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State
California
PRC Sec 6801-6819 Provisions Relating to All State Lands OIL AND GAS AND MINERAL LEASES (PUBLIC LANDS)


PUBLIC RESOURCES CODE
SECTION 6801-6819





6801. A lease or prospecting permit under this chapter shall be
issued only to and held by:
(a) Persons or associations of persons who are citizens of the
United States or who have declared their intention of becoming such,
or who are citizens of any country, dependency, colony, or province,
the laws, customs, and regulations of which permit the grant of
similar or like privileges to citizens of the United States.
(b) Any corporation or corporations organized and existing under
and by virtue of the laws of the United States or of any state or
territory thereof; or any corporation or corporations 90 percent or
more of the shares of which are owned by persons eligible to hold a
lease or permit under subdivision (a) or (c) of this section; or any
corporation or corporations 90 percent or more of the shares of which
are owned either by a corporation eligible to hold a lease or permit
hereunder, or by any combination of such eligible persons or
corporations, or both.
(c) Any alien person entitled thereto by virtue of any treaty
between the United States and the nation or country of which the
alien person is a citizen or subject.
(d) In every case of joint bidding, the names of all persons,
firms, or corporations interested in a particular joint bid shall be
specified.



6802. Any interest held in violation of this chapter shall be
forfeited to the State by appropriate proceedings for that purpose
brought by the State in the superior court for the county in which
the property or some part thereof is located, except that any
ownership or interest forbidden in this chapter which is acquired by
descent, will, judgment, or decree may be held for two years and not
longer after its acquisition.



6803. The commission, in issuing any lease under this chapter, may
reserve to the State the right to lease, sell, or otherwise dispose
of the surface of the lands embraced within the lease, in so far as
the surface is not required by the lessee. If such a reservation is
to be made, however, it shall be so determined before the offering of
the lease.



6804. A lease or permit issued under this chapter may be assigned,
transferred or sublet as to all or any part of the leased or
permitted lands, and as to either a divided or undivided interest
therein, or as to any separate and distinct zone or geological
horizon or portion thereof, subject to approval by the commission, to
any person, association of persons, or corporation, who at the time
of the proposed assignment, transfer, or sublease, possesses the
qualifications provided in this chapter. Any assignment, transfer or
sublease shall take effect as of the first day of the month
following the approval by the commission and filing with the
commission of an executed counterpart thereof, together with any
required bond and proof of the qualification, under this act and the
rules and regulations of the commission, of the assignee, transferee
or sublessee to take or hold such lease or permit or interest
therein. Unless approved by the commission no assignment, transfer
or sublease shall be of any effect. Upon approval of any assignment,
transfer or sublease the assignee, transferee or sublessee shall be
bound by the terms of the lease or permit to the same extent as if
such assignee, transferee or sublessee were the original lessee or
permittee, any conditions in the assignment, transfer or sublease to
the contrary notwithstanding. Any assignment or transfer of a
separate portion of any lease or permit or of a separate and distinct
zone or geological horizon, or a portion thereof, shall segregate
the assigned, transferred or subleased portion thereof from the
retained portion thereof, and such approval shall release and
discharge the assignor or transferor from all obligations thereafter
accruing under said lease or permit with respect to the assigned or
transferred lands or zones or horizons, and such segregated leases or
permits shall continue in full force and effect for the primary term
of the original lease or permit, but, in the case of any lease, for
not less than two (2) years after the date of discovery of oil or gas
in paying quantities, or commercially valuable deposit of minerals,
upon any segregated portion of the lands or zones or horizons
originally subject to such lease, and so long thereafter as oil or
gas is produced in paying quantities. Assignments or transfers under
this section may also be made with the approval of the commission of
parts of leases which are in their extended term because of
production, and the segregated lease of any undeveloped lands or
zones or horizons shall continue in full force and effect for two (2)
years and so long thereafter as oil or gas or minerals are produced
in paying quantities from the segregated lease lands or zones or
horizons.



