ENROLLED
H. B. 4574
(By Delegates Douglas, Collins,
Stalnaker,
Heck, Everson,
Varner and Davis)
[Passed March 14, 1998; in effect ninety days from passage.]
AN ACT to amend and reenact sections two, three, four, five, seven,
eight, ten, eleven, twelve, fourteen and sixteen, article
nine, chapter twenty-two-c of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to further
amend said article by adding thereto a new section, designated
section four-a, all relating to the oil and gas conservation
commission generally; revising definitions; reestablishing,
reconstituting and continuing the oil and gas conservation
commission; requiring that the appointed commission members
may not be employees of the division of environmental
protection; requiring at least one commission member possess
minimum educational and professional qualifications; providing
that the commissioner serve on the commission; providing for
termination of commission members under certain circumstances;
establishing quorum requirements; authorizing and prohibiting delegation of authority and providing the circumstances
therefor; establishing a termination date and requiring
submission of annual reports; expanding notice requirements;
revising hearing procedures; expanding minimum acreage
requirements for drilling units; transferring authority from
the oil and gas conservation commissioner to the oil and gas
conservation commission; and continuing the effect of existing
orders, determinations, and other lawful actions of the
commissioner and the commission under prior enactments of this
article.
Be it enacted by the Legislature of West Virginia:
That sections two, three, four, five, seven, eight, ten,
eleven, twelve, fourteen and sixteen, article nine, chapter twenty- two-c of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; and that said
article be further amended by adding thereto a new section,
designated section four-a, all to read as follows:
ARTICLE 9. OIL AND GAS CONSERVATION.
§22C-9-2. Definitions.
(a)Unless the context in which used clearly requires a
different meaning, as used in this article:
(1)"Commission" means the oil and gas conservation
commission and "commissioner" means the oil and gas conservation
commissioner as provided for in section four of this article;
(2)"Director" means the director of the division of
environmental protection and "chief" means the chief of the office
of oil and gas;
(3)"Person" means any natural person, corporation,
partnership, receiver, trustee, executor, administrator, guardian,
fiduciary or other representative of any kind, and includes any
government or any political subdivision or any agency thereof;
(4)"Operator" means any owner of the right to develop,
operate and produce oil and gas from a pool and to appropriate the
oil and gas produced therefrom, either for such person or for such
person and others; in the event that there is no oil and gas lease
in existence with respect to the tract in question, the owner of
the oil and gas rights therein shall be considered as "operator" to
the extent of seven eighths of the oil and gas in that portion of
the pool underlying the tract owned by such owner, and as "royalty
owner" as to one-eighth interest in such oil and gas; and in the
event the oil is owned separately from the gas, the owner of the
substance being produced or sought to be produced from the pool
shall be considered as "operator" as to such pool;
(5)"Royalty owner" means any owner of oil and gas in place,
or oil and gas rights, to the extent that such owner is not an
operator as defined in subdivision (4) of this section;
(6)"Independent producer" means a producer of crude oil or
natural gas whose allowance for depletion is determined under Section 613A of the federal Internal Revenue Code in effect on the
first day of July, one thousand nine hundred ninety-seven;
(7)"Oil" means natural crude oil or petroleum and other
hydrocarbons, regardless of gravity, which are produced at the well
in liquid form by ordinary production methods and which are not the
result of condensation of gas after it leaves the underground
reservoir;
(8)"Gas" means all natural gas and all other fluid
hydrocarbons not defined as oil in subdivision (7) of this section;
(9)"Pool" means an underground accumulation of petroleum or
gas in a single and separate natural reservoir (ordinarily a porous
sandstone or limestone). It is characterized by a single
natural-pressure system so that production of petroleum or gas from
one part of the pool affects the reservoir pressure throughout its
extent. A pool is bounded by geologic barriers in all directions,
such as geologic structural conditions, impermeable strata, and
water in the formations, so that it is effectively separated from
any other pools that may be presented in the same district or on
the same geologic structure;
(10) "Well" means any shaft or hole sunk, drilled, bored or
dug into the earth or underground strata for the extraction of oil
or gas;
(11)"Shallow well" means any well drilled and completed in a
