[Rev. 11/21/2013 12:17:06 PM--2013]

CHAPTER 522 - OIL AND GAS

GENERAL PROVISIONS

NRS 522.010           Waste of oil and gas prohibited.

NRS 522.020           Definitions.

NRS 522.021           “Correlative rights” defined.

NRS 522.023           “Division” defined.

NRS 522.024           “Division order” defined.

NRS 522.025           “Field” defined.

NRS 522.027           “Gas” defined.

NRS 522.028           “Lessee” defined.

NRS 522.0285         “Lessor” defined.

NRS 522.029           “Oil” defined.

NRS 522.0295         “Operator” defined.

NRS 522.0301         “Other nonworking interest” defined.

NRS 522.0305         “Overriding royalty” defined.

NRS 522.031           “Owner” defined.

NRS 522.033           “Person” defined.

NRS 522.035           “Pool” defined.

NRS 522.037           “Producer” defined.

NRS 522.038           “Royalty” defined.

NRS 522.039           “Waste” defined.

NRS 522.0395         “Working interest” defined.

NRS 522.040           Powers and duties of Division.

DRILLING PERMITS; ESTABLISHMENT OF DRILLING UNITS

NRS 522.050           Permits to drill wells required; fees.

NRS 522.060           Establishment of drilling units for pools.

NRS 522.080           Use of gas from well to manufacture carbon products without permit is prima facie waste.

UNITIZATION

NRS 522.082           “Unit production” defined.

NRS 522.0824         Voluntary unitization; petition for compulsory unitization.

NRS 522.0828         Order for compulsory unitization: Findings required before issuance.

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

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

NRS 522.0838         Plan of unitization: Required provisions.

NRS 522.084           Plan of unitization: Modification; approval of owners not required in certain circumstances.

NRS 522.0844         Property acquired by unit is owned by lessees subject to management by unit.

NRS 522.0848         Transfer of title to tracts and leases not required; proceeds and production are income of owners.

NRS 522.085           Distribution of production; distribution in kind under certain circumstances.

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

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

NRS 522.086           Operations under plan are considered fulfillment of provisions in contracts relating to pool in unit.

NRS 522.0864         Property rights, leases and contracts regarded as modified to conform to provisions of chapter and plan of unitization.

NRS 522.0868         Plan approved by Division does not violate statutes prohibiting monopolies.

NRS 522.087           Implied covenants unaffected.

NRS 522.0874         Procedural requirements for petitions, notices and hearings.

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

HEARINGS, ORDERS AND REGULATIONS OF DIVISION

NRS 522.090           Regulations and 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           Application for rehearing.

PRODUCTION FROM WELLS

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

ROYALTIES AND OTHER NONWORKING INTERESTS

NRS 522.115           Respective rights; information to be reported with remittance; liability for failure to report information. [Effective through November 24, 2014, and after that date unless the provisions of Senate Joint Resolution No. 15 (2011) are approved and ratified by the voters at the 2014 General Election.]

NRS 522.115           Respective rights; information to be reported with remittance; liability for failure to report information. [Effective November 25, 2014, if the provisions of Senate Joint Resolution No. 15 (2011) are approved and ratified by the voters at the 2014 General Election.]

NRS 522.118           Applicability; alteration of previous agreement prohibited.

HYDRAULIC FRACTURING PROGRAM

NRS 522.119           Development of program; regulations.

PENALTIES; INJUNCTIVE RELIEF

NRS 522.120           Penalties.

NRS 522.130           Injunctive relief.

MISCELLANEOUS PROVISIONS

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

NRS 522.150           Payment of 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           Contents of Interstate Compact.

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

NRS 522.190           Interstate Oil Compact Commission: State representation.

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GENERAL PROVISIONS

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

      [1:202:1953]

      NRS 522.020  Definitions.  As used in this chapter, unless the context otherwise requires, the words and terms defined in NRS 522.021 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  “Correlative rights” defined.  “Correlative rights” means the opportunity afforded, so far as it is practicable to do so, to the owner of each property in a pool to produce without waste the owner’s just and equitable share of the oil or gas, or both, in the pool and for this purpose to use the owner’s just and equitable share of the reservoir’s energy.

      (Added to NRS by 1983, 2070)

      NRS 522.023  “Division” defined.  “Division” means the Division of Minerals of the Commission on Mineral Resources.

