Oil and Gas ConservationSubsidence
Section § 3315
This law finds that land subsidence (sinking) in areas over oil and gas pools in California is causing various problems, like damaging buildings and infrastructure and threatening safety and the environment. It highlights that repressuring underground oil and gas formations is the only viable solution to stop the subsidence. This involves maintaining or increasing pressure in these areas through cooperative efforts managed by the State Oil and Gas Supervisor. Additionally, the state encourages voluntary repressuring operations and might need to use eminent domain to manage subsidence effectively, even if it means acquiring property from non-consenting owners.
Section § 3316
This section explains that the general rules and definitions set out in the chapter apply to understanding and interpreting this article, unless the situation calls for a different interpretation.
Section § 3316.1
This law defines what "person" means in the specific context of this article. It includes not just human beings, but also various types of organizations like corporations, partnerships, and limited liability companies. It also covers legal roles like trustees and executors, plus government entities and subdivisions like cities and state departments.
Section § 3316.2
In this context, a "pool" is defined as an underground area that holds or seems to hold crude oil or natural gas. Each distinct layer or zone within a geological structure, which doesn't mix with other layers, is considered a separate pool.
Section § 3316.3
The term "field" refers to a broad land area that is situated over or seems to be over one or more pools of a natural resource, like oil or gas.
Section § 3316.4
This section defines 'repressuring operations' as activities designed to manage pressure in underground pools. These operations can include injecting gas or water to either stop ground sinking (subsidence), increase the pool's pressure, or prevent pressure loss.
Section § 3316.5
This section defines the term 'subsidence' as any form of land movement like sinking, lowering, collapsing, or becoming compacted, regardless of whether the land is underwater or dry.
Section § 3316.6
The term “unit area” refers to the entire or a portion of an oil or gas pool that is included within the boundaries of a unit. This unit is either established by a supervisor's order under Section 3322 or created through a voluntary unit agreement.
Section § 3316.7
"Unit production" refers to all the oil, gas, and other hydrocarbons collected from a specific area starting from when a supervisor officially establishes or approves a production unit.
Section § 3316.8
This law defines a 'fieldwide repressuring plan' as a strategy created to manage the pressure in underground reservoirs to limit or stop the sinking of the ground, known as subsidence, over specific land areas. The plan must be based on thorough engineering studies carried out by a licensed petroleum engineer.
Section § 3316.9
This section defines what is considered a 'unit agreement.' It includes the main unit agreement itself, along with any related operating agreements, consent agreements, and additional agreements that support it. However, it does not cover preliminary agreements that only deal with exchanging land interests.
Section § 3316.10
"Increased production" refers to the extra amount of oil or gas extracted from wells in a certain area due to using repressuring operations. This is compared to the amount that would have been produced without such operations, based on a predicted decline rate.
Section § 3316.11
In simple terms, a "working interest" is the right someone has to explore for and produce oil and gas on land they own or control. This right can come from owning the land itself or through agreements like leases or operating contracts. Even if the owner lets another party handle the actual drilling under an agreement, they still hold the working interest.
Section § 3316.12
The term "working interest owner" refers to an individual or entity that owns a working interest in a property or business venture.
Section § 3316.13
A 'royalty interest' refers to the right to receive a portion of the oil and gas produced from a property, or from the proceeds of their first sale, without having to bear any production costs. It excludes any involvement in the operation or development of the oil and gas source.
Section § 3316.14
A 'royalty interest owner' is simply anyone who owns a royalty interest, which usually means they have the right to receive a portion of the revenue from the production of minerals or other resources.
Section § 3316.15
A "unit operator" is the individual or group identified in a unit agreement or as stated in specific parts of another section, to manage the operations of a unified area for resource extraction or related activities.
Section § 3316.16
This law clarifies that the term "land" includes both the surface of the land and any mineral rights beneath it.
Section § 3317
This law talks about land areas that are either on top of or right next to areas where oil or gas is being extracted. If this land is sinking and could be flooded by the sea, posing a risk to people or damaging buildings or infrastructure, it is called a 'subsidence area.' Specifically, it refers to lands mentioned in another section, 3315.
Section § 3318
This law ensures that any management order involving tide or submerged lands, which are lands granted to local governments or districts, must protect public trust rights like commerce, navigation, and fisheries. The law reassures that following these orders won't harm these public trust rights and that these orders won't alter any existing rights, grants, or conditions of the lands.