6804.1. Notwithstanding any provisions of this code to the
contrary, a lessee may at any time make and file with the commission
a written quitclaim or relinquishment of all rights under any lease
or of any portion thereof comprising a 10-acre parcel or multiple
thereof in a compact form, or of any separate or distinct zone or
geological horizon or portion thereof underlying such 10-acre parcel
or multiple thereof. Such quitclaim or relinquishment shall be
effective as of the date of its filing, subject to the continued
obligation of the lessee and his surety to make payment of all
rentals and royalties theretofore accrued and to place all wells on
the lands or in the zones or horizons to be quitclaimed or
relinquished, in condition for suspension or abandonment in
accordance with the applicable lease terms and regulations; thereupon
the lessee shall be released from all obligations thereafter
accruing under said lease with respect to the lands, zones or
horizons quitclaimed or relinquished, but no such quitclaim or
relinquishment shall release such lessee or his surety from any
liability for breach of any obligation of the lease with respect to
which such lessee is in default at the time of the filing of such
quitclaim or relinquishment.


6805. The commission shall reserve and may exercise the authority
to cancel any prospecting permit or lease upon which a commercially
valuable deposit of minerals or geothermal resources other than oil
or gas has not been discovered or upon which oil or gas has not been
discovered in paying quantities upon failure of the permittee or
lessee (after 30 days' written notice and demand for performance) to
exercise due diligence and care in the prosecution of the prospecting
or development work in accordance with the terms and conditions of
the permit or lease. After discovery of a commercially valuable
deposit of minerals or geothermal resources other than oil or gas on
lands subject to any permit or lease issued pursuant to this chapter,
or after discovery of oil or gas in paying quantities on lands
subject to any lease, the permit or lease may be forfeited and
canceled only upon failure of the lessee after 90 days' written
notice and demand to comply with any of the provisions of the permit
or lease or of the regulations applicable thereto and in force at the
date of the permit or lease. However, in the event of any
cancellation the lessee under any oil or gas lease or the permittee
or lessee under any geothermal resource permit or lease shall have
the right to retain under the permit or lease any and all drilling or
producing wells as to which no default exists, together with a
parcel of land surrounding any well or wells and any rights-of-way
through the lands, under permit or lease, as may be reasonably
necessary to enable the permittee or lessee to drill and operate the
retained well or wells. In the event of the cancellation of any
permit or lease the permittee or lessee shall have a reasonable time
within which to remove any and all property, equipment and facilities
owned or used by the permittee or lessee in connection with
operations under the permit or lease. The commission shall insert in
every permit or lease issued under this chapter appropriate
provisions for its cancellation in accordance with the provisions of
this section.


6806. Any permit or lease under this chapter shall reserve to the
commission the right to allow, upon such terms as the commission may
determine to be just, the joint or several use of such easements or
rights of way, including easements in tunnels, upon, through, or in
the lands leased or permitted, as may be necessary or appropriate for
the working of such lands or of other lands containing the deposits
described in this chapter.



6807. The commission, in the name of the State, may purchase or
receive by donation or lease any right of way or easement in real
property, or any real property in fee simple, necessary or proper for
sites for drilling operations, storage of oil, dehydration plants,
absorption plants, or other operations necessary or proper under this
chapter.



6808. The commission, if it deems such action for the best
interests of the state, may condemn, acquire, and possess in the name
of the state any right-of-way or easement, including surface rights,
for any operation authorized or contemplated under this chapter,
that may be necessary for the development and production of oil and
gas from state-owned land and for their removal, transportation,
storage, and sale.



6809. Any interests in lands, or lands in fee simple, acquired by
the commission by purchase, donation, lease, condemnation, or
otherwise, may be made available to any lessee of the State for the
purposes contained in this chapter and upon such terms and conditions
as may be determined by the commission.



6810. The provisions of this chapter authorizing the commission to
acquire interests in real property include the acquisition of
structures and improvements situated on lands sold by the State
subject to the reservations provided herein. Such structures and
improvements shall be acquired, however, only upon the written
request of a lessee under this chapter, to whom the State has granted
the right to extract the oil and gas or other minerals from such
lands, and only upon the agreement by the lessee to reimburse the
State for the cost and expense of such acquisition and the deposit by
the lessee with the commission of such security as it may require.