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

      NRS 522.024  “Division order” defined.  “Division order” means a written instrument executed for the purpose of:

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

      2.  Setting forth the name and address of each of those owners; and

      3.  Enabling the purchaser of the production from an oil or gas well who is responsible for the distribution to make remittance directly to each of those owners.

      (Added to NRS by 1991, 960)

      NRS 522.025  “Field” defined.  “Field” means the general area which is underlain or appears to be underlain by at least one pool and includes the underground reservoir or reservoirs containing oil or gas.

      (Added to NRS by 1983, 2070)

      NRS 522.027  “Gas” defined.  “Gas” includes all natural gas and all hydrocarbons produced at the wellhead except oil.

      (Added to NRS by 1983, 2070)

      NRS 522.028  “Lessee” defined.  “Lessee” means the person entitled under an oil and gas lease to drill and operate wells.

      (Added to NRS by 1991, 385)

      NRS 522.0285  “Lessor” defined.  “Lessor” means the mineral owner who has executed a lease and who is entitled to the payment of a royalty on production.

      (Added to NRS by 1991, 960)

      NRS 522.029  “Oil” defined.  “Oil” includes:

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

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

      (Added to NRS by 1983, 2071)

      NRS 522.0295  “Operator” defined.  “Operator” means a person engaged in the business of drilling wells capable of producing oil or gas.

      (Added to NRS by 1991, 385)

      NRS 522.0301  “Other nonworking interest” defined.  “Other nonworking interest” means any interest in an oil and gas lease or well which is not a royalty, overriding royalty or working interest.

      (Added to NRS by 1991, 960)

      NRS 522.0305  “Overriding royalty” defined.  “Overriding royalty” means a share of production taken from the lessee’s interest under an oil and gas lease.

      (Added to NRS by 1991, 960)

      NRS 522.031  “Owner” defined.  “Owner” means the person who has the right to drill into and produce from a pool and to appropriate the oil and gas he or she produces therefrom for himself or herself and others.

      (Added to NRS by 1983, 2071)

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

      (Added to NRS by 1983, 2071)

      NRS 522.035  “Pool” defined.  “Pool” means an underground reservoir containing, or appearing to contain, a common accumulation of oil or gas. Each zone of a general structure which is completely separated from any other zone in the structure is included in the term “pool.”

      (Added to NRS by 1983, 2071)

      NRS 522.037  “Producer” defined.  “Producer” means the owner of a well or wells capable of producing oil or gas, or both.

      (Added to NRS by 1983, 2071)

      NRS 522.038  “Royalty” defined.  “Royalty” means the mineral owner’s share of production.

      (Added to NRS by 1991, 960)

      NRS 522.039  “Waste” defined.  “Waste” includes:

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

      2.  The locating, spacing, drilling, equipping, operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from any pool in this state under operations conducted in accordance with good engineering 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 to cause unnecessary or excessive surface loss or destruction of oil or gas.

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

      6.  The operation of an oil well with an inefficient ratio of gas to oil.

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

      8.  Underground waste.

      9.  The creation of unnecessary fire hazards.

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

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

      (Added to NRS by 1983, 2071)

      NRS 522.0395  “Working interest” defined.  “Working interest” means the interest granted under an oil and gas lease, giving the lessee the right to work on the leased property to search for, develop and produce oil and gas.

      (Added to NRS by 1991, 960)

      NRS 522.040  Powers and duties of Division.  Except as otherwise provided in NRS 522.119:

      1.  The Division has jurisdiction and authority over all persons and property, public and private, necessary to effectuate the purposes and intent of this chapter.

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

      3.  The Division shall adopt regulations, make orders and 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 logs and directional surveys. Logs of exploratory or “wildcat” wells marked “confidential” must be kept confidential for 6 months after the filing thereof, unless the owner gives written permission to release those logs at an earlier date.

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

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

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

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

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

      (b) Regulate, for conservation purposes:

             (1) The drilling, producing and plugging of wells.

             (2) The shooting and chemical treatment of wells.

             (3) The spacing of wells.

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

             (5) The contamination or waste of underground water.

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

      [4:202:1953]—(NRS A 1977, 1151; 1981, 86; 1983, 2079; 1993, 1689; 2013, 2776)

DRILLING PERMITS; ESTABLISHMENT OF DRILLING UNITS

      NRS 522.050  Permits to drill wells required; fees.

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

      2.  The Commission on Mineral Resources shall, by regulations, establish the fee required pursuant to subsection 1 in an amount not to exceed $200 per permit.

