SECTIONS 3315-3347 - California Statutes

PUBLIC RESOURCES CODE

SECTION 3315-3347

3315. It is hereby found and determined:
(a) That the people of the State of California have a direct and
primary interest in arresting and ameliorating the subsidence and
compaction of land in those areas overlying or immediately adjacent
to producing oil or gas pools within the State where valuable
buildings, harbor installations and other improvements are being
injured or imperiled or where subsidence is interfering or may
interfere with commerce, navigation and fishery, or where substantial
portions of such areas may be inundated if subsidence continues,
thereby endangering life, health, safety, public peace, welfare and
property;
(b) That in certain of such areas of the State land already has
subsided to a great extent and is continuing to subside at an
alarming rate, resulting in injury to surface and underground
improvements through land movement or the threat of inundation from
the sea, necessitating extensive filling and construction of levees
and dikes; and requiring the raising, repair and reconstruction of
highways, bridges, buildings, utility and transportation facilities,
vital national defense installations and other improvements;
(c) That the results of studies by qualified engineers, which have
been conducted in certain of such affected areas, indicate that the
only feasible method that can be expected to arrest or ameliorate
subsidence in such areas is by repressuring subsurface oil and gas
formations thereunder and that such repressuring operations, in
addition thereto, should increase the amount of oil ultimately
recoverable from the formations underlying such areas and protect the
oil or gas in such lands from unreasonable waste;
(d) That unit or co-operative operation of such pool or pools in
such areas is necessary in order to repressure or maintain pressure
in said pool or pools in order to arrest or ameliorate subsidence;
(e) That, in view of the special characteristics of the subsidence
problem in such areas, it is necessary, therefore, that the State of
California, through authority vested in the State Oil and Gas
Supervisor, exercise its power and jurisdiction to require the
carrying on of repressuring operations which will tend to arrest or
ameliorate subsidence by maintaining or replenishing underground
pressures in formations underlying such areas, thereby safeguarding
life, health, property, and the public welfare, and to require such
co-operative or unit plan or plans as may be necessary for
repressuring which tend to arrest or ameliorate subsidence subject to
the limitations on the authority of the supervisor contained in this
article;
(f) That it is also desirable to encourage the carrying on of
voluntary repressuring operations pursuant to voluntary unit or
co-operative agreements in order to arrest or ameliorate subsidence,
and as a means to that end it is necessary that the power of eminent
domain be exercised to acquire the properties of nonconsenting owners
of interests in oil and gas under the circumstances and subject to
the limitations set forth in this article.

3316. Unless the context otherwise requires, the general provisions
and definitions contained in this chapter govern the construction of
this article.

3316.1. As used in this article, "person" means any natural person,
corporation, association, partnership, limited liability company,
joint venture, receiver, trustee, executor, administrator, guardian,
fiduciary or other representative of any kind and includes the state
and any city, county, city and county, district or any department,
agency or instrumentality of the state or of any governmental
subdivision whatsoever.

3316.2. "Pool" means an underground reservoir containing, or
appearing at the time of determination to contain, a common
accumulation of crude petroleum oil or natural gas or both. Each zone
of a general structure which is separated from any other zone in the
structure is a separate pool.

3316.3. "Field" means the same general surface area which is
underlaid or reasonably appears to be underlaid by one or more pools.

3316.4. "Repressuring operations" means gas injection operations,
water injection operations, water flooding operations, or any
combination thereof, or any other operations intended primarily to
arrest or ameliorate subsidence, or to restore or increase the
pressure in a pool, or to avoid or minimize a reduction of pressure
within a pool.

3316.5. "Subsidence" means sinking, lowering, collapsing,
compaction or other movement of the land whether covered by water or
not.

3316.6. "Unit area" means all or part of a pool or pools included
within the area embraced by a unit created pursuant to an order of
the supervisor as provided in Section 3322, or created by a unit
agreement voluntarily entered into.

3316.7. "Unit production" means all oil, gas and other hydrocarbon
substances produced from a unit area from the effective date of the
order of the supervisor creating the unit, or from the effective date
of a unit agreement approved by the supervisor.

3316.8. "Fieldwide repressuring plan" means a plan based upon a
competent engineering study or studies, prepared by a petroleum
engineer licensed by the State, of all the pools in a field, designed
so as to provide for a program of pressure restoration or
maintenance as to most effectively arrest or ameliorate subsidence
with respect to those land areas referred to in Section 3315.

3316.9. "Unit agreement" means and includes, in addition to the
unit agreement, any unit operating agreement, consent agreement and
other agreement entered into in connection with and supplemental to
such unit agreement, but shall not include any preliminary agreement
confined to effectuating any exchange of interests in tracts of land
which the parties to such preliminary agreement may desire.

3316.10. "Increased production" means that portion of the oil or
gas produced from all wells bottomed within a unit area, or within
any other area where the supervisor finds repressuring operations
feasible, during any year over and above the oil or gas that would
have been produced from all wells bottomed within the same area
during the identical year at the projected rate of decline for the
wells in the absence of repressuring operations conducted pursuant to
this article.

3316.11. "Working interest" means an interest held in lands by
virtue of fee title, including lands held in trust, a lease,
operating agreement or otherwise, under which the owner of such
interest has the right to drill for, develop and produce oil and gas.
A working interest shall be deemed vested in the owner thereof even
though his right to drill or produce may be delegated to an operator
under a drilling and operating agreement, unit agreement, or other
type of operating agreement.

3316.12. "Working interest owner" means a person owning a working
interest.

3316.13. "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.

3316.14. "Royalty interest owner" means a person owning a royalty
interest.

3316.15. "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.

3316.16. "Land" means both surface and mineral rights.

3317. 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."

3318. 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.

3319. (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.

3319.1. 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.

3320. (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.

3320.1. (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.

3320.2. 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.

3320.3. 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 3 1/2 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.

3320.4. 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.

3320.5. 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.

3321. (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; and
2. 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; and
3. 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; and
4. 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; and
5. 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.

3322. 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.

3322.1. 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.

3323. 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.

3324. 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.

3325. 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.

3326. 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.

3327. 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.

3328. (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.

3329. 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.

3330. 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.

3331. 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.

3332. 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.

3333. (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.

3334. 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.

3335. 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.

3336. 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.

3337. The division shall exercise surveillance over all
repressuring operations in the state.

3341. 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.

3342. 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.

3343. (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.

3344. (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.

3345. 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