2005 Nevada Revised Statutes - Chapter 522 — Oil and Gas

CHAPTER 522 - OIL AND GAS

GENERAL PROVISIONS

NRS 522.010 Wasteof oil and gas prohibited.

NRS 522.020 Definitions.

NRS 522.021 Correlativerights defined.

NRS 522.023 Divisiondefined.

NRS 522.024 Divisionorder defined.

NRS 522.025 Fielddefined.

NRS 522.027 Gasdefined.

NRS 522.028 Lesseedefined.

NRS 522.0285 Lessordefined.

NRS 522.029 Oildefined.

NRS 522.0295 Operatordefined.

NRS 522.0301 Othernonworking interest defined.

NRS 522.0305 Overridingroyalty defined.

NRS 522.031 Ownerdefined.

NRS 522.033 Persondefined.

NRS 522.035 Pooldefined.

NRS 522.037 Producerdefined.

NRS 522.038 Royaltydefined.

NRS 522.039 Wastedefined.

NRS 522.0395 Workinginterest defined.

NRS 522.040 Powersand duties of Division.

DRILLING PERMITS; ESTABLISHMENT OF DRILLING UNITS

NRS 522.050 Permitsto drill wells required; fees.

NRS 522.060 Establishmentof drilling units for pools.

NRS 522.080 Useof gas from well to manufacture carbon products without permit is prima faciewaste.

UNITIZATION

NRS 522.082 Unitproduction defined.

NRS 522.0824 Voluntaryunitization; petition for compulsory unitization.

NRS 522.0828 Orderfor compulsory unitization: Findings required before issuance.

NRS 522.083 Orderfor compulsory unitization: Limitations on area of pool to be included in plan.

NRS 522.0834 Orderfor compulsory unitization: Consent of certain percentage of owners required;hearings; revocation of order.

NRS 522.0838 Planof unitization: Required provisions.

NRS 522.084 Planof unitization: Modification; approval of owners not required in certaincircumstances.

NRS 522.0844 Propertyacquired by unit is owned by lessees subject to management by unit.

NRS 522.0848 Transferof title to tracts and leases not required; proceeds and production are incomeof owners.

NRS 522.085 Distributionof production; distribution in kind under certain circumstances.

NRS 522.0854 Expensesof unit: Liability of owners is several and limited to amount charged.

NRS 522.0858 Expensesof unit: Lien for amount assessed; persons primarily responsible for payment;payment by persons not responsible; payment to royalty owners free of lien andexpenses.

NRS 522.086 Operationsunder plan are considered fulfillment of provisions in contracts relating topool in unit.

NRS 522.0864 Propertyrights, leases and contracts regarded as modified to conform to provisions ofchapter and plan of unitization.

NRS 522.0868 Planapproved by Division does not violate statutes prohibiting monopolies.

NRS 522.087 Impliedcovenants unaffected.

NRS 522.0874 Proceduralrequirements for petitions, notices and hearings.

NRS 522.0878 Operationof well in unit area by persons not included in unit unlawful.

HEARINGS, ORDERS AND REGULATIONS OF DIVISION

NRS 522.090 Regulationsand orders of Division: Notice; hearing and entry of order.

NRS 522.100 Witnesses:Attendance and testimony; production of books and records; contempt.

NRS 522.110 Applicationfor rehearing.

PRODUCTION FROM WELLS

NRS 522.113 Paymentof money derived from sale of production; liability for violation; applicability.

ROYALTIES AND OTHER NONWORKING INTERESTS

NRS 522.115 Respectiverights; information to be reported with remittance; liability for failure toreport information.

NRS 522.118 Applicability;alteration of previous agreement prohibited.

PENALTIES; INJUNCTIVE RELIEF

NRS 522.120 Penalties.

NRS 522.130 Injunctiverelief.

MISCELLANEOUS PROVISIONS

NRS 522.140 Applicationof chapter; lands subject to jurisdiction of United States.

NRS 522.150 Paymentof expenses for Interstate Oil Compact Commission and operation of Division;administrative fee.

INTERSTATE COMPACT TO CONSERVE OIL AND GAS

NRS 522.160 Nevada to join Interstate Compact.

NRS 522.170 Contentsof Interstate Compact.

NRS 522.180 Extensionof expiration date of Compact; reentry of State after withdrawal.

NRS 522.190 InterstateOil Compact Commission: State representation.

_________

GENERAL PROVISIONS

NRS 522.010 Wasteof oil and gas prohibited. The waste of oiland gas is prohibited in the State of Nevada.

[1:202:1953]

NRS 522.020 Definitions. As used in this chapter, unless the context otherwiserequires, the words and terms defined in NRS522.021 to 522.0395, inclusive,have the meanings ascribed to them in those sections.

[2:202:1953; A 1955, 55](NRS A 1977, 1149; 1983,2078; 1991, 386, 962)

NRS 522.021 Correlativerights defined. Correlative rights meansthe opportunity afforded, so far as it is practicable to do so, to the owner ofeach property in a pool to produce without waste his just and equitable shareof the oil or gas, or both, in the pool and for this purpose to use his justand equitable share of the reservoirs energy.

(Added to NRS by 1983, 2070)

NRS 522.023 Divisiondefined. Division means the Division of Mineralsof the Commission on Mineral Resources.

(Added to NRS by 1983, 2070; A 1993, 1689; 1999, 3632)

NRS 522.024 Divisionorder defined. Division order means awritten instrument executed for the purpose of:

1. Directing the distribution of the proceeds from thesale of the production from an oil or gas well among the owners of theinterests in that production;

2. Setting forth the name and address of each of thoseowners; and

3. Enabling the purchaser of the production from anoil or gas well who is responsible for the distribution to make remittancedirectly to each of those owners.

(Added to NRS by 1991, 960)

NRS 522.025 Fielddefined. Field means the general area whichis underlain or appears to be underlain by at least one pool and includes theunderground reservoir or reservoirs containing oil or gas.

(Added to NRS by 1983, 2070)

NRS 522.027 Gasdefined. Gas includes all natural gas andall hydrocarbons produced at the wellhead except oil.

(Added to NRS by 1983, 2070)

NRS 522.028 Lesseedefined. Lessee means the person entitledunder an oil and gas lease to drill and operate wells.

(Added to NRS by 1991, 385)

NRS 522.0285 Lessordefined. Lessor means the mineral owner whohas executed a lease and who is entitled to the payment of a royalty onproduction.

(Added to NRS by 1991, 960)

NRS 522.029 Oildefined. Oil includes:

1. The crude petroleum oil and other hydrocarbonsregardless of gravity which are produced at the wellhead in liquid form; and

2. The liquid hydrocarbon known as distillate orcondensate recovered or extracted from gas, other than gas produced inassociation with oil and commonly known as casing-head gas.

