change the report, but failure to do so shall not invalidate the assessment.

history: (History: Amended by Stats. 1992, Ch. 999, Sec. 17. Effective January 1, 1993.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3408

text:
(a) If any person chargeable under this article fails or refuses to file with the department, within the time prescribed in this article, the verified report provided for in Section 3406, the department shall note failure or refusal as provided for in Section 3418.

(b) The department shall estimate the amount of oil and gas produced by the person and shall assess the person an assessment based upon the estimated production. A penalty assessment shall be added to the charge pursuant to Section 3420.

history: (History: Amended by Stats. 1992, Ch. 999, Sec. 18. Effective January 1, 1993.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3410

text: The department shall, on or before June 15th of each year, acting in conjunction with the Department of Finance, make an estimate of the amount of money which will be required to carry out the provisions of this chapter, including any adjustments for savings or increased expenditures in the current and prior fiscal years.

history: (History: Amended by Stats. 1977, Ch. 112.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3412

text: On or before June 15 of each year, the department shall determine the rate or rates that will produce the sums necessary to be raised as provided in Section 3410. Within the same time, the department shall extend into the proper column of the record of assessments the amount of charges due from each person. The department shall post the information supporting the rate or rates on a publicly available portion of its internet website.

history: (History: Amended by Stats. 2021, Ch. 727, Sec. 9. (SB 406) Effective January 1, 2022.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3413

text:
Between the first of March and the 15th of June in each year, the department shall assess and levy the charges as provided in this article. The assessment shall be made against the person operating the property subject to assessment on the first Monday in March, except that, where the actual operation of any well has changed hands during the period for which the charge is imposed, the charge shall be apportioned to each operator upon the basis of the oil or gas produced during the period, and the lien provided for in Section 3423 shall be a lien against the property of each operator. If the name of the owner is unknown to the department the assessment shall be made against unknown owners.

Clerical errors occurring or appearing in the name of any person whose property is properly assessed and charged, or in the making or extension of any assessment or charge upon the records, which do not affect the substantial rights of the payer, shall not invalidate the assessment or charge.

article: 7. Assessment and Collection of Charges


citation: PRC § 3417

text:
The notice shall state:

(a) That the assessment of property and levy of charges under this article has been completed.

(b) That the records of assessments containing the charges due will be delivered to the State Controller on the first Monday in July.

(c) That if any person is dissatisfied with the assessment made or charge fixed by the department he may, at any time before the first Monday in July, apply to the Controller to have the assessment or charge corrected in any particular.

The omission to publish notice shall not affect the validity of any assessment levied pursuant to this article.

history: (History: Amended by Stats. 1975, Ch. 1049.)

article: 7. Assessment and Collection of Charges


text:
(a) The division shall send a notice to each operator subject to a fee pursuant to Section 3206 by April 1 of each year. The notice shall do both of the following:

(1) Identify the amount of the annual fee due no later than May 1 of that year.

(2) State that if the fee amount in the notice is in error, the operator may apply to the division before May 1 of that year to have the fee amount corrected.

(b) The failure to send a notice shall not affect the validity or amount of the fee owed pursuant to Section 3206.

(c) The notice shall be sent by mail or by electronic means deemed appropriate by the division, including, but not limited to, electronic mail or an alternative electronic system that persons opt into for receiving notice.

history: (History: Added by Stats. 2021, Ch. 707, Sec. 5. (AB 896) Effective January 1, 2022.)

article: 7. Assessment and Collection of Charges


citation: PRC § 3418

text: The department shall prepare each year a record called the “Record of Assessments and Charges” in which shall be entered each assessment and levy or charge made by it upon the property assessed and charged under this article, describing the property assessed. The assessments may be classified and entered in such separate parts of the record as the department may prescribe. If such charges and assessments become delinquent as provided in Section 3420 of this code, in addition to the information contained in the “Record of Assessments and Charges” as herein provided, the department shall furnish to the State Controller upon his request the name and address of any owner of property assessed as such name and address last appears in the office of the tax assessor for county in which such land or a major portion thereof is situate.

article: 7. Assessment and Collection of Charges


citation: PRC § 3419

text: On or before the first of July the department shall deliver to the State Controller the record of assessments and charges, certified to by the director, which certificate shall be substantially as follows: “I, ____, Director of Conservation, do hereby certify that between the first of March and the first of July, 20__, I made diligent inquiry and examination to ascertain all property and persons, firms, corporations and associations subject to assessment as required by the provisions of this chapter, providing for the assessment and collection of charges; that I have faithfully complied with all the duties imposed upon me by law; that I have not imposed any unjust or double assessment through malice or ill will or otherwise; nor allowed any person, firm, corporation, or association, or property to escape a just assessment or charge through favor or regard or otherwise.” Failure to subscribe the certificate to the record of assessments and charges, or any certificate, shall not affect the validity of any assessment or charge.

history: (History: Amended by Stats. 2008, Ch. 562, Sec. 11. Effective January 1, 2009.)

article: 7. Assessment and Collection of Charges