formation above the top of the uppermost member of the "Onondaga Group": Provided, That in drilling a shallow well the operator may
penetrate into the "Onondaga Group" to a reasonable depth, not in
excess of twenty feet, in order to allow for logging and completion
operations, but in no event may the "Onondaga Group" formation be
otherwise produced, perforated or stimulated in any manner;
(12)"Deep well" means any well, other than a shallow well,
drilled and completed in a formation at or below the top of the
uppermost member of the "Onondaga Group";
(13)"Drilling unit" means the acreage on which one well may
be drilled;
(14) "Waste" means and includes:
(A)Physical waste, as that term is generally understood in
the oil and gas industry;
(B)The locating, drilling, equipping, operating or producing
of any oil or gas well in a manner that causes, or tends to cause,
a reduction in the quantity of oil or gas ultimately recoverable
from a pool under prudent and proper operations, or that causes or
tends to cause unnecessary or excessive surface loss of oil or gas;
or
(C)The drilling of more deep wells than are reasonably
required to recover efficiently and economically the maximum amount
of oil and gas from a pool. Waste does not include gas vented or
released from any mine areas as defined in section two, article
one, chapter twenty-two-a of this code or from adjacent coal seams which are the subject of a current permit issued under article two
of chapter twenty-two-a of this code: Provided, That nothing in
this exclusion is intended to address ownership of the gas;
(15)"Correlative rights" means the reasonable opportunity of
each person entitled thereto to recover and receive without waste
the oil and gas in and under his tract or tracts, or the equivalent
thereof; and
(16)"Just and equitable share of production" means, as to
each person, an amount of oil or gas or both substantially equal to
the amount of recoverable oil and gas in that part of a pool
underlying such person's tract or tracts.
(b)Unless the context clearly indicates otherwise, the use
of the word "and" and the word "or" shall be interchangeable, as,
for example, "oil and gas" shall mean oil or gas or both.
§22C-9-3. Application of article; exclusions.
(a)Except as provided in subsection (b) of this section, the
provisions of this article shall apply to all lands located in this
state, however owned, including any lands owned or administered by
any government or any agency or subdivision thereof, over which the
state has jurisdiction under its police power. The provisions of
this article are in addition to and not in derogation of or
substitution for the provisions of article six, chapter twenty-two
of this code.
(b)This article shall not apply to or affect:
(1)Shallow wells other than those utilized in secondary
recovery programs as set forth in section eight of this article;
(2)Any well commenced or completed prior to the ninth day of
March, one thousand nine hundred seventy-two, unless such well is,
after completion (whether such completion is prior or subsequent to
that date):
(A)Deepened subsequent to that date to a formation at or
below the top of the uppermost member of the "Onondaga Group"; or
(B)Involved in secondary recovery operations for oil under
an order of the commission entered pursuant to section eight of
this article;
(3)Gas storage operations or any well employed to inject gas
into or withdraw gas from a gas storage reservoir or any well
employed for storage observation; or
(4)Free gas rights.
(c)The provisions of this article shall not be construed to
grant to the commissioner or the commission authority or power to:
(1)Limit production or output, or prorate production of any
oil or gas well, except as provided in subdivision (6), subsection
(a), section seven of this article; or
(2)Fix prices of oil or gas.
§22C-9-4.Oil and gas conservation commissioner and commission;
commission membership; qualifications of members; terms
of members; vacancies on commission; meetings;
compensation and expenses; appointment and qualifications
of commissioner; general powers and duties.
(a)The "oil and gas conservation commission" shall be
composed of five members. The director of the division of
environmental protection and the chief of the office of oil and gas
shall be members of the commission ex officio. The remaining three
members of the commission shall be appointed by the governor, by
and with the advice and consent of the Senate, and may not be
employees of the division of environmental protection. Of the three
members appointed by the governor, one shall be an independent
producer and at least one shall be a public member not engaged in
an activity under the jurisdiction of the public service commission
or the federal energy regulatory commission. The third appointee
shall possess a degree from an accredited college or university in
petroleum engineering or geology and must be a registered
professional engineer with particular knowledge and experience in
the oil and gas industry and shall serve as commissioner and as
chair of the commission.