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

      NRS 522.060  Establishment of drilling units for pools.

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

      2.  Each well permitted on a drilling unit must be drilled under such regulations and in accordance with such a spacing pattern as the Division prescribes for the pool in which the well is located. Exceptions to the regulations and spacing pattern may be granted where it is shown, after notice and hearing, that the unit is partly outside the pool, or for some other reason a well so located on the unit would be nonproductive, or topographical conditions are such as to make the drilling at such a location unduly burdensome. If an exception is granted, the Division shall offset any advantage which the person securing the exception may have over other producers and shall prevent or minimize drainage from developed units to the tract to which the exception is granted. The producer of the well drilled as an exception must be allowed to produce no more than a just and equitable share of the oil and gas in the pool.

      3.  When two or more separately owned tracts of land are within an established drilling unit, persons owning the drilling rights therein and the right to share in the production therefrom may agree to pool their interests and develop their lands as a drilling unit. If those persons do not agree to pool their interests, the Division may, for the prevention of waste, for the protection of correlative rights, or to avoid the drilling of unnecessary wells, enter an order pooling and integrating their interests for the development of their lands as a drilling unit. Orders effectuating such pooling must be made after notice and hearing, and must be upon terms and conditions which will afford to the owner of each tract the opportunity to recover or receive the owner’s just and equitable share of the oil and gas in the pool without unnecessary expense. Operations incident to the drilling of a well upon any portion of a unit covered by a pooling order shall be deemed for all purposes to be the conduct of the operation upon each separately owned tract in the unit by the several lessees thereof. The portion of the production allocated to the lessee of each tract included in a drilling unit formed by a pooling order shall, when produced, be considered as if it had been produced from the tract by a well drilled thereon.

      4.  If the pooling is effectuated, the cost of development and operation of the pooled unit chargeable by the operator to the other interested lessees is limited to the actual and reasonable expenditures required for that purpose, including a reasonable charge for supervision. As to lessees who refuse to agree upon pooling, the order must provide for reimbursement 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 event of a dispute relative to those costs, the Division shall, upon notice to all interested parties and hearing thereon, determine the proper costs. Appeals may be taken from the determination as from any other order of the Division. If one or more of the lessees drill and operate, or pay the expense of drilling and operating, the well for the benefit of others, then in addition to any other right conferred by the pooling order, the lessee or lessees so drilling or operating have a lien on the share of production from the unit accruing to the interest of each of the other lessees for the payment of his or her proportionate share of the expenses. All the oil and gas subject to the lien, or so much thereof as is necessary, must be marketed and sold by the creditor, and the proceeds applied in payment of the expenses secured by the lien, with the balance, if any, payable to the debtor.

      5.  The Division shall, in all instances where a unit has been formed out of lands or areas of more than one ownership, require the operator, upon request of a lessee, but subject to the right of the operator to market production and collect the proceeds with respect to a lessee in default, as provided in subsection 4, to deliver to the lessee or the lessee’s assigns his or her proportionate share of the production from the well common to the drilling unit. The lessee receiving his or her share shall provide at the lessee’s own expense proper receptacles for the receipt and storage thereof.

      6.  If the persons owning the drilling or other rights in separate tracts embraced within a drilling unit fail to agree upon the pooling of the tracts and the drilling of a well on the unit, and if the Division is without authority to require pooling as provided by this section, then subject to all other applicable provisions of this chapter, the lessee of each tract embraced within the drilling unit may drill on the lessee’s tract, but the allowable production from the tract is such a proportion of the allowable production for the full drilling unit as the area of the separately owned tract bears to the full drilling unit.

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

      NRS 522.080  Use of gas from well to manufacture carbon products without permit is prima facie waste.  The use of gas from a well producing gas only, or from a well which is primarily a gas well, for the manufacture of carbon black or similar products predominantly carbon, is declared to constitute waste prima facie, and the gas well must not be used for any such purpose unless it is clearly shown at a public hearing to be held by the Division, on application of the person desiring to use the gas, that waste would not take place by the use of the gas for the purpose applied for, and that gas which would otherwise be lost is now available for that purpose, and that the gas to be used cannot be used for a more beneficial purpose, such as for light or fuel, except at prohibitive cost, and that it would be in the public interest to grant the permit. If the Division finds that the applicant has clearly shown a right to use the gas for the purpose applied for, it shall issue a permit upon such terms and conditions as may be found necessary in order to permit the use of the gas and at the same time require compliance with the intent of this section.