6811. The commission may, prior to the receipt of any bid for a
lease under this chapter, withdraw any offer to receive bids
therefor, and it may reject all bids therefor filed pursuant to
invitation of the commission. At any time before the awarding of a
lease thereon, all or any portion of a tract proposed to be leased
may be withdrawn by the commission and eliminated from the proposal.



6812. Whenever by the terms of this chapter the commission may
grant a lease of State lands, the commission may make and execute an
easement of surface or subsurface rights, or both, in lieu thereof
and upon the same terms and conditions and subject to the same
limitations and prohibitions as are provided for a lease of such
lands.



6813. For the purpose of this chapter, the commission may enter
into agreements with any person, association of persons, corporation,
city, or county, the United States or any agency thereof, or any of
them, claiming the oil and gas in lands adversely to the State of
California, which agreements may:
(a) Establish the respective interests of the parties to the
agreement in the oil and gas underlying such land.
(b) Establish the boundary line between lands claimed by the State
and other parties to the agreement in those cases in which oil or
gas is known or believed to exist in such lands or in the vicinity
thereof, and, pending the establishment of any such boundaries,
provide for the administration, exploration and development of any
lands embraced within the conflicting boundary claims.
(c) Fix the amount of damages for past or future production of oil
and gas from wells drilled under color of title on or into land
claimed by the State.
Any agreement entered into by the commission with the United
States or any agency thereof under this section shall first be
approved by the Governor in order to make it effective.



6814. The commission, in the name of the people of the State, may
bring action to determine the title to oil and gas in land against
persons, associations of persons, and corporations claiming the oil
and gas adversely and to recover damages for oil and gas removed
therefrom. Any person, association of persons, corporation, or city
not a party to such a suit and claiming the oil or gas in the land,
or any part thereof, may intervene in such an action and have his
rights adjudicated. The State hereby consents to be sued by any
person, association of persons, corporation, or city for the purpose
of quieting title to the right to oil or gas, or both, in any land,
claimed by the State and by such person, association of persons,
corporation, or city. Any other person, association of persons,
corporation, or city not made a party to such an action but claiming
any interest in the oil or gas may intervene in such suit.
All such actions shall be brought and tried in the county where
the land or some part thereof is situated.




6815. (a) Notwithstanding any other provision of law to the
contrary, the commission may negotiate and enter into agreements for
compensation for drainage or oil and gas leases on state-owned lands,
other than those not available for lease pursuant to Section 6871.1
and that are described in Section 6871.2, if any of the following
circumstances exist:
(1) Wells drilled upon private or public lands, including
state-owned lands, are draining or may drain oil or gas from
state-owned lands, provided that where wells are drilled on
state-owned lands and other state-owned lands are or may be subject
to drainage, the development is allowed only by drilling from already
developed state lands.
(2) The lands are determined by the commission to be unsuitable
for competitive bidding because of such factors as their small size
or irregular configuration, or their inaccessibility from surface
drill sites reasonably available or obtainable.
(3) The state owns a fractional interest in the lands.
(4) The lease or agreement is determined by the commission to be
in the best interests of the state.
(b) Whenever wells drilled upon private or public lands, including
state-owned lands, are draining or may drain oil or gas from
state-owned lands not available for lease pursuant to Section 6871.1
and that are described in Section 6871.2, the commission may
negotiate and enter into agreements for compensation for drainage or
oil and gas leases, provided that the development of those lands
shall be allowed only by drilling from adjacent lands.



6815.1. Whenever the commission exercises a right to take oil, gas,
or other hydrocarbons in kind pursuant to any lease the commission
shall make and enter into contracts or agreements for the disposition
and sale of such oil, gas, or other hydrocarbons only with the
highest responsible bidder upon competitive bidding, and in
accordance with procedures set forth in rules and regulations adopted
by the commission. All specifications and forms for the purpose of
inviting bids in connection with such disposition and sale shall be
adopted by the commission prior to publication of notice to bidders.
Should no bids be received, or should the commission determine to
reject any and all bids because of the insufficiency thereof, the
commission may negotiate and enter into agreements for such
disposition and sale under terms and conditions deemed by the
commission to be in the best interests of the State.