(b)The members of the commission appointed by the governor
shall be appointed for overlapping terms of six years each, except
that the original appointments shall be for terms of two, four and
six years, respectively. Each member appointed by the governor
shall serve until the members successor has been appointed and
qualified. Members may be appointed by the governor to serve any
number of terms. The members of the commission appointed by the
governor, before performing any duty hereunder, shall take and subscribe to the oath required by section 5, article IV of the
constitution of West Virginia. Vacancies in the membership
appointed by the governor shall be filled by appointment by the
governor for the unexpired term of the member whose office is
vacant and such appointment shall be made by the governor within
sixty days of the occurrence of such vacancy. Any member appointed
by the governor may be removed by the governor in case of
incompetency, neglect of duty, gross immorality or malfeasance in
office. A commission member's appointment shall be terminated as
a matter of law if that member fails to attend three consecutive
meetings. The governor shall appoint a replacement within thirty
days of the termination.
(c)The commission shall meet at such times and places as
shall be designated by the chair. The chair may call a meeting of
the commission at any time, and shall call a meeting of the
commission upon the written request of two members or upon the
written request of the oil and gas conservation commissioner or the
chief of the office of oil and gas. Notification of each meeting
shall be given in writing to each member by the chair at least
fourteen calendar days in advance of the meeting. Three members of
the commission, at least two of whom are appointed members, shall
constitute a quorum for the transaction of any business.
(d)The commission shall pay each member the same
compensation as is paid to members of the Legislature for their interim duties as recommended by the citizens legislative
compensation commission and authorized by law for each day or
portion thereof engaged in the discharge of official duties and
shall reimburse each member for actual and necessary expenses
incurred in the discharge of official duties.
(e) The commission is hereby empowered and it is the
commission's duty to execute and carry out, administer and enforce
the provisions of this article in the manner provided herein.
Subject to the provisions of section three of this article, the
commission has jurisdiction and authority over all persons and
property necessary therefor. The commission is authorized to make
such investigation of records and facilities as the commission
deems proper. In the event of a conflict between the duty to
prevent waste and the duty to protect correlative rights, the
commission's duty to prevent waste shall be paramount.
(f)Without limiting the commission's general authority, the
commission shall have specific authority to:
(1)Regulate the spacing of deep wells;
(2)Make and enforce reasonable rules and orders reasonably
necessary to prevent waste, protect correlative rights, govern the
practice and procedure before the commission and otherwise
administer the provisions of this article;
(3)Issue subpoenas for the attendance of witnesses and
subpoenas duces tecum for the production of any books, records, maps, charts, diagrams and other pertinent documents, and
administer oaths and affirmations to such witnesses, whenever, in
the judgment of the commission, it is necessary to do so for the
effective discharge of the commission's duties under the provisions
of this article; and
(4)Serve as technical advisor regarding oil and gas to the
Legislature, its members and committees, to the chief of office of
oil and gas, to the division of environmental protection and to any
other agency of state government having responsibility related to
the oil and gas industry.
(g) The commission may delegate to the commission staff the
authority to approve or deny an application for new well permits,
to establish drilling units or special field rules if:
(1)The application conforms to the rules of the commission;
and
(2)No request for hearing has been received.
(h)The commission may not delegate its authority to:
(1)Propose legislative rules;
(2)Approve or deny an application for new well permits, to
establish drilling units or special field rules if the conditions
set forth in subsection (g) of this section are not met; or
(3)Approve or deny an application for the pooling of
interests within a drilling unit.
(i)Any exception to the field rules or the spacing of wells which does not conform to the rules of the commission, and any
application for the pooling of interests within a drilling unit,
must be presented to and heard before the commission.
§22C-9-4a. Termination of commission; reports.
(a)The commission is hereby continued until the first day of
July, two thousand one.
(b)On or before the thirty-first day of December, one
thousand nine hundred ninety-eight, and for the next two
consecutive years thereafter, the oil and gas conservation
commission shall submit a report annually to the joint committee on
government operations of its activities for the year and any
recommendations for improving the function of the commission.
§22C-9-5. Rules; notice requirements.
(a)The commission may propose rules for legislative approval
in accordance with the provisions of article three, chapter twenty- nine-a of this code, to implement and make effective the provisions
of this article and the powers and authority conferred and the
duties imposed upon the commission under the provisions of this
article.
(b)Notwithstanding the provisions of section two, article
seven, chapter twenty-nine-a of this code, any notice required
under the provisions of this article shall be given at the
direction of the commission by personal or substituted service or
by certified United States mail, addressed, postage prepaid, to the last-known mailing address, if any, of the person being served,
with the direction that the same be delivered to addressee only,
return receipt requested. In the case of providing notice upon the
filing of an application with the commission, the commission shall
cause notice to be published as a Class II legal advertisement in
compliance with the provisions of article three, chapter fifty-nine
of this code, and the publication area for such publication shall
be the county or counties wherein any land which may be affected by
such order is situate.