(Added to NRS by 1983, 2071)

NRS 522.0295 Operatordefined. Operator means a person engaged inthe business of drilling wells capable of producing oil or gas.

(Added to NRS by 1991, 385)

NRS 522.0301 Othernonworking interest defined. Othernonworking interest means any interest in an oil and gas lease or well whichis not a royalty, overriding royalty or working interest.

(Added to NRS by 1991, 960)

NRS 522.0305 Overridingroyalty defined. Overriding royalty means ashare of production taken from the lessees interest under an oil and gas lease.

(Added to NRS by 1991, 960)

NRS 522.031 Ownerdefined. Owner means the person who has theright to drill into and produce from a pool and to appropriate the oil and gashe produces therefrom for himself and others.

(Added to NRS by 1983, 2071)

NRS 522.033 Persondefined. Person includes any department,agency or instrumentality of the State or any governmental subdivision thereof.

(Added to NRS by 1983, 2071)

NRS 522.035 Pooldefined. Pool means an underground reservoircontaining, or appearing to contain, a common accumulation of oil or gas. Eachzone of a general structure which is completely separated from any other zonein the structure is included in the term pool.

(Added to NRS by 1983, 2071)

NRS 522.037 Producerdefined. Producer means the owner of a wellor wells capable of producing oil or gas, or both.

(Added to NRS by 1983, 2071)

NRS 522.038 Royaltydefined. Royalty means the mineral ownersshare of production.

(Added to NRS by 1991, 960)

NRS 522.039 Wastedefined. Waste includes:

1. The inefficient, excessive or improper use of orunnecessary dissipation of reservoir energy.

2. The locating, spacing, drilling, equipping,operating or producing of any oil or gas well in a manner which results ortends to result in reducing the quantity of oil or gas to be recovered from anypool in this state under operations conducted in accordance with goodengineering practices in an oil field.

3. The inefficient aboveground storage of oil.

4. The locating, spacing, drilling, equipping,operating or producing of any oil or gas well in a manner causing or tending tocause unnecessary or excessive surface loss or destruction of oil or gas.

5. Producing oil or gas in such manner as to causeunnecessary water channeling or coning.

6. The operation of an oil well with an inefficientratio of gas to oil.

7. The drowning with water of any pool or part thereofcapable of producing oil or gas, except insofar as and to the extent authorizedby the Commission under this chapter.

8. Underground waste.

9. The creation of unnecessary fire hazards.

10. The escape into the open air, from a wellproducing oil or gas, of gas in excess of the amount which is reasonablynecessary in the efficient production of the well.

11. The use of gas for the manufacture of carbonblack, except as provided for in this chapter.

(Added to NRS by 1983, 2071)

NRS 522.0395 Workinginterest defined. Working interest meansthe interest granted under an oil and gas lease, giving the lessee the right towork on the leased property to search for, develop and produce oil and gas.

(Added to NRS by 1991, 960)

NRS 522.040 Powersand duties of Division.

1. The Division has jurisdiction and authority overall persons and property, public and private, necessary to effectuate thepurposes and intent of this chapter.

2. The Division shall make investigation to determinewhether waste exists or is imminent, or whether other facts exist which justifyor require action by it.

3. The Division shall adopt regulations, make ordersand take other appropriate action to effectuate the purposes of this chapter.

4. The Division may:

(a) Require:

(1) Identification or ownership of wells,producing leases, tanks, plants and drilling structures.

(2) The making and filing of reports, well logsand directional surveys. Logs of exploratory or wildcat wells markedconfidential must be kept confidential for 6 months after the filing thereof,unless the owner gives written permission to release those logs at an earlierdate.

(3) The drilling, casing and plugging of wellsin such a manner as to prevent the escape of oil or gas out of one stratum intoanother, the intrusion of water into an oil or gas stratum, the pollution offresh water supplies by oil, gas or salt water, and to prevent blowouts,cavings, seepages and fires.

(4) The furnishing of a reasonable bond withgood and sufficient surety conditioned for the performance of the duty to plugeach dry or abandoned well or the repair of wells causing waste.

(5) The operation of wells with efficientgas-oil and water-oil ratios, and to fix these ratios.

(6) The gauging or other measuring of oil andgas to determine the quality and quantity thereof.

(7) That every person who produces oil or gas inthis State keep and maintain for a period of 5 years within this State completeand accurate record of the quantities thereof, which must be available forexamination by the Division or its agents at all reasonable times.

(b) Regulate, for conservation purposes:

(1) The drilling, producing and plugging ofwells.

(2) The shooting and chemical treatment ofwells.

(3) The spacing of wells.

(4) The disposal of salt water, nonpotable waterand oil field wastes.

(5) The contamination or waste of undergroundwater.

(c) Classify wells as oil or gas wells for purposesmaterial to the interpretation or enforcement of this chapter.

[4:202:1953](NRS A 1977, 1151; 1981, 86; 1983, 2079;1993, 1689)

DRILLING PERMITS; ESTABLISHMENT OF DRILLING UNITS

NRS 522.050 Permitsto drill wells required; fees.

1. A person desiring to drill a well in search of oilor gas shall notify the Division of that intent on a form prescribed by theDivision and shall pay a fee in an amount established pursuant to subsection 2for a permit for each well. Upon receipt of the notification and fee, theDivision shall promptly issue to the person a permit to drill, unless thedrilling of the well is contrary to law or a regulation or order of theDivision. The drilling of a well is prohibited until a permit to drill isobtained in accordance with the provisions of this chapter.

2. The Commission on Mineral Resources shall, byregulations, establish the fee required pursuant to subsection 1 in an amountnot to exceed $200 per permit.

[5:202:1953](NRS A 1977, 1151; 1983, 2080; 1993,1689; 1999, 892, 3632; 2001, 66)

NRS 522.060 Establishmentof drilling units for pools.

1. For the prevention of waste, to protect and enforcethe correlative rights of lessees in a pool, and to avoid the augmentation andaccumulation of risks arising from the drilling of an excessive number ofwells, or the reduced recovery which might result from too small a number ofwells, the Division shall, after a hearing, establish a drilling unit or unitsfor each pool. The establishment of a unit for gas must be limited to theproduction of gas.

2. Each well permitted on a drilling unit must bedrilled under such regulations and in accordance with such a spacing pattern asthe Division prescribes for the pool in which the well is located. Exceptionsto the regulations and spacing pattern may be granted where it is shown, afternotice and hearing, that the unit is partly outside the pool, or for some otherreason a well so located on the unit would be nonproductive, or topographicalconditions are such as to make the drilling at such a location undulyburdensome. If an exception is granted, the Division shall offset any advantagewhich the person securing the exception may have over other producers and shallprevent or minimize drainage from developed units to the tract to which theexception is granted. The producer of the well drilled as an exception must beallowed to produce no more than a just and equitable share of the oil and gasin the pool.