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

UNITIZATION

      NRS 522.082  “Unit production” defined.  As used in NRS 522.082 to 522.0878, inclusive, “unit production” includes all oil and gas produced from a unit area from and after the effective date of the order of the Division creating the unit regardless of the well or tract within the unit area from which it is produced.

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

      NRS 522.0824  Voluntary unitization; petition for compulsory unitization.

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

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

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

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

      1.  The unitized management, operation and further development of a pool or portion thereof is reasonably necessary in order effectively to carry on pressure control, pressure-maintenance or repressuring operations, cycling operations, waterflooding operations, or any combination thereof, or any other form of joint effort calculated to substantially increase the ultimate recovery of oil and gas from the pool;

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

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

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

Ê it shall make a finding to that effect and make an order creating the unit and providing for the unitization and unitized operation of the pool or portion thereof described in the order, all upon such terms and conditions, as may be shown by the evidence to be fair, reasonable, equitable, and which are necessary or proper to protect, safeguard and adjust the respective rights and obligations of the several persons affected, including royalty owner, owners of overriding royalties, oil and gas payments, carried interests, mortgages, lien claimants and others, as well as the lessees.

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

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

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

      2.  Each unit and unit area must be limited to all or a portion of a single pool. Only so much of a pool as has been defined and determined to be productive of oil and gas by actual drilling operations may be so included within the unit area. A unit may be created to embrace less than the whole of a pool only where it is shown by the evidence that the area to be so included within the unit area is of such size and shape as may be reasonably required for the successful and efficient conduct of the unitized method of operation for which the unit is created, and that the conduct thereof will have no material adverse effect upon the remainder of the pool.

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

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

      1.  No order of the Division creating a unit and prescribing the plan of unitization applicable thereto becomes effective unless:

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

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

      2.  Where the plan of unitization has not been so signed, ratified or approved by the lessees and royalty owners owning the required percentage interest in and to the unit area at the time the order creating the unit is made, the Division shall, upon petition and notice, hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area and shall, in respect to the hearing, make and enter a finding of its determination in that regard. If lessees and royalty owners, or either, owning the required percentage interest in and to the unit area have not so signed, ratified or approved the plan of unitization within a period of 6 months after the date on which the order creating the unit is made, the order creating the unit ceases to be of further effect and must be revoked by the Division.

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

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

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

      2.  The division of interest or formula for the apportionment and allocation of the unit production among and to the several separately owned tracts within the unit area such as will reasonably permit persons otherwise entitled to share in or benefit by the production from such separately owned tracts to produce and receive, in lieu thereof, their fair, equitable and reasonable share of the unit production or other benefits thereof. A separately owned tract’s fair, equitable and reasonable share of the unit production must be measured by the value of each such tract for oil and gas purposes and its contributing value to the unit in relation to like values of other tracts in the unit, taking into account acreage, the quantity of oil and gas recoverable therefrom, location on the structure, its probable productivity of oil and gas in the absence of unit operations, the burden of operation to which the tract will or is likely to be subjected, or so many of such factors, or such other pertinent engineering, geological or operating factors, as may be reasonably susceptible of determination.

      3.  The manner in which the unit and the further development and operation of the unit area will be financed and the basis, terms and conditions on which the cost and expense thereof will be apportioned among and assessed against the tracts and interests made chargeable therewith, including a detailed accounting procedure governing all charges and credits incident to the operations. Upon and subject to such terms and conditions as to time and rate of interest as is fair to all concerned, reasonable provisions must be made in the plan of unitization for carrying or otherwise financing lessees who are unable promptly to meet their financial obligations in connection with the unit.

      4.  The procedure and basis upon which wells, equipment and other properties of the several lessees within the unit area are to be taken over and used for unit operations, including the method of arriving at the compensation therefor, or of otherwise proportionately equalizing or adjusting the investment of the several lessees in the project as of the effective date of unit operation.

      5.  The creation of an operating committee to have general overall management and control of the unit and the conduct of its business and affairs and the operations carried on by it, together with the creation or designation of such other subcommittees, boards or officers to function under the authority of the operating committee as may be necessary, proper or convenient in the efficient management of the unit, defining the powers and duties of all those committees, boards and officers, and prescribing their tenure and time and method for their selection.