In addition, the commission shall mail a copy of such notice
to all other persons who have specified to the commission an
address to which all such notices may be mailed. The notice shall
issue in the name of the state, shall be signed by the one of the
commission members, shall specify the style and number of the
proceeding, the time and place of any hearing and shall briefly
state the purpose of the proceeding. Each notice of a hearing must
be provided no fewer than twenty days preceding the hearing date.
Personal or substituted service and proof thereof may be made by an
officer authorized to serve process or by an agent of the
commission in the same manner as is now provided by the "West
Virginia Rules of Civil Procedure for Trial Courts of Record" for
service of process in civil actions in the various courts of this
state.
A certified copy of any pooling order entered under the provisions of this article shall be presented by the commission to
the clerk of the county commission of each county wherein all or
any portion of the pooled tract is located, for recordation in the
record book of such county in which oil and gas leases are normally
recorded. The recording of the order from the time noted thereon by
such clerk shall be notice of the order to all persons.
§22C-9-7. Drilling units and the pooling of interests in drilling
units in connection with deep oil or gas wells
.
(a)Drilling units.
(1)After one discovery deep well has been drilled
establishing a pool, an application to establish drilling units may
be filed with the commission by the operator of such discovery deep
well or by the operator of any lands directly and immediately
affected by the drilling of such discovery deep well, or subsequent
deep wells in said pool. Each application shall contain such
information as prescribed by reasonable rules proposed by the
commission in accordance with the provisions of section five of
this article.
(2)
Upon the filing of an application to establish drilling units,
the commission shall provide notice to all interested parties in
accordance with this subsection. If the application does not
conform to the existing rules of the commission, then the
commission shall set a hearing and provide notice to all interested
parties. If the application conforms to the rules of the commission, the commission shall provide notice of the filing of
the application to all interested parties. Each notice shall
describe the area for which a spacing order is to be entered in
recognizable, narrative terms; contain such other information as is
essential to the giving of proper notice, including the time and
date and place of a hearing, if any; include a statement that any
party has a right to a hearing before the commission; and include
a statement that any request for hearing must be filed with the
commission within fifteen days of receipt of notice. If no request
for hearing has been received within the fifteen days following
receipt of the notice, the commission may proceed to process the
application. If a request for hearing has been received by the
commission, then the commission shall set a hearing and provide
notice to all interested parties.
(3)The commission shall determine the area to be included in
such spacing order and the acreage to be contained by each drilling
unit, the shape thereof, and the minimum distance from the outside
boundary of the unit at which a deep well may be drilled thereon.
The commission shall consider:
(A)The surface topography and property lines of the lands
underlaid by the pool to be included in such order;
(B)The plan of deep well spacing then being employed or
proposed in such pool for such lands;
(C)The depth at which production from said pool has been found;
(D)The nature and character of the producing formation or
formations, and whether the substance produced or sought to be
produced is gas or oil or both;
(E)The maximum area which may be drained efficiently and
economically by one deep well; and
(F)Any other available geological or scientific data
pertaining to said pool which may be of probative value to the
commission in determining the proper deep well drilling units
therefor.
If the commission determines that drilling units should be
established, the commission shall enter an order establishing
drilling units of a specified and approximately uniform size and
shape for each pool subject to the provisions of this section.
(4)When it is determined that an oil or gas pool underlies
an area for which a spacing order is to be entered, the commission
shall include in such order all lands determined or believed to be
underlaid by such pool and exclude all other lands.
(5)No drilling unit established by the commission shall be
smaller than the maximum area which can be drained efficiently and
economically by one deep well: Provided, That if there is not
sufficient evidence from which to determine the area which can be
drained efficiently and economically by one deep well, the
commission may enter an order establishing temporary drilling units for the orderly development of the pool pending the obtaining of
information necessary to determine the ultimate spacing for such
pool.