3. When two or more separately owned tracts of landare within an established drilling unit, persons owning the drilling rightstherein and the right to share in the production therefrom may agree to pooltheir interests and develop their lands as a drilling unit. If those persons donot agree to pool their interests, the Division may, for the prevention ofwaste, for the protection of correlative rights, or to avoid the drilling ofunnecessary wells, enter an order pooling and integrating their interests forthe development of their lands as a drilling unit. Orders effectuating suchpooling must be made after notice and hearing, and must be upon terms andconditions which will afford to the owner of each tract the opportunity torecover or receive his just and equitable share of the oil and gas in the poolwithout unnecessary expense. Operations incident to the drilling of a well uponany portion of a unit covered by a pooling order shall be deemed for allpurposes to be the conduct of the operation upon each separately owned tract inthe unit by the several lessees thereof. The portion of the productionallocated to the lessee of each tract included in a drilling unit formed by apooling order shall, when produced, be considered as if it had been producedfrom the tract by a well drilled thereon.

4. If the pooling is effectuated, the cost ofdevelopment and operation of the pooled unit chargeable by the operator to theother interested lessees is limited to the actual and reasonable expendituresrequired for that purpose, including a reasonable charge for supervision. As tolessees who refuse to agree upon pooling, the order must provide forreimbursement for 300 percent of the costs chargeable to each lessee out of,and only out of, production from the unit belonging to the lessee. In the eventof a dispute relative to those costs, the Division shall, upon notice to allinterested parties and hearing thereon, determine the proper costs. Appeals maybe taken from the determination as from any other order of the Division. If oneor more of the lessees drill and operate, or pay the expense of drilling andoperating, the well for the benefit of others, then in addition to any otherright conferred by the pooling order, the lessee or lessees so drilling oroperating have a lien on the share of production from the unit accruing to theinterest of each of the other lessees for the payment of his proportionateshare of the expenses. All the oil and gas subject to the lien, or so muchthereof as is necessary, must be marketed and sold by the creditor, and theproceeds applied in payment of the expenses secured by the lien, with thebalance, if any, payable to the debtor.

5. The Division shall, in all instances where a unithas been formed out of lands or areas of more than one ownership, require theoperator, upon request of a lessee, but subject to the right of the operator tomarket production and collect the proceeds with respect to a lessee in default,as provided in subsection 4, to deliver to the lessee or his assigns hisproportionate share of the production from the well common to the drillingunit. The lessee receiving his share shall provide at his own expense properreceptacles for the receipt and storage thereof.

6. If the persons owning the drilling or other rightsin separate tracts embraced within a drilling unit fail to agree upon thepooling of the tracts and the drilling of a well on the unit, and if theDivision is without authority to require pooling as provided by this section,then subject to all other applicable provisions of this chapter, the lessee ofeach tract embraced within the drilling unit may drill on his tract, but theallowable production from the tract is such a proportion of the allowable productionfor the full drilling unit as the area of the separately owned tract bears tothe full drilling unit.

[6:202:1953](NRS A 1977, 1152; 1983, 2080; 1985,1675; 1993, 1690)

NRS 522.080 Useof gas from well to manufacture carbon products without permit is prima faciewaste. The use of gas from a well producinggas only, or from a well which is primarily a gas well, for the manufacture ofcarbon black or similar products predominantly carbon, is declared toconstitute waste prima facie, and the gas well must not be used for any suchpurpose unless it is clearly shown at a public hearing to be held by theDivision, on application of the person desiring to use the gas, that waste wouldnot take place by the use of the gas for the purpose applied for, and that gaswhich would otherwise be lost is now available for that purpose, and that thegas to be used cannot be used for a more beneficial purpose, such as for lightor fuel, except at prohibitive cost, and that it would be in the publicinterest to grant the permit. If the Division finds that the applicant hasclearly shown a right to use the gas for the purpose applied for, it shallissue a permit upon such terms and conditions as may be found necessary inorder to permit the use of the gas and at the same time require compliance withthe intent of this section.

[8:202:1953](NRS A 1977, 1159; 1983, 2082; 1993,1691)

UNITIZATION

NRS 522.082 Unitproduction defined. As used in NRS 522.082 to 522.0878, inclusive, unit productionincludes all oil and gas produced from a unit area from and after the effectivedate of the order of the Division creating the unit regardless of the well ortract within the unit area from which it is produced.

(Added to NRS by 1983, 2071; A 1993, 1691)

NRS 522.0824 Voluntaryunitization; petition for compulsory unitization.

1. To prevent, or to assist in preventing waste, asprohibited by this chapter, to ensure a greater ultimate recovery of oil andgas, and to protect the correlative rights of persons owning interests in thetracts of land affected, those persons may validly integrate their interests toprovide for the unitized management, development and operation of those tractsof land as a unit. Where those persons have not agreed so to integrate theirinterests, the Division, upon proper petition, after notice and hearing, shallmake and enforce such orders and do such things as may be necessary or properto carry out the purposes of NRS 522.0828to 522.0878, inclusive.

2. The petition must set forth a description of theproposed unit area with a map or plat thereof attached, must allege theexistence of the facts required to be found by the Division as provided in NRS 522.0828 and must have attachedthereto a recommended plan of unitization applicable to the proposed unit areaand which the petitioner considers to be fair, reasonable and equitable.

(Added to NRS by 1983, 2072; A 1993, 1692)

NRS 522.0828 Orderfor compulsory unitization: Findings required before issuance. If upon the filing of a petition and after notice andhearing, the Division finds that:

1. The unitized management, operation and furtherdevelopment of a pool or portion thereof is reasonably necessary in ordereffectively to carry on pressure control, pressure-maintenance or repressuringoperations, cycling operations, waterflooding operations, or any combinationthereof, or any other form of joint effort calculated to substantially increasethe ultimate recovery of oil and gas from the pool;

2. One or more of the unitized methods of operation asapplied to the pool or portion thereof are feasible, will prevent waste andwill, with reasonable probability, result in the increased recovery ofsubstantially more oil and gas from the pool than would otherwise be recovered;

3. The estimated additional cost, if any, ofconducting those operations will not exceed the value of the additional oil andgas so recovered; and

4. The unitization and adoption of one or more of theunitized methods of operation is for the common good and will result in thegeneral advantage of the owners of the oil and gas rights within the pool orthe portion thereof directly affected,

it shallmake a finding to that effect and make an order creating the unit and providingfor the unitization and unitized operation of the pool or portion thereof describedin the order, all upon such terms and conditions, as may be shown by theevidence to be fair, reasonable, equitable, and which are necessary or properto protect, safeguard and adjust the respective rights and obligations of theseveral persons affected, including royalty owner, owners of overridingroyalties, oil and gas payments, carried interests, mortgages, lien claimantsand others, as well as the lessees.