The law also specifies that despite any management decisions such as pooling resources, these orders won't revoke or change trust-related terms. If any granted lands are part of a resource unit approved by a supervisor, only the portion of resources or proceeds directly from granted lands will be subject to any trust conditions.
Section § 3319
This section outlines the process for handling subsidence issues in oil and gas fields. If there's a concern about the ground sinking in an area where oil or gas is produced, the state supervisor can organize a public hearing to discuss solutions. Cities, counties, contractors, or anyone with interest in the field can apply with an engineering report showing how to address the issue. All costs for the hearing must be covered by the applicants. If the supervisor determines that repressuring operations can help, a plan will be created to implement these operations without compromising future oil and gas recovery. The plan can be reviewed and modified as needed based on new data and subsequent hearings can be ordered to consider changes.
Section § 3319.1
Before implementing a plan to increase pressure in oil or gas fields to address land subsidence, a public hearing must be held if a city, county, or entity involved submits an engineering plan that outlines how to manage pressure. The hearing considers whether the proposed methods will help prevent subsidence without significantly reducing the amount of oil or gas that can be extracted.
If the proposed repressuring plan seems beneficial, the supervisor will approve it. This plan can be revised if needed after another public hearing to ensure it aligns with broader fieldwide repressuring plans.
Section § 3320
This law encourages the voluntary process of repressuring in oil or gas pools to prevent land from sinking (subsidence) or for other lawful reasons. The supervisor can approve these operations before a formal plan is in place if they are not harmful. Once a plan is set, the supervisor reviews and approves ongoing or proposed operations that match the plan. If approved, parties can proceed without direct supervision, unless specified otherwise.
For agreements involving lands granted to local governments that don't reserve mineral rights to the state, additional conditions apply. If approved operations do not begin within a specified time, the approval is automatically revoked. The supervisor has the right to inspect repressuring operations anytime to ensure they meet the approved standards and can enforce compliance.
Section § 3320.1
This law allows for the creation and approval of agreements to manage oil and gas production from different land parcels as a single unit. These agreements can include operations to restore pressure (repressuring) in oil and gas fields to address land subsidence (sinking). Such agreements, which share the benefits and costs among landowners, must be filed for the supervisor's approval. The supervisor can approve the agreement if it's not harmful or illegal.
If approved, the agreement can enforce participation by nonconsenting landowners in certain cases, using the right of eminent domain. This means if 75% of owners have agreed, the state can force others to join by taking their property for public use, but it should cause the least harm.
All parties, including cities or counties, can use eminent domain to acquire necessary land or property, ensuring the project is compatible with the public good. The law guides the legal procedure if properties need to be condemned and ensures quick action for such acquisitions.
Section § 3320.2
This law addresses the process of "unitization," where the California supervisor overseeing oil and gas operations can require various stakeholders (working interest owners and royalty interest owners) to collaborate in repressuring operations. These operations help improve the recovery of oil or gas from a pool or field. If the stakeholders don’t voluntarily agree to work together, the supervisor can compel them to do so if it benefits the oil recovery process.
However, the supervisor can only enforce this if it won’t significantly reduce the total recoverable oil or if the cost is justifiable by the expected increased production. Additionally, the supervisor can continue to oversee and adjust these operations if needed.
Section § 3320.3
This law explains how the costs of certain oil operations, called repressuring, are evaluated. If someone agrees to pay more than their fair share of these costs, that extra amount will be ignored when calculating the total cost versus the anticipated profit from increased production.
The people paying extra will be repaid through a share of the profits from increased production, until they get back the full amount they covered plus interest. The share they receive will be between 60% and 90% of the increased production's profits, deemed fair by a supervisor.
If the supervisor finds this cost-sharing offer reasonable, they will issue an order detailing how and when these extra costs will be repaid through the profits coming from the increased oil production.
Section § 3320.4
This law allows the State, or any local government, to use revenues from oil or gas extracted from underwater lands to help pay for repressuring operations that combat subsidence, which is the sinking of land. This funding can cover costs exceeding what operators would normally pay as part of a mandatory or voluntary agreement, with the expectation that these costs may be conditionally repaid later.
Section § 3320.5
This law states that if you're involved in oil and gas production and are following all the rules of a cooperative or unit agreement, you won't be held responsible for any loss or damage from activities like repressuring, as long as you're not negligent.
Section § 3321
This law explains that a supervisor has the authority to issue a compulsory unit order for oil or gas production if specific conditions are met. This order can be requested by a city, county, or other interested parties affected by land subsidence, which is the gradual sinking of land, often due to resource extraction like oil or gas. Before issuing such an order, a public hearing must be held within 60 days of a petition.