(6)An order establishing drilling units shall specify the
minimum distance from the nearest outside boundary of the drilling
unit at which a deep well may be drilled. The minimum distance
provided shall be the same in all drilling units established under
said order with necessary exceptions for deep wells drilled or
being drilled at the time of the filing of the application. If the
commission finds that a deep well to be drilled at or more than the
specified minimum distance from the boundary of a drilling unit
would not be likely to produce in paying quantities or will
encounter surface conditions which would substantially add to the
burden or hazard of drilling such deep well, or that a location
within the area permitted by the order is prohibited by the lawful
order of any state agency or court, the commission is authorized
after notice and hearing to make an order permitting the deep well
to be drilled at a location within the minimum distance prescribed
by the spacing order. In granting exceptions to the spacing order,
the commission may restrict the production from any such deep well
so that each person entitled thereto in such drilling unit shall
not produce or receive more than his just and equitable share of
the production from such pool.
(7)An order establishing drilling units for a pool shall cover all lands determined or believed to be underlaid by such
pool, and may be modified by the commission from time to time, to
include additional lands determined to be underlaid by such pool or
to exclude lands determined not to be underlaid by such pool. An
order establishing drilling units may be modified by the commission
to permit the drilling of additional deep wells on a reasonably
uniform pattern at a uniform minimum distance from the nearest unit
boundary as provided above. Any order modifying a prior order shall
be made only after application by an interested operator and notice
and hearing as prescribed herein for the original order: Provided,
That drilling units established by order shall not exceed one
hundred sixty acres for an oil well or six hundred forty acres for
a gas well: Provided, however, That the commission may exceed the
acreage limitation by ten percent if the applicant demonstrates
that the area would be drained efficiently and economically by a
larger drilling unit.
(8)After the date an application to establish drilling units
has been filed with the commission, no additional deep well shall
be commenced for production from the pool until the order
establishing drilling units has been made, unless the commencement
of the deep well is authorized by order of the commission.
(9)The commission shall, within forty-five days after the
filing of an application to establish drilling units for a pool
subject to the provisions of this section, enter an order establishing such drilling units, dismiss the application, or for
good cause, continue the application process.
(10)As part of the order establishing a drilling unit, the
commission shall prescribe just and reasonable terms and conditions
upon which the royalty interests in the unit shall, in the absence
of voluntary agreement, be deemed to be integrated without the
necessity of a subsequent order integrating the royalty interests.
(11)If a hearing has been held on an application submitted
pursuant to this subsection, the order shall be a final order. If
no hearing has been held, the commission shall issue a proposed
order and shall provide a copy of the proposed order, together with
notice of the right to appeal and request a hearing, to all
interested parties. Any party aggrieved by the proposed order may
appeal the proposed order to the full commission and request a
hearing. Notice of appeal and request for hearing shall be made in
accordance with section ten of this article within fifteen days of
entry of the order. If no appeal and request for hearing has been
received within fifteen days, the proposed order shall become
final.
(b)Pooling of interests in drilling units.
(1)When two or more separately owned tracts are embraced
within a drilling unit, or when there are separately owned
interests in all or a part of a drilling unit, the interested
persons may pool their tracts or interests for the development and operation of the drilling unit. In the absence of voluntary pooling
and upon application of any operator having an interest in the
drilling unit, the commission shall set a hearing and provide
notice to all interested parties. Each notice shall describe the
area for which an order is to be entered in recognizable, narrative
terms; contain such other information as is essential to the giving
of proper notice, including the time and date and place of a
hearing. After the hearing, the commission shall enter an order
pooling all tracts or interests in the drilling unit for the
development and operation thereof and for sharing production
therefrom. Each such pooling order shall be upon terms and
conditions which are just and reasonable and in no event shall
drilling be initiated on the tract of an unleased owner without the
owner's written consent.
(2)All operations, including, but not limited to, the
commencement, drilling or operation of a deep well, upon any
portion of a drilling unit for which a pooling order has been
entered, shall be deemed for all purposes the conduct of such
operations upon each separately owned tract in the drilling unit by
the several owners thereof. That portion of the production
allocated to a separately owned tract included in a drilling unit
shall, when produced, be deemed for all purposes to have been
actually produced from such tract by a deep well drilled thereon.