(Added to NRS by 1983, 2072; A 1993, 1692)

NRS 522.083 Orderfor compulsory unitization: Limitations on area of pool to be included in plan.

1. The order of the Division must define the area ofthe pool or portion thereof to be included within the unit area and prescribewith reasonable detail the plan of unitization applicable thereto.

2. Each unit and unit area must be limited to all or aportion of a single pool. Only so much of a pool as has been defined anddetermined to be productive of oil and gas by actual drilling operations may beso included within the unit area. A unit may be created to embrace less thanthe whole of a pool only where it is shown by the evidence that the area to beso included within the unit area is of such size and shape as may be reasonablyrequired for the successful and efficient conduct of the unitized method ofoperation for which the unit is created, and that the conduct thereof will haveno material adverse effect upon the remainder of the pool.

(Added to NRS by 1983, 2073; A 1993, 1692)

NRS 522.0834 Orderfor compulsory unitization: Consent of certain percentage of owners required;hearings; revocation of order.

1. No order of the Division creating a unit andprescribing the plan of unitization applicable thereto becomes effectiveunless:

(a) The plan of unitization has been signed or inwriting ratified, or approved by the lessees of record of not less than 62.5percent of the unit area affected thereby and by the owners of record or notless than 62.5 percent (exclusive of royalty interests owned by lessees or bysubsidiaries of any lessee) of the normal one-eighth landowners royaltyinterest in and to the unit area; and

(b) The Division has made a finding either in the ordercreating the unit or in a supplemental order that the plan of unitization hasbeen so signed, ratified or approved by lessees and royalty owners owning therequired percentage interest in and to the unit area.

2. Where the plan of unitization has not been sosigned, ratified or approved by the lessees and royalty owners owning therequired percentage interest in and to the unit area at the time the ordercreating the unit is made, the Division shall, upon petition and notice, holdsuch additional and supplemental hearings as may be requested or required todetermine if and when the plan of unitization has been so signed, ratified orapproved by lessees and royalty owners owning the required percentage interestin and to the unit area and shall, in respect to the hearing, make and enter afinding of its determination in that regard. If lessees and royalty owners, oreither, owning the required percentage interest in and to the unit area havenot so signed, ratified or approved the plan of unitization within a period of6 months after the date on which the order creating the unit is made, the ordercreating the unit ceases to be of further effect and must be revoked by theDivision.

(Added to NRS by 1983, 2074; A 1993, 1693)

NRS 522.0838 Planof unitization: Required provisions. The planof unitization for each such unit and unit area must be one suited to the needsand requirements of the particular unit dependent upon the facts and conditionsfound to exist with respect thereto. In addition to such other terms,provisions, conditions and requirements found by the Division to be reasonablynecessary or proper to effectuate or accomplish the purpose of this chapter,and subject to further requirements of this section, each such plan ofunitization must contain fair, reasonable and equitable provisions for:

1. The efficient unitized management or control of thefurther development and operation of the unit area for the recovery of oil andgas from the pool affected. Under such a plan the actual operations within theunit area may be carried on in whole or in part by the unit itself, or by oneor more of the lessees within the unit area as the unit operator subject to thesupervision and direction of the unit, dependent upon what is most beneficialor expedient. The designation of the unit operator must be by vote of thelessees in the unit in a manner provided in the plan of unitization and not bythe Division.

2. The Division of interest or formula for theapportionment and allocation of the unit production among and to the severalseparately owned tracts within the unit area such as will reasonably permitpersons otherwise entitled to share in or benefit by the production from suchseparately owned tracts to produce and receive, in lieu thereof, their fair,equitable and reasonable share of the unit production or other benefitsthereof. A separately owned tracts fair, equitable and reasonable share of theunit production must be measured by the value of each such tract for oil andgas purposes and its contributing value to the unit in relation to like valuesof other tracts in the unit, taking into account acreage, the quantity of oiland gas recoverable therefrom, location on the structure, its probableproductivity of oil and gas in the absence of unit operations, the burden ofoperation to which the tract will or is likely to be subjected, or so many ofsuch factors, or such other pertinent engineering, geological or operatingfactors, as may be reasonably susceptible of determination.

3. The manner in which the unit and the furtherdevelopment and operation of the unit area will be financed and the basis,terms and conditions on which the cost and expense thereof will be apportionedamong and assessed against the tracts and interests made chargeable therewith,including a detailed accounting procedure governing all charges and creditsincident to the operations. Upon and subject to such terms and conditions as totime and rate of interest as is fair to all concerned, reasonable provisionsmust be made in the plan of unitization for carrying or otherwise financinglessees who are unable promptly to meet their financial obligations in connectionwith the unit.

4. The procedure and basis upon which wells, equipmentand other properties of the several lessees within the unit area are to betaken over and used for unit operations, including the method of arriving atthe compensation therefor, or of otherwise proportionately equalizing oradjusting the investment of the several lessees in the project as of theeffective date of unit operation.

5. The creation of an operating committee to havegeneral overall management and control of the unit and the conduct of its businessand affairs and the operations carried on by it, together with the creation ordesignation of such other subcommittees, boards or officers to function underthe authority of the operating committee as may be necessary, proper orconvenient in the efficient management of the unit, defining the powers andduties of all those committees, boards and officers, and prescribing theirtenure and time and method for their selection.

6. The time when the plan of unitization becomeseffective.

7. The time when and the conditions under which andthe method by which the unit may be dissolved and its affairs wound up.

(Added to NRS by 1983, 2073; A 1993, 1693)

NRS 522.084 Planof unitization: Modification; approval of owners not required in certaincircumstances. The unit area of a unit may beenlarged to include adjoining portions of the same pool, including the unitarea of another unit, and a new unit created for the unitized management,operation and further development of the enlarged unit area, or the plan ofunitization may be otherwise amended, all in the same manner, upon the sameconditions and subject to the same limitations as provided in NRS 522.082 to 522.0878, inclusive, with respect to thecreation of a unit in the first instance, except that where the amendment tothe plan of unitization relates only to the rights and obligations as betweenlessees the requirement that it be signed, ratified and approved by royaltyowners of record of not less than 62.5 percent of the unit area does not apply.

(Added to NRS by 1983, 2077)

NRS 522.0844 Propertyacquired by unit is owned by lessees subject to management by unit. All property, whether real or personal, which the unit mayin any way acquire, hold or possess, may not be acquired, held or possessed bythe unit for its own account but must be so acquired, held and possessed by theunit for the account and as agent of the several lessees and is the property ofthe lessees as their interests may appear under the plan of unitization,subject to the right of the unit to the possession, management, use or disposalof the property in the proper conduct of its affairs, and subject to any lienthe unit may have on it to secure the payment of unit expense.