6815.2. (a) Notwithstanding Section 6815.1, the commission may take
any oil, gas, or other hydrocarbons taken in kind by it, pursuant to
any lease or agreement, and exchange it, by competitive bidding, for
refined products which shall be allocated to state agencies and to
other public agencies, if the State Energy Resources Conservation and
Development Commission, established pursuant to Division 15
(commencing with Section 25000), after a public hearing, finds, in
its judgment, that such retention and allocation is necessary to
alleviate fuel shortage conditions or will effect a substantial cost
saving to the state.
(b) The commission may make and enter into contracts or agreements
for exchange of such oil, gas, and other hydrocarbons taken in kind
for finished products required for use by state and other public
agencies. Such contracts or agreements shall be entered into by
competitive bids. The commission may reject all bids, if it
determines that they are not in the public interest.
(c) The commission shall charge the state or other public agencies
allocated refined products the current market price of these
products including all applicable taxes. This price shall not be
less than the value of the oil, gas, or other hydrocarbons which
would have been received by the state if not taken in kind. The
revenue shall be subject to the terms and conditions enumerated in
Section 6217. The taxes generated by these sales shall be
distributed according to applicable provisions of the Revenue and
Taxation Code.
(d) The refined products obtained from such exchange contracts or
agreements shall be allocated to state agencies and to other public
agencies in accordance with the regulations which shall be adopted,
after a public hearing, by the State Energy Resources Conservation
and Development Commission.
(e) Notwithstanding Section 6815.1, if the commission determines
that it is in the best interests of the state, it may allow another
state or public agency to take in kind oil, gas, or other
hydrocarbons acquired by the commission.
The commission shall charge the state or other public agencies
allocated in kind oil, gas, or other hydrocarbons the current market
price of these products, including all applicable taxes. This price
shall not be less than the value of the oil, gas, or other
hydrocarbons which would have been received by the state if not taken
in kind. The commission may also charge for any transportation,
treatment, or other costs associated with taking the in kind royalty.
The revenue shall be subject to the terms and conditions
enumerated in Section 6217. The taxes generated by these sales shall
be distributed according to applicable provisions of the Revenue and
Taxation Code.