(3)Any pooling order under the provisions of this subsection (b) shall authorize the drilling and operation of a deep well for
the production of oil or gas from the pooled acreage; shall
designate the operator to drill and operate such deep well; shall
prescribe the time and manner in which all owners of operating
interests in the pooled tracts or portions of tracts may elect to
participate therein; shall provide that all reasonable costs and
expenses of drilling, completing, equipping, operating, plugging
and abandoning such deep well shall be borne, and all production
therefrom shared, by all owners of operating interests in
proportion to the net oil or gas acreage in the pooled tracts owned
or under lease to each owner; and shall make provisions for payment
of all reasonable costs thereof, including a reasonable charge for
supervision and for interest on past-due accounts, by all those who
elect to participate therein.
(4)No drilling or operation of a deep well for the
production of oil or gas shall be permitted upon or within any
tract of land unless the operator shall have first obtained the
written consent and easement therefor, duly acknowledged and placed
on record in the office of the county clerk, for valuable
consideration of all owners of the surface of such tract of land,
which consent shall describe with reasonable certainty, the
location upon such tract, of the location of such proposed deep
well, a certified copy of which consent and easement shall be
submitted by the operator to the commission.
(5)Upon request, any such pooling order shall provide just
and equitable alternatives whereby an owner of an operating
interest who does not elect to participate in the risk and cost of
the drilling of a deep well may elect:
(A)Option 1. To surrender such interest or a portion thereof
to the participating owners on a reasonable basis and for a
reasonable consideration, which, if not agreed upon, shall be
determined by the commission; or
(B)Option 2. To participate in the drilling of the deep well
on a limited or carried basis on terms and conditions which, if not
agreed upon, shall be determined by the commission to be just and
reasonable.
(6)In the event a nonparticipating owner elects Option 2,
and an owner of any operating interest in any portion of the pooled
tract shall drill and operate, or pay the costs of drilling,
completing, equipping and operating a deep well for the benefit of
such nonparticipating owner as provided in the pooling order, then
such operating owner shall be entitled to the share of production
from the tracts or portions thereof pooled accruing to the interest
of such nonparticipating owner, exclusive of any royalty or
overriding royalty reserved in any leases, assignments thereof or
agreements relating thereto, of such tracts or portions thereof, or
exclusive of one eighth of the production attributable to all
unleased tracts or portions thereof, until the market value of such nonparticipating owner's share of the production, exclusive of such
royalty, overriding royalty or one eighth of production, equals
double the share of such costs payable by or charged to the
interest of such nonparticipating owner.
(7)If a dispute shall arise as to the costs of drilling,
completing, equipping and operating a deep well, the commission
shall determine and apportion the costs, within ninety days from
the date of written notification to the commission of the existence
of such dispute.
(8)The commission shall, within forty-five days after the
filing of an application, enter an order, dismiss the application,
or for good cause, continue the application process.
§22C-9-8. Secondary recovery of oil; unit operations.
(a)Upon the application of any operator in a pool productive
of oil the commission shall set a hearing and provide notice to all
interested parties. Each notice shall describe the area for which
an order is to be entered in recognizable, narrative terms; contain
such other information as is essential to the giving of proper
notice, including the time and date and place of a hearing. After
the hearing, the commission may enter an order requiring the unit
operation of such pool in connection with a program of secondary
recovery of oil, and providing for the unitization of separately
owned tracts and interests within such pool, but only after finding
that:
(1)The order is reasonably necessary for the prevention of
waste and the drilling of unnecessary wells;
(2)The proposed plan of secondary recovery will increase the
ultimate recovery of oil from the pool to such an extent that the
proposed secondary recovery operation will be economically
feasible;
(3)The production of oil from the unitized pool can be
allocated in such a manner as to ensure the recovery by all
operators of their just and equitable share of such production; and
(4)The operators of at least three fourths of the acreage
(calculating partial interests on a pro rata basis for operator
interests on any parcel owned in common) and the royalty owners of
at least three fourths of the acreage (calculating partial
interests on a pro rata basis for royalty interests on any parcel
owned in common) in such pool have approved the plan and terms of
unit operation to be specified by the commission in its order, such
approval to be evidenced by a written contract setting forth the
terms of the unit operation and executed by said operators and said
royalty owners, and filed with the commission. The order requiring
such unit operation shall designate one operator in the pool as
unit operator and shall also make provision for the proportionate
allocation to all operators of the costs and expenses of the unit
operation, including reasonable charges for supervision and
interest on past-due accounts, which allocation shall be in the same proportion that the separately owned tracts share in the
production of oil from the unit. In the absence of an agreement
entered into by the operators and filed with the commission
providing for sharing the costs of capital investment in wells and
physical equipment, and intangible drilling costs, the commission
shall provide by order for the sharing of such costs in the same
proportion as the costs and expenses of the unit operation:
Provided, That any operator who has not consented to the
unitization shall not be required to contribute to the costs or
expenses of the unit operation, or to the cost of capital
investment in wells and physical equipment, and intangible drilling
costs, except out of the proceeds from the sale of the production
accruing to the interest of such operator: Provided, however, That
no credit to the well costs shall be adjusted on the basis of less
than the average well costs within the unitized area: Provided
further, That no order entered under the provisions of this section
requiring unit operation shall vary or alter any of the terms of
any contract entered into by operators and royalty owners under the
provisions of this section.