(Added to NRS by 1983, 2077)

NRS 522.0848 Transferof title to tracts and leases not required; proceeds and production are incomeof owners.

1. This chapter does not require a transfer to orvesting in the unit of title to the separately owned tracts or leases withinthe unit area, other than the right to use and operate them to the extent setout in the plan of unitization; nor may the unit be regarded as owning the unitproduction. The unit production and the proceeds from the sale thereof areowned by the several persons to whom they are allocated under the plan ofunitization.

2. Neither the unit production or proceeds from thesale thereof, nor the other receipts may be treated or taxed as income orprofits of the unit; but instead, all such receipts are the income of theseveral persons to whom or to whose credit they are payable under the plan ofunitization. To the extent the unit may receive or disburse the receipts itshall only do so as a common administrative agent of the persons to whom theyare payable.

(Added to NRS by 1983, 2076)

NRS 522.085 Distributionof production; distribution in kind under certain circumstances.

1. The amount of the unit production allocated to eachseparately owned tract within the unit, and only that amount, regardless of thewell or wells in the unit area from which it may be produced and regardless ofwhether it be more or less than the amount of the production from the well orwells, if any, on any such separately owned tract, must be considered asproduction from the separately owned tract, and, except as may be otherwiseauthorized in this chapter, or in the plan of unitization approved by theDivision, must be distributed among or the proceeds thereof paid to the severalpersons entitled to share in the production from the separately owned tract inthe same manner, in the same proportions, and upon the same condition that theywould have participated and shared in the production or proceeds thereof fromsuch separately owned tract had not the unit been organized, and with the samelegal effect.

2. If adequate provisions are made for the receiptthereof, the share of the unit production allocated to each separately ownedtract must be delivered in kind to the persons entitled thereto by virtue ofownership of oil and gas rights therein or by purchase from the owners subjectto the rights of the unit to withhold and sell it in payment of unit expensepursuant to the plan of unitization, and subject further to the call of theunit on such portions of the gas for operating purposes as may be provided inthe plan of unitization.

(Added to NRS by 1983, 2076; A 1993, 1695)

NRS 522.0854 Expensesof unit: Liability of owners is several and limited to amount charged. The obligation or liability of the lessees or other ownersof the oil and gas rights in the several separately owned tracts for thepayment of unit expense is at all times several and not joint or collective andin no event is a lessee or other owner of the oil and gas rights in theseparately owned tract chargeable with, obligated or liable, directly orindirectly, for more than the amount apportioned, assessed or otherwise chargedto his interest in such separately owned tract pursuant to the plan ofunitization and then only to the extent of the lien provided for in NRS 522.0858.

(Added to NRS by 1983, 2075)

NRS 522.0858 Expensesof unit: Lien for amount assessed; persons primarily responsible for payment;payment by persons not responsible; payment to royalty owners free of lien andexpenses.

1. Subject to such reasonable limitations as may beset out in the plan of unitization, the unit has a first and prior lien uponthe leasehold estate and all other oil and gas rights (exclusive of aone-eighth landowners royalty interest) in and to each separately owned tract,the interest of the owners thereof in and to the unit production and allequipment in the possession of the unit, to secure the payment of the amount ofthe unit expense charged to and assessed against the separately owned tract.

2. The interest of the lessee or other persons who bylease, contract or otherwise are obligated or responsible for the cost andexpense of developing and operating a separately owned tract for oil and gas inthe absence of unitization, is primarily responsible for and charged with anyassessment for unit expense made against the tract and resort may be had tooverriding royalties, oil and gas payments, royalty interests in excess ofone-eighth of the production, or other interests which otherwise are not chargeablewith that cost, only if the owner of interest primarily responsible fails topay the assessment of the production to the credit thereof, or production isinsufficient for that purpose.

3. If the owner of any royalty interest, overridingroyalty, oil or gas payment, or any other interest which under the plan ofunitization is not primarily responsible therefor pays in whole or in part theamount of an assessment for unit expense for the purpose of protecting thatinterest, or the amount of the assessment in whole or in part is deducted fromthe unit production to the credit of that interest, the owner thereof is to theextent of the payment or deduction subrogated to all the rights of the unitwith respect to the interest or interests primarily responsible for theassessment.

4. A one-eighth part of the unit production allocatedto each separately owned tract must in all events be regarded as royalty to bedistributed to and among, or the proceeds thereof paid to, the royalty ownersfree and clear of all unit expense and free of any lien therefor.

(Added to NRS by 1983, 2075)

NRS 522.086 Operationsunder plan are considered fulfillment of provisions in contracts relating topool in unit. Operations carried on under andin accordance with the plan of unitization must be considered as a fulfillmentof a compliance with all of the provisions, covenants and conditions, expressor implied, of the several oil and gas leases upon lands included with the unitarea, or other contracts pertaining to the development thereof insofar as thoseleases or other contracts may relate to the pool or portion thereof included inthe unit area. Wells drilled or operated on any part of the unit area, nomatter where located, must for all purposes be regarded as wells drilled oneach separately owned tract within the unit area.

(Added to NRS by 1983, 2077)

NRS 522.0864 Propertyrights, leases and contracts regarded as modified to conform to provisions ofchapter and plan of unitization. Propertyrights, leases, contracts and all other rights and obligations must be regardedas amended and modified to the extent necessary to conform to the provisionsand requirements of this chapter and to any valid and applicable plan ofunitization or order of the Division made and adopted pursuant to this chapter,but otherwise to remain in effect.

(Added to NRS by 1983, 2076; A 1993, 1695)

NRS 522.0868 Planapproved by Division does not violate statutes prohibiting monopolies. No agreement or plan for the development and operation ofa field or pool of oil or gas as a unit, if approved by the Division for thepurpose of conserving oil or gas, violates any of the statutes of this stateprohibiting monopolies or acts, arrangements, agreements, contracts,combinations or conspiracies in restraint of trade or commerce.

(Added to NRS by 1983, 2077; A 1993, 1695)

NRS 522.087 Impliedcovenants unaffected. NRS 522.082 to 522.0878, inclusive, and any plan ofunitization do not increase or decrease the implied covenants of a lease inrespect to a common source of supply or lands not included within the unit areaof a unit.

(Added to NRS by 1983, 2077)

NRS 522.0874 Proceduralrequirements for petitions, notices and hearings.

1. Except as otherwise expressly provided in NRS 522.082 to 522.0878, inclusive, all proceedings heldunder this chapter, including the filing of petitions, the giving of notices,the conduct of hearings and other action taken by the Division must be in theform and manner and in accordance with the procedure and proceduralrequirements provided in NRS 522.090.