6817. (a) The Controller shall annually as of June 30 apportion,
for the fiscal year ending on that date, to each city or county
having within its boundaries ungranted tide and submerged lands or
other tide and submerged lands granted to it by the state, in which
the state has reserved the rights to the mineral deposits contained
therein, 1 percent of the revenues paid to the state under Article 4
(commencing with Section 6870) from those tide and submerged lands
that are within the limits of the particular county or city, except
that the total amount apportioned to each city or county in each year
shall not exceed one hundred thousand dollars ($100,000) per mile,
or fraction of a mile, of ocean frontage that is within, and owned or
operated as a park by, that city or county and leased by the
commission for the production of oil, gas, and other hydrocarbons,
and which ocean frontage is available to the public free of charge
for recreational purposes. However, that limitation on the amount
that may be apportioned to each city or county in each year does not
apply to revenues from leases within the limits of the particular
county or city that exceed the revenues paid to the state during the
1983-84 fiscal year. Any city that is fronted, in whole or in part,
by a state oil and gas lease shall be qualified to receive an
apportionment under this section based on the formula contained in
this section. For purposes of this section, tide and submerged lands
within the limits of a city shall not be deemed to be within the
boundaries of a county except in the case of a city and county. The
commission shall, at the time of remitting revenues to the State
Treasury received under Article 4 (commencing with Section 6870),
report to the Controller the total amount of the revenue paid from
the tide and submerged lands to the state, shown with respect to each
city or county to which that amount is applicable. The
apportionment for any given fiscal year shall be based upon the
physical facts with respect to each city or county existing on June
30 of the next preceding fiscal year. The report of the commission
and the apportionments of the Controller shall be final.
(b) In addition to any amounts payable to a city or county
pursuant to subdivision (a), 20 percent of revenues paid to the state
under Article 4 (commencing with Section 6870) that are derived from
the production of oil, gas, and other hydrocarbons from a state
tideland lease, not to exceed a total amount of two hundred million
dollars ($200,000,000), adjusted annually to reflect increases in the
cost of living, as measured by the California Consumer Price Index,
shall be paid to the city or county within whose boundaries the lease
is located, for a period not to exceed 20 years from commencement of
payment, if oil, gas, or other hydrocarbons are extracted under the
lease under any of the following circumstances, except as provided in
subdivision (c):
(1) The lease was not under production at any time during 1994.
(2) Although the lease was under production at some time during
1994, the lease is subject to a boundary adjustment pursuant to
Section 6872.5.
(3) Although the lease was under production in 1994, the lease has
new production from a new drilling site constructed after January 1,
1996, including a new offshore platform, an existing offshore
platform that has been substantially modified to achieve an increase
in production, a subsea well completion, or an upland drilling site
where the upland drilling site was constructed pursuant to a
development plan approved by the commission after January 1, 1996.
(4) The extraction is from a production zone not under production
prior to January 1, 1996.
(5) The extraction is from new wells drilled as a result of a
development plan approved by the commission after January 1, 1996.
(c) Subdivision (b) does not apply to any of the following:
(1) Oil and gas development on tide and submerged lands that have
been granted by the state to local government without a reservation
of the minerals to the state.
(2) The Long Beach Unit operations, notwithstanding the inclusion
in those operations of the Alamitos Beach Park Lands as Tract No. 2.

(3) Any upland location or tideflats. "Tideflats" are areas that
are marshy, sandy, or muddy and nearly horizontal coastal flatlands
that are alternatively covered and exposed as the tide rises and
falls, or that are located within 100 feet inland of the mean high
tide line of any beach or tideflat.
(4) Any upland drilling site, unless the site requires the use of
slant drilling technology to extract oil, gas, or other hydrocarbons.

(5) Leases that do not have either a local or state development
plan submitted for consideration on or before January 1, 2002.
(d) (1) The amounts paid to cities and counties shall be deposited
in a special tide and submerged lands fund established by the cities
or counties, to be held in trust and to be expended only for the
promotion and accommodation of commerce, navigation, and fisheries,
for the protection of the lands within the boundaries of the cities
and counties, for the promotion, accommodation, establishment,
improvement, operation, and maintenance of public recreational
beaches and coastline for the benefit of all the people of the state,
and for the mitigation of any adverse environmental impact caused by
exploration for hydrocarbons on state tide and submerged lands
within city or county boundaries or caused by production or
transportation of hydrocarbons produced on these tide and submerged
lands.
(2) The Legislature hereby finds and declares that the purposes
specified in paragraph (1) constitute matters of statewide interest
and that the expenditure of funds for those purposes will benefit all
of the people of the state.
(e) This section applies with respect to all revenues received in
the State Treasury on and after October 1, 1963.



6818. All applications made to the commission pursuant to this
chapter for erection of any permanent structure on tidelands or
submerged lands or for depositing thereon or removal therefrom of any
material shall be submitted by the commission to the Director of
Parks and Recreation to make an examination and report concerning
possible interference with the recreational use of lands littoral to
the tidelands or submerged lands involved in such application. All
such applications shall also be submitted by the commission to the
Attorney General for approval as to compliance with the applicable
provisions of law and of the rules and regulations of the commission.
Should it be found by the commission that the action proposed in
any such application would unreasonably interfere with the
maintenance or use of the lands involved for recreational purposes or
protection of shore properties, such application shall not be
granted unless modified in a manner which may avoid such
interference.



6819. The commission shall promulgate rules and regulations to
require any person extracting oil or gas or other minerals from lands
under the jurisdiction of the commission to remove beach and
underwater obstructions.