      6.  The time when the plan of unitization becomes effective.

      7.  The time when and the conditions under which and the 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  Plan of unitization: Modification; approval of owners not required in certain circumstances.  The unit area of a unit may be enlarged to include adjoining portions of the same pool, including the unit area of another unit, and a new unit created for the unitized management, operation and further development of the enlarged unit area, or the plan of unitization may be otherwise amended, all in the same manner, upon the same conditions and subject to the same limitations as provided in NRS 522.082 to 522.0878, inclusive, with respect to the creation of a unit in the first instance, except that where the amendment to the plan of unitization relates only to the rights and obligations as between lessees the requirement that it be signed, ratified and approved by royalty owners 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  Property acquired by unit is owned by lessees subject to management by unit.  All property, whether real or personal, which the unit may in any way acquire, hold or possess, may not be acquired, held or possessed by the unit for its own account but must be so acquired, held and possessed by the unit for the account and as agent of the several lessees and is the property of the lessees as their interests may appear under the plan of unitization, subject to the right of the unit to the possession, management, use or disposal of the property in the proper conduct of its affairs, and subject to any lien the unit may have on it to secure the payment of unit expense.

      (Added to NRS by 1983, 2077)

      NRS 522.0848  Transfer of title to tracts and leases not required; proceeds and production are income of owners.

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

      2.  Neither the unit production or proceeds from the sale thereof, nor the other receipts may be treated or taxed as income or profits of the unit; but instead, all such receipts are the income of the several persons to whom or to whose credit they are payable under the plan of unitization. To the extent the unit may receive or disburse the receipts it shall only do so as a common administrative agent of the persons to whom they are payable.

      (Added to NRS by 1983, 2076)

      NRS 522.085  Distribution of production; distribution in kind under certain circumstances.

      1.  The amount of the unit production allocated to each separately owned tract within the unit, and only that amount, regardless of the well or wells in the unit area from which it may be produced and regardless of whether it be more or less than the amount of the production from the well or wells, if any, on any such separately owned tract, must be considered as production from the separately owned tract, and, except as may be otherwise authorized in this chapter, or in the plan of unitization approved by the Division, must be distributed among or the proceeds thereof paid to the several persons entitled to share in the production from the separately owned tract in the same manner, in the same proportions, and upon the same condition that they would have participated and shared in the production or proceeds thereof from such separately owned tract had not the unit been organized, and with the same legal effect.

      2.  If adequate provisions are made for the receipt thereof, the share of the unit production allocated to each separately owned tract must be delivered in kind to the persons entitled thereto by virtue of ownership of oil and gas rights therein or by purchase from the owners subject to the rights of the unit to withhold and sell it in payment of unit expense pursuant to the plan of unitization, and subject further to the call of the unit on such portions of the gas for operating purposes as may be provided in the plan of unitization.

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

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

      (Added to NRS by 1983, 2075)

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

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

      2.  The interest of the lessee or other persons who by lease, contract or otherwise are obligated or responsible for the cost and expense of developing and operating a separately owned tract for oil and gas in the absence of unitization, is primarily responsible for and charged with any assessment for unit expense made against the tract and resort may be had to overriding royalties, oil and gas payments, royalty interests in excess of one-eighth of the production, or other interests which otherwise are not chargeable with that cost, only if the owner of interest primarily responsible fails to pay the assessment of the production to the credit thereof, or production is insufficient for that purpose.

      3.  If the owner of any royalty interest, overriding royalty, oil or gas payment, or any other interest which under the plan of unitization is not primarily responsible therefor pays in whole or in part the amount of an assessment for unit expense for the purpose of protecting that interest, or the amount of the assessment in whole or in part is deducted from the unit production to the credit of that interest, the owner thereof is to the extent of the payment or deduction subrogated to all the rights of the unit with respect to the interest or interests primarily responsible for the assessment.

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

      (Added to NRS by 1983, 2075)

      NRS 522.086  Operations under plan are considered fulfillment of provisions in contracts relating to pool in unit.  Operations carried on under and in accordance with the plan of unitization must be considered as a fulfillment of a compliance with all of the provisions, covenants and conditions, express or implied, of the several oil and gas leases upon lands included with the unit area, or other contracts pertaining to the development thereof insofar as those leases or other contracts may relate to the pool or portion thereof included in the unit area. Wells drilled or operated on any part of the unit area, no matter where located, must for all purposes be regarded as wells drilled on each separately owned tract within the unit area.