After a hearing, if the supervisor concludes that repressuring operations (which help manage subsidence) are needed because the involved parties can't agree or take action, and if continuing subsidence is damaging land, buildings, commerce, or safety, then unit operation may be mandated. This means organizing the land resources in a uniform way to effectively manage the situation based on an already approved repressuring plan. The unit must be deemed feasible, necessary, and justified, ensuring the terms are fair and reasonable for everyone involved.
Section § 3322
This law allows a supervisor to order a unified operation of land, including different ownerships, to manage oil and gas production in a way that protects the rights of all involved parties. It specifies the unit area, the nature of the repressuring plan to stop land from sinking (subsidence), and conditions for continuing oil or gas production. The law details how production and costs are shared fairly among participants based on each land tract's oil and gas value.
It permits interim and final formulas for distributing production and expenses, requiring adjustments based on specific factors. Financing details are outlined, with considerations for those unable to meet expenses promptly. The statute mandates an operating committee to oversee management and appoints a 'unit operator' as needed. It also covers voting procedures, the commencement and termination of operations, and any other necessary provisions to ensure effective repressuring and subsidence control.
Section § 3322.1
Before any plan to combine oil and gas lands for production can be enforced, it needs backing from owners who receive 65% of the production profits (before royalties) based on the previous year's output. If this agreement isn't reached immediately, additional hearings are held. If these owners don't approve within six months, the plan is canceled.
Section § 3323
If there's a hearing about land sinking (called subsidence), a notice will be published in a local newspaper where the issue is happening. Notices will also be sent to specific individuals as detailed in another section.
Section § 3324
This section outlines the procedures for hearings related to specific subject matters in California. Anyone interested can attend, speak, and provide evidence. These participants must take an oath, and the hearing's proceedings will be recorded. It details how the supervisor will handle oaths, subpoenas, depositions, and penalties for noncompliance, as per the division's rules.
If needed, an officer from the Office of Administrative Hearings can help manage the hearing, but they won’t make certain decisions. The restriction against testifying about the contents of records is lifted in this context, allowing records to be used as evidence at these hearings or in court.
Section § 3325
This law section gives the supervisor the authority to create and enforce all necessary rules to meet the goals of the article or carry out any orders. These rules must be made following specific guidelines in the Government Code.
Section § 3326
This law section explains that an existing order for unit operation can be changed if there's a good reason, but it requires a new order from the supervisor. However, the percentage of oil and gas assigned to individual tracts can't be altered unless everyone affected agrees to it. Any new order needs to meet the same requirements as the original, including necessary findings and restrictions. The section also clarifies that it doesn't stop the creation of a temporary formula for distributing unit production as mentioned in another specific section.
Section § 3327
This law allows the supervisor, after holding a public hearing, to issue a new order that mandates unit operation in a specific oil or gas pool area, expanding an existing unit area. When redistributing production among the larger unit area, the law requires treating the previous unit area as one section before dividing production among separately owned sections within it, following the proportions set by the earlier order.
Section § 3328
This law explains how oil and gas production is managed when multiple owners have rights in a single area. Even if the oil is pulled from a general area, it’s legally treated as if it's coming from each specific owner’s property. Each owner receives their share of the oil or profits as if the oil was taken directly from their property. Operations in this shared area meet all the obligations of any contracts or leases the owners might have. All the wells, regardless of their exact location in the unit, are considered as if they're on each owner’s specific land.
Section § 3329
This law section authorizes a unit operator to manage the development and operations for extracting oil, gas, and other hydrocarbons on behalf of all owners of mineral rights in a designated area. Each owner is responsible for their own share of expenses and cannot be held liable for more than their allocated portion.
The unit operator has the right to place a lien on equipment and production outputs from each tract to ensure payment of the expenses assessed against that tract. This lien can be enforced as per Section 3330. Only those responsible for the costs of producing resources without unitization must cover the expense assessments for their specific tract.
Section § 3330
If a person responsible for running an oil or gas unit hasn't been paid for costs they've covered on behalf of others, they can place a lien on the debtor's equipment and share of production from the oil or gas unit. This is done by filing a detailed affidavit in the local county, explaining what's unpaid, and notifying the debtor at least 20 days before filing. The lien needs to be filed within 90 days of when the expenses or work were completed. The lien covers oil and gas produced, not real estate, and can be foreclosed like a mechanics' lien. The operator can sell the production to cover the debt but must save the proceeds until the issue is resolved.