(5)The commission shall, within forty-five days after the
filing of an application to establish unit operators for a pool
subject to the provisions of this section, enter an order
establishing such unit operators, dismiss the application, or for
good cause, continue the application process.
§22C-9-10. Hearing procedures.
(a) Upon receipt of a request for hearing, the commission
shall set a time and place for such hearing not less than twenty
and not more than forty-five days thereafter. Any scheduled hearing
may be continued by the commission upon the commission's own motion
or for good cause shown by any party to the hearing. All interested
parties shall be entitled to be heard at any hearing conducted
under the provisions of this article.
(b)All of the pertinent provisions of article five, chapter
twenty-nine-a of this code shall apply to and govern the hearing
and the administrative procedures in connection with and following
such hearing, with like effect as if the provisions of said article
five were set forth in extenso in this subsection.
(c)Any such hearing shall be conducted by the commission.
For the purpose of conducting any such hearing, the commission
shall have the power and authority to issue subpoenas and subpoenas
duces tecum which shall be issued and served as specified in
section one, article five of said chapter twenty-nine-a, and all of
the said section one provisions dealing with subpoenas and
subpoenas duces tecum shall apply to subpoenas and subpoenas duces
tecum issued for the purpose of a hearing hereunder.
(d) At any hearing parties may represent themselves or be
represented by an attorney-at-law admitted to practice before any
circuit court of this state. Upon request by the commission, the commission shall be represented at a hearing by the attorney
general or the attorney general's assistants without additional
compensation. The commission, with the written approval of the
attorney general, may employ special counsel to represent the
commission at any hearing.
(e)After any hearing and consideration of all of the
testimony, evidence and record in the case, the commission shall
render a decision in writing. The written decision of the
commission shall be accompanied by findings of fact and conclusions
of law as specified in section three, article five, chapter
twenty-nine-a of this code, and a copy of such decision and
accompanying findings and conclusions shall be served by certified
mail, return receipt requested, upon all parties and their attorney
of record, if any.
The decision of the commission shall be final unless reversed,
vacated or modified upon judicial review thereof in accordance with
the provisions of section eleven of this article.
§22C-9-11.Judicial review; appeal to supreme court of
appeals; legal representation for commission.
(a)Any party adversely affected by an order of the
commission shall be entitled to judicial review thereof. All of the
pertinent provisions of section four, article five, chapter
twenty-nine-a of this code, shall apply to and govern such judicial
review with like effect as if the provisions of said section four
were set forth in this section.
(b)The judgment of the circuit court shall be final unless
reversed, vacated or modified on appeal to the supreme court of
appeals in accordance with the provisions of section one, article
six, chapter twenty-nine-a of this code, except that
notwithstanding the provisions of said section one the petition
seeking such review must be filed with said supreme court of
appeals within thirty days from the date of entry of the judgment
of the circuit court.
(c)Legal counsel and services for the commission in all
appeal proceedings in any circuit court and the supreme court of
appeals shall be provided by the attorney general or the attorney
general's assistants and in any circuit court by the prosecuting
attorney of the county as well, all without additional
compensation. The commission, with the written approval of the
attorney general, may employ special counsel to represent the
commission at any such appeal proceedings.
§22C-9-12. Injunctive relief.
(a)Whenever it appears to the commission that any person has
been or is violating or is about to violate any provision of this
article, any reasonable rule promulgated by the commission
hereunder or any order or final decision of the commission, the
commission may apply in the name of the state to the circuit court
of the county in which the violations or any part thereof has
occurred, is occurring or is about to occur, or the judge thereof in vacation, for an injunction against such person and any other
persons who have been, are or are about to be, involved in any
practices, acts or omissions, so in violation, enjoining such
person or persons from any such violation or violations. Such
application may be made and prosecuted to conclusion whether or not
any such violation or violations have resulted or shall result in
prosecution or conviction under the provisions of section fourteen
of this article.