2. Such additional notice must be given as may berequired by the Division.

(Added to NRS by 1983, 2075; A 1993, 1695)

NRS 522.0878 Operationof well in unit area by persons not included in unit unlawful. After the effective date of an order of the Divisioncreating a unit and prescribing the plan of unitization applicable thereto, theoperation of any well producing from the pool or portion thereof within theunit area defined in the order by persons other than the unit or persons actingunder its authority or except in the manner and to the extent provided in theplan of unitization is unlawful.

(Added to NRS by 1983, 2075; A 1993, 1695)

HEARINGS, ORDERS AND REGULATIONS OF DIVISION

NRS 522.090 Regulationsand orders of Division: Notice; hearing and entry of order.

1. The Division shall make no regulation or order, oramendment thereof, except in an emergency, without a public hearing upon atleast 10 days notice. The public hearing must be held at such time and placeas may be prescribed by the Division, and any interested person is entitled tobe heard.

2. Any notice required by this chapter must be givenby personal service on all interested persons, and if personal service cannotbe made, then substituted service may be made in the manner provided forsubstitute service of process under the Nevada Rules of Civil Procedure.

3. The Division may act upon its own motion, or uponthe petition of any interested person. On the filing of a petition concerningany matter within the jurisdiction of the Division, the Division shall promptlyfix a date for a hearing thereon, and shall cause notice of the hearing to begiven. The hearing must be held without undue delay after the filing of thepetition. The Division shall enter its order within 30 days after the hearing.

[9:202:1953](NRS A 1977, 77, 1159; 1983, 2083; 1993,1696)

NRS 522.100 Witnesses:Attendance and testimony; production of books and records; contempt.

1. The Division may summon witnesses and require theproduction of records, books and documents for examination at any hearing orinvestigation conducted by it. No person may be excused from attending andtestifying, or from producing books, papers and records before the Division ora court, or from obedience to the subpoena of the Division or a court, on theground or for the reason that the testimony or evidence, documentary orotherwise, required of him may tend to incriminate him or subject him to apenalty or forfeiture. This section does not require any person to produce anybooks, papers or records, or to testify in response to any inquiry notpertinent to some question lawfully before the Division or court for determination.No natural person may be subjected to criminal prosecution or to any penalty orforfeiture for or on account of any transaction, matter or thing concerningwhich, in spite of his objection, he may be required to testify or produceevidence, documentary or otherwise, before the Division or court, or inobedience to its subpoena, but no person testifying is exempt from prosecutionand punishment for perjury committed in so testifying.

2. In case of failure or refusal on the part of anyperson to comply with the subpoena issued by the Division, or in case of therefusal of any witness to testify as to any matter regarding which he may beinterrogated, any court of record in the State, upon application of theDivision, may issue an attachment for that person and compel him to comply withthe subpoena, and to attend before the Division and produce his records, booksand documents for examination, and to give his testimony. The court may punishfor contempt as in the case of disobedience to a like subpoena issued by thecourt, or for refusal to testify therein.

[10:202:1953](NRS A 1977, 1160; 1981, 87; 1983,2083; 1993, 1696)

NRS 522.110 Applicationfor rehearing. Within 20 days after written noticeof the entry of any order or decision of the Division, or such further time asthe Division may grant for good cause shown, any person affected thereby mayfile with the Division an application for the rehearing in respect of anymatter determined by the order or decision, setting forth the respect in whichthe order or decision is believed to be erroneous. The Division shall grant orrefuse any such application in whole or in part within 10 days after it isfiled, and failure to act thereon within such period is deemed a refusalthereof and a final disposition of the application. If the rehearing is granted,the Division may enter such new order or decision after rehearing as may berequired under the circumstances.

[11:202:1953](NRS A 1977, 78, 1160; 1983, 2084;1993, 1696)

PRODUCTION FROM WELLS

NRS 522.113 Paymentof money derived from sale of production; liability for violation;applicability.

1. The owner, lessee, operator or other person who isliable for payment of the money derived from the sale of the production from anoil or gas well located in this state shall:

(a) Pay the money directly to each person identified asbeing legally entitled thereto not later than:

(1) Six months after the first day of the monthfollowing the date of the first sale of the production, and thereafter notlater than 60 days after the end of the month within which subsequentproduction is sold; or

(2) Twelve months after the first day of themonth following the date of the first sale of the production, and every 12months thereafter, if the amount owed is $25 or less.

(b) If unable to pay timely any portion of the moneybecause of inability to locate a person entitled to receive the money or forany other reason, deposit the unpaid portion of the money in an escrow accountin a bank, credit union or savings and loan institution in Nevada, using astandard escrow document form approved by the Attorney General of Nevada. Thebank, credit union or savings and loan association must be federally insured orinsured by a private insurer approved pursuant to NRS 678.755. The deposit must earn interestat the highest rate being offered by that institution for similar deposits. Theescrow agent may commingle money so received into escrow from any one source.The escrow agent shall pay the appropriate amount of principal and accruedinterest from such an account to a person legally entitled thereto within 30days after the date of receipt by the escrow agent of a final legaldetermination of entitlement thereto. Applicable escrow fees must be deductedfrom the payment.

2. Any person who violates the provisions ofsubsection 1 is liable to each person legally entitled thereto for the unpaidamounts of money, together with interest at the rate of 18 percent per annum onthe unpaid balance from the date the payment was due pursuant to paragraph (a)of subsection 1.

3. This section does not apply to payments from anowner, lessee, operator or other person who is liable for payment of the moneyderived from the sale of the production from an oil or gas well located in thisstate to a person identified as being legally entitled to such a payment ifthose persons have agreed in writing to some other period of payment for thefirst payment or for subsequent payments.

(Added to NRS by 1991, 385; A 1999, 1507)

ROYALTIES AND OTHER NONWORKING INTERESTS

NRS 522.115 Respectiverights; information to be reported with remittance; liability for failure toreport information.

1. For purposes of determining the respective rightsof the lessor and lessee and the owners of a royalty interest, overridingroyalty interest and any other nonworking interest in the money earned from anoil and gas lease or other agreement concerning the sale of the production froman oil or gas well located in this state:

(a) The lessee is liable for all of the costs ofproduction, which must be deducted from the working interest.

(b) The lessors interest, the mineral owners royaltyinterest and the overriding royalty interest must not be decreased by the costsof production.