Section § 3331
This law states that once a supervisor issues an order regarding an area, anyone with an interest in that area or its oil and gas production must follow it. After the order takes effect, no one can drill, operate, or work on any wells in that area unless they comply with the order.
Section § 3332
If you're affected by a final order from a supervisor, you have 30 days to ask for a rehearing, though in some cases, you may get up to 60 days total if the supervisor agrees there's a good reason. The supervisor has 30 days to decide on your request for a rehearing; if they do nothing, that's considered a denial.
If a rehearing is granted, you'll be notified and given a date for it, which must be between 30 and 60 days from when your rehearing request was approved. However, with a good reason, this can be extended to 90 days. After the rehearing, the supervisor can change or issue a new order.
Note that the usual appeal rules don't apply to this process.
Section § 3333
If you disagree with a decision made by the supervisor, you can ask a court to review it. To do this, you file a special petition called a writ of mandate in the county where the issue is or has happened. You must start this process within 30 days once you receive the official record of the decision.
You have to notify the supervisor within 60 days if you plan to petition the court, or within 60 days after a rehearing decision. This notice should spell out what you disagree with. After you inform them, the supervisor will estimate the cost to prepare the decision's transcript, which you must pay in 10 days. Once paid, you'll receive the transcript within 60 days, but the supervisor can extend this to 90 days if needed.
Section § 3334
This law states that just because a case is in progress or being reviewed by the court doesn't automatically pause an order's effect. However, the court can choose to pause the order if there's a good reason, either on its own or if someone involved in the case asks for it.
Section § 3335
If someone doesn't start a legal review on time or finish appealing a decision on time about oil or gas production, or if their appeal fails, the supervisor can stop or limit their ability to produce oil or gas. This will continue until they follow the rules set out in the order.
Section § 3336
This law allows a supervisor to hold a public hearing to establish or change the boundaries of a specific piece of land if there's a request from an interested person. If, after the hearing, the land is found to meet certain criteria, the supervisor will officially set the boundaries. The supervisor also has ongoing authority to hold more hearings to adjust these boundaries if necessary.
Section § 3337
This law mandates that the division must monitor all activities related to increasing the pressure within oil or gas reservoirs across the state.
Section § 3341
This law allows cities or public agencies to take over oil and gas facilities through eminent domain after production has stopped and efforts to restart have failed. This is done to maintain underground pressure and prevent land subsidence, which is the sinking of the ground.
Section § 3342
This law outlines how leases, contracts, and rights are modified when there's a unitization order or regulation for oil and gas operations. Basically, it says that although leases and contracts may be changed to fit the order, this doesn't extend their term or change who owns the land or resources. The title of land or mineral rights remains with the original owners, not transferred to the unit operator or other parties involved in the operation. Any production profits are owned by the original owners as specified by the unitization order. The unit operator manages shared resources and costs for the operation, but assets are still owned by the participating interest owners.
Section § 3343
If someone deliberately breaks a rule in this article, they face a $1,000 fine for each violation and for every day it continues. The Attorney General can sue to collect this penalty, and collecting it doesn’t exempt the violator from further damages to others. If someone helps another person break the rules, they face the same fine.
Section § 3344
This law allows a supervisor to sue in court if someone is breaking, or threatening to break, certain rules or orders. The court can issue orders to stop these actions. If the supervisor doesn't take action within 10 days of a written request from someone affected, that person can file the lawsuit themselves. After filing, the supervisor takes over the case if the court decides to grant an injunction.
Damages cannot be claimed against most parties involved, like lessors or contractors, except the working interest owner. However, damage claims are only allowed after an official order is ignored. Also, in any lawsuit the supervisor brings, other defendants can't file countersuits or try to bring in others for damages.
Section § 3345
This law states that any decision or determination made by a supervisor, or reviewed by a court regarding those decisions, cannot be used as evidence in unrelated legal matters. These findings are only relevant in situations that directly involve the making, enforcing, or reviewing of those specific decisions by the supervisor.
Section § 3346
This law states that the rules in this article take priority over any conflicting rules found in other laws related to tide and submerged lands, or in any legislative grants or amendments concerning these lands.
Section § 3347
This law states that if any part of this article is found to be unconstitutional or invalid, that decision won't affect the rest of the article. Basically, each part of the article is intended to stand on its own, so removing an invalidated section won't impact the effectiveness of the other sections.