(b)Upon application by the commission, the circuit courts of
this state may by mandatory or prohibitory injunction compel
compliance with the provisions of this article, the reasonable
rules promulgated by the commission hereunder and all orders and
final decisions of the commission. The court may issue a temporary
injunction in any case pending a decision on the merits of any
application filed. Any other section of this code to the contrary
notwithstanding, the state shall not be required to furnish bond or
other undertaking as a prerequisite to obtaining mandatory,
prohibitory or temporary injunctive relief under the provisions of
this article.
(c)The judgment of the circuit court upon any application
permitted by the provisions of this section shall be final unless
reversed, vacated or modified on appeal to the supreme court of
appeals. Any such appeal shall be sought in the manner and within
the time provided by law for appeals from circuit courts in other civil actions.
(d)The commission shall be represented in all such
proceedings by the attorney general or the attorney general's
assistants and in such proceedings in the circuit courts by the
prosecuting attorneys of the several counties as well, all without
additional compensation. The commission, with the written approval
of the attorney general, may employ special counsel to represent
the commission in any such proceedings.
(e)If the commission shall refuse or fail to apply for an
injunction to enjoin a violation or threatened violation of any
provision of this article, any reasonable rule promulgated by the
commission hereunder or any order or final decision of the
commission within ten days after receipt of a written request to do
so by any person who is or will be adversely affected by such
violation or threatened violation, the person making such request
may apply in his own behalf for an injunction to enjoin such
violation or threatened violation in any court in which the
commission might have brought suit. The commission shall be made a
party defendant in such application in addition to the person or
persons violating or threatening to violate any provision of this
article, any reasonable rule promulgated by the commission
hereunder or any order or final decision of the commission. The
application shall proceed and injunctive relief may be granted
without bond or other undertaking in the same manner as if the application had been made by the commission.
§22C-9-14. Penalties.
(a)Any person who violates any provision of this article,
any of the reasonable rules promulgated by the commission hereunder
or any order or any final decision of the commission, other than
a violation covered by the provisions of subsection (b) of this
section, shall be guilty of a misdemeanor and, upon conviction
thereof, shall be fined not more than one thousand dollars, and
each day that a violation continues shall constitute a new and
separate violation.
(b)Any person who, for the purpose of evading any provision
of this article, any of the reasonable rules promulgated by the
commission hereunder or any order or final decision of the
commission, shall make or cause to be made any false entry or
statement in a report required under the provisions of this
article, any of the reasonable rules promulgated by the commission
hereunder or any order or final decision of the commission, or
shall make or cause to be made any false entry in any record,
account or memorandum required under the provisions of this
article, any of the reasonable rules promulgated by the commission
hereunder or any order or any final decision of the commission, or
who shall omit, or cause to be omitted, from any such record,
account or memorandum, full, true and correct entries, or shall
remove from this state or destroy, mutilate, alter or falsify any such record, account or memorandum, shall be guilty of a
misdemeanor and, upon conviction thereof, shall be fined not more
than five thousand dollars, or imprisoned in the county jail not
more than six months, or both fined and imprisoned.
(c)Any person who knowingly aids or abets any other person
in the violation of any provision of this article, any of the
reasonable rules promulgated by the commission hereunder or any
order of final decision of the commission, shall be subject to the
same penalty as that prescribed in this article for the violation
by such other person.
§22C-9-16.Rules, orders and permits remain in effect.
(a)All orders, determinations, rules, permits, grants,
contracts, certificates, licenses, waivers, bonds, authorizations
and privileges which have been issued, made, granted or allowed to
become effective pursuant to any prior enactment of this article
and which are in effect on the effective date of this article shall
continue in effect according to their terms until modified,
terminated, superseded, set aside or revoked pursuant to this
article, by a court of competent jurisdiction, or by operation of
law.
(b)Orders and actions of the commission or commissioner in
the exercise of functions amended by this enactment are subject to
judicial review to the same extent and in the same manner as if
such orders and actions had been by the commission or commissioner exercising such functions immediately preceding the enactment of
this article.
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