(c) The following information must be reported witheach remittance, unless otherwise reported each month, to the owner of aninterest:

(1) The name or number used to identify thelease, property or well;

(2) The month and year during which any saleoccurred for which payment is being made;

(3) The total number of barrels of oil orthousands of cubic feet of gas sold;

(4) The price per barrel of oil or the price perthousand cubic feet of gas;

(5) The total amount of state taxes on the netproceeds of minerals, taxes ad valorem and other taxes on the production froman oil or gas well, if the payment of those taxes reduces the amount paid tothe owner of an interest;

(6) An itemized list of any other deductions oradjustments that reduce the amount paid to the owner of an interest;

(7) The net value of total sales afterdeductions or adjustments that reduce the amount paid to the owner of aninterest;

(8) The percentage share of the owner of aninterest in the sales of the production from the oil or gas well, lease orproperty as expressed by a decimal number;

(9) The share of the total value attributed tothe owner of an interest in the sales of the production from the oil or gaswell, lease or property before any deductions or adjustments and after anydeductions or adjustments; and

(10) A name and an address where the owner of aninterest may receive clarification of the information reported pursuant to thisparagraph and additional information concerning his interest. If information isrequested by certified mail, an answer must be mailed by certified mail within30 days after receipt of the request.

2. Any person who fails to report information pursuantto paragraph (c) of subsection 1 is liable to the affected owner of aninterest, except for the working interest, in the amount of $100 for eachviolation and $100 for each month that elapses thereafter until the informationis provided.

3. As used in this section, the term costs ofproduction means all costs incurred for the exploration and development of,primary or enhanced recovery of oil or gas from, and operations associated withthe abandonment of, an oil or gas well, including costs associated with the:

(a) Acquisition of an oil and gas lease;

(b) Drilling and completion of the well;

(c) Pumping or lifting, recycling, gathering,compressing, pressurizing, heater treating, dehydrating, separating and storingof oil or gas; and

(d) Transporting of oil to storage tanks, or gas intothe pipeline for delivery.

The termdoes not include the reasonable and actual direct costs associated withtransporting oil from storage tanks to the market, gas from the point of entryinto the pipeline to the market or the processing of gas in a processing plant.

(Added to NRS by 1991, 960)

NRS 522.118 Applicability;alteration of previous agreement prohibited.

1. The provisions of NRS522.115 govern the relationship between the parties to an oil and gaslease, or other agreement, concerning the determination and reporting ofroyalties, overriding royalties, working interests or other nonworkinginterests from the sale of the production from an oil or gas well located inthis state, unless otherwise specifically provided within such a lease or otheragreement that has been reduced to writing and executed by all of the affectedparties.

2. A division order may not alter or amend the termsof a previously executed oil or gas lease or other written agreement. Adivision order that purports to alter or amend the terms of such a lease orother agreement is invalid to the extent of the alteration or amendment and theterms of the oil or gas lease or other written agreement govern.

(Added to NRS by 1991, 961)

PENALTIES; INJUNCTIVE RELIEF

NRS 522.120 Penalties.

1. Any person who willfully violates any provision ofthis chapter, or any regulation or order of the Division is subject to apenalty of not more than $1,000 for each act of violation and for each day thatthe violation continues, unless the penalty for the violation is otherwiseprovided for and made exclusive in this chapter.

2. If any person, for the purpose of evading thischapter, or any regulation or order of the Division, makes or causes to be madeany false entry in any record, account or memorandum required by this chapter,or by any such regulation or order, or omits or causes to be omitted, from anysuch record, account or memorandum, full, true and correct entries as requiredby this chapter, or by any such regulation or order, or removes from this stateor destroys, mutilates, alters or falsifies any such record, account ormemorandum, that person is guilty of a gross misdemeanor.

3. Any person knowingly aiding or abetting any otherperson in the violation of any provision of this chapter, or any regulation ororder of the Division is subject to the same penalty as that prescribed by thischapter for the violation by the other person.

4. The penalties provided in this section arerecoverable by suit filed by the Attorney General in the name and on behalf ofthe Division in the district court of the county in which the defendant residesor in which any defendant resides, if there is more than one defendant, or inthe district court of any county in which the violation occurred. The paymentof any such penalty does not operate to relieve a person on whom the penalty isimposed from liability to any other person for damages arising out of theviolation.

[12:202:1953](NRS A 1967, 607; 1977, 1160; 1983,2084; 1985, 304; 1993, 1697)

NRS 522.130 Injunctiverelief.

1. Whenever it appears that any person is violating orthreatening to violate any provision of this chapter, or any regulation ororder of the Division, the Division shall bring suit against that person in thedistrict court of any county where the violation occurs or is threatened torestrain the person from continuing the violation or from carrying out thethreat of violation. Upon the filing of any such suit, summons issued to theperson may be directed to the sheriff of any county in this state for serviceby the sheriff or his deputies. In any such suit, the court may grant to theDivision, without bond or other undertaking, such prohibitory and mandatoryinjunctions as the facts may warrant.

2. If the Division fails to bring suit to enjoin aviolation or threatened violation of any provision of this chapter, or anyregulation or order of the Division, within 10 days after receipt of writtenrequest to do so by any person who is or will be adversely affected by theviolation, the person making the request may bring suit in his own behalf torestrain the violation or threatened violation in any court in which theDivision might have brought suit. If, in the suit, the court should hold thatinjunctive relief should be granted, then the Division must be made a party andmust be substituted for the person who brought the suit, and the injunctionmust be issued as if the Division had at all times been the plaintiff.

[13:202:1953](NRS A 1977, 1161; 1983, 2085; 1993,1697)

MISCELLANEOUS PROVISIONS

NRS 522.140 Applicationof chapter; lands subject to jurisdiction of United States.

1. As the State of Nevada is a sovereign state and notdisposed to jeopardize or surrender any of its sovereign rights, this chapterapplies to all lands in the State of Nevada lawfully subject to its policepowers. It applies to lands of the United States or to lands subject to thejurisdiction of the United States only to the extent that control andsupervision of conservation of oil and gas by the United States on its landsfails to effect the intent and purposes of this chapter and otherwise appliesto those lands to such extent as an officer of the United States havingjurisdiction, or his authorized representative, approves any of the provisionsof this chapter or the order or orders of the Division which affects thoselands.

2. This chapter applies to any lands committed to aunit agreement approved by the Secretary of the Interior of the United Statesor his authorized representative, except that the Division may, under the unitagreements, suspend the application of this chapter or any part of this chapterso long as the conservation of oil and gas and the prevention of waste isaccomplished thereby, but the suspension does not relieve any operator frommaking such reports as are necessary or advised to be fully informed as tooperations under the agreement and as the Division may require under thischapter.

[14:202:1953](NRS A 1977, 1162; 1983, 2085; 1993,1698)

NRS 522.150 Paymentof expenses for Interstate Oil Compact Commission and operation of Division;administrative fee.

1. Any expenses in connection with Nevadasaffiliation with the Interstate Oil Compact Commission must be paid from theAccount for the Division of Minerals created pursuant to NRS 513.103.

2. To pay the expenses of the Division, every producerof oil or natural gas in this state shall, on or before the last day of eachmonth, report to the Division and the State Treasurer his production in thisstate of oil in barrels and of natural gas in thousands of cubic feet duringthe preceding month, and at the same time shall pay to the Division a fee in anamount established pursuant to subsection 3 on each barrel of oil and each50,000 cubic feet of natural gas produced and marketed by him during thepreceding month. The Division shall deposit with the State Treasurer, forcredit to the Account for the Division of Minerals, all money received pursuantto this subsection. Every person purchasing such oil or natural gas is liablefor the payment of the fee for each barrel of oil or each 50,000 cubic feet ofnatural gas, unless it has been paid by the producer.

3. The Commission on Mineral Resources shall, byregulation, establish the administrative fee required pursuant to subsection 2in an amount not to exceed 20 cents for each barrel of oil or each 50,000 cubicfeet of natural gas.

[15:202:1953](NRS A 1971, 207; 1977, 1162; 1983,399, 2086; 1989, 1595; 1991, 1781; 1993, 1698; 1999, 892, 3632; 2001, 66)

INTERSTATE COMPACT TO CONSERVE OIL AND GAS

NRS 522.160 Nevadato join Interstate Compact. The Governor isauthorized and directed, for and in the name of the State of Nevada, to joinwith the other states in the Interstate Compact to Conserve Oil and Gas, whichwas heretofore executed in the city of Dallas, Texas, on February 16, 1935, andwhich is now on deposit with the Department of State of the United States, andwhich has been extended to September 1, 1955, all with the consent of theCongress of the United States.

[1:42:1955]

NRS 522.170 Contentsof Interstate Compact. The Interstate Compactto Conserve Oil and Gas referred to in NRS522.160 is as follows:

 

AN INTERSTATE COMPACTTO CONSERVE OIL AND GAS

 

Article I

 

This agreement may become effective within anycompacting state at any time as prescribed by that state, and shall becomeeffective within those states ratifying it whenever any three of the States ofTexas, Oklahoma, California, Kansas and New Mexico have ratified and Congresshas given its consent. Any oil producing state may become a party hereto ashereinafter provided.

 

Article II

 

The purpose of this Compact is to conserve oil and gasby the prevention of physical waste thereof from any cause.

 

Article III

 

Each state bound hereby agrees that within a reasonabletime it will enact laws, or if laws have been enacted, then it agrees tocontinue the same in force, to accomplish within reasonable limits theprevention of:

(a) The operation of any oil well with an inefficientgas-oil ratio.

(b) The drowning with water of any stratum capable ofproducing oil or gas, or both oil and gas in paying quantities.

(c) The avoidable escape into the open air or thewasteful burning of gas from a natural gas well.

(d) The creation of unnecessary fire hazards.

(e) The drilling, equipping, locating, spacing oroperating of a well or wells so as to bring about physical waste of oil or gasor loss in the ultimate recovery thereof.

(f) The inefficient, excessive or improper use of thereservoir energy in producing any well.

The enumeration of the foregoing subjects shall notlimit the scope of the authority of any state.

 

Article IV

 

Each state bound hereby agrees that it will, within areasonable time, enact statutes, or if such statutes have been enacted, then itwill continue the same in force, providing in effect that oil produced inviolation of its valid oil and/or gas conservation statutes, or any valid rule,order or regulation promulgated thereunder, shall be denied access to commerce;and providing for stringent penalties for the waste of either oil or gas.

 

Article V

 

It is not the purpose of this Compact to authorize thestates joining herein to limit the production of oil or gas for the purpose ofstabilizing or fixing the price thereof, or create or perpetuate monopoly, orto promote regimentation, but is limited to the purpose of conserving oil andgas and preventing the avoidable waste thereof within reasonable limitations.

 

Article VI

 

Each state joining herein shall appoint onerepresentative to a commission hereby constituted and designated as theInterstate Oil Compact Commission, the duty of which said Commission shall beto make inquiry and ascertain from time to time such methods, practices,circumstances and conditions as may be disclosed for bringing aboutconservation and the prevention of physical waste of oil and gas, and at suchintervals as said Commission deems beneficial it shall report its finding andrecommendations to the several states for adoption or rejection.

The Commission shall have power to recommend thecoordination of the exercise of the police powers of the several states withintheir several jurisdictions to promote the maximum ultimate recovery from thepetroleum reserves of said states, and to recommend measures for the maximumultimate recovery of oil and gas. Said Commission shall organize and adoptsuitable rules and regulations for the conduct of its business.

No action shall be taken by the Commission except: (1)By the affirmative votes of the majority of the whole number of the compactingstates, represented at any meeting, and (2) by a concurring vote of a majorityin interest of the compacting states at said meeting, such interest to bedetermined as follows: Such vote of each state shall be in the decimalproportion fixed by the ratio of its daily average production during thepreceding calendar half-year to the daily average production of the compactingstates during said period.

 

Article VII

 

No state by joining herein shall become financiallyobligated to any other state, nor shall the breach of the terms hereof by anystate subject such state to financial responsibility to the other statesjoining herein.

 

Article VIII

 

This Compact shall expire September 1, 1937. But anystate joining herein may, upon sixty (60) days notice, withdraw herefrom.

The representatives of the signatory states have signedthis agreement in a single original, which shall be deposited in the archivesof the Department of State of the United States, and a duly certified copyshall be forwarded to the Governor of each of the signatory states.

This Compact shall become effective when ratified andapproved as provided in Article I. Any oil producing state may become a partyhereto by affixing its signature to a counterpart to be similarly deposited,certified and ratified.

Done in the City of Dallas, Texas, this sixteenth dayof February, 1935.

[2:42:1955]

NRS 522.180 Extensionof expiration date of Compact; reentry of State after withdrawal.

1. The Governor is authorized and empowered, for andin the name of the State of Nevada, to execute agreements for the furtherextension of the expiration date of the Interstate Compact to Conserve Oil andGas, and to determine if and when it shall be to the best interest of the Stateof Nevada to withdraw from the Compact following a notice of 60 days asprovided by its terms.

2. In the event of withdrawal, the Governor or anysucceeding Governor may thereafter, in his discretion, effect the reentry ofthe State into the Compact as herein provided.

[3:42:1955]

NRS 522.190 InterstateOil Compact Commission: State representation.

1. The Governor shall be the official representativeof the State of Nevada on the Interstate Oil Compact Commission provided for inthe Interstate Compact to Conserve Oil and Gas and shall exercise and performfor the State all of the powers and duties as a member of the Interstate OilCompact Commission.

2. The Governor shall have the authority to appoint anassistant representative who shall act in his stead as the officialrepresentative of the State as a member of the Commission. His officialrepresentative, if not already a state official, shall take the oath of officeprescribed by the Constitution and file the same with the Secretary of State.

[4:42:1955]

 

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