      (Added to NRS by 1983, 2077)

      NRS 522.0864  Property rights, leases and contracts regarded as modified to conform to provisions of chapter and plan of unitization.  Property rights, leases, contracts and all other rights and obligations must be regarded as amended and modified to the extent necessary to conform to the provisions and requirements of this chapter and to any valid and applicable plan of unitization 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  Plan approved by Division does not violate statutes prohibiting monopolies.  No agreement or plan for the development and operation of a field or pool of oil or gas as a unit, if approved by the Division for the purpose of conserving oil or gas, violates any of the statutes of this state prohibiting 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  Implied covenants unaffected.  NRS 522.082 to 522.0878, inclusive, and any plan of unitization do not increase or decrease the implied covenants of a lease in respect to a common source of supply or lands not included within the unit area of a unit.

      (Added to NRS by 1983, 2077)

      NRS 522.0874  Procedural requirements for petitions, notices and hearings.

      1.  Except as otherwise expressly provided in NRS 522.082 to 522.0878, inclusive, all proceedings held under 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 the form and manner and in accordance with the procedure and procedural requirements provided in NRS 522.090.

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

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

      NRS 522.0878  Operation of well in unit area by persons not included in unit unlawful.  After the effective date of an order of the Division creating a unit and prescribing the plan of unitization applicable thereto, the operation of any well producing from the pool or portion thereof within the unit area defined in the order by persons other than the unit or persons acting under its authority or except in the manner and to the extent provided in the plan of unitization is unlawful.

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

HEARINGS, ORDERS AND REGULATIONS OF DIVISION

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

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

      2.  Any notice required by this chapter must be given by personal service on all interested persons, and if personal service cannot be made, then substituted service may be made in the manner provided for substitute service of process under the Nevada Rules of Civil Procedure.

      3.  The Division may act upon its own motion, or upon the petition of any interested person. On the filing of a petition concerning any matter within the jurisdiction of the Division, the Division shall promptly fix a date for a hearing thereon, and shall cause notice of the hearing to be given. The hearing must be held without undue delay after the filing of the petition. 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 the production of records, books and documents for examination at any hearing or investigation conducted by it. No person may be excused from attending and testifying, or from producing books, papers and records before the Division or a court, or from obedience to the subpoena of the Division or a court, on the ground or for the reason that the testimony or evidence, documentary or otherwise, required of the person may tend to incriminate the person or subject the person to a penalty or forfeiture. This section does not require any person to produce any books, papers or records, or to testify in response to any inquiry not pertinent to some question lawfully before the Division or court for determination. No natural person may be subjected to criminal prosecution or to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which, in spite of the person’s objection, the person may be required to testify or produce evidence, documentary or otherwise, before the Division or court, or in obedience to its subpoena, but no person testifying is exempt from prosecution and punishment for perjury committed in so testifying.

      2.  In case of failure or refusal on the part of any person to comply with the subpoena issued by the Division, or in case of the refusal of any witness to testify as to any matter regarding which the witness may be interrogated, any court of record in the State, upon application of the Division, may issue an attachment for that person and compel the person to comply with the subpoena, and to attend before the Division and produce the person’s records, books and documents for examination, and to give his or her testimony. The court may punish for contempt as in the case of disobedience to a like subpoena issued by the court, or for refusal to testify therein.

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

      NRS 522.110  Application for rehearing.  Within 20 days after written notice of the entry of any order or decision of the Division, or such further time as the Division may grant for good cause shown, any person affected thereby may file with the Division an application for the rehearing in respect of any matter determined by the order or decision, setting forth the respect in which the order or decision is believed to be erroneous. The Division shall grant or refuse any such application in whole or in part within 10 days after it is filed, and failure to act thereon within such period is deemed a refusal thereof 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 be required under the circumstances.

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

PRODUCTION FROM WELLS

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

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

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

             (1) Six months after the first day of the month following the date of the first sale of the production, and thereafter not later than 60 days after the end of the month within which subsequent production is sold; or

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

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

      2.  Any person who violates the provisions of subsection 1 is liable to each person legally entitled thereto for the unpaid amounts of money, together with interest at the rate of 18 percent per annum on the 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 an owner, lessee, operator or other person who is liable for payment of the money derived from the sale of the production from an oil or gas well located in this state to a person identified as being legally entitled to such a payment if those persons have agreed in writing to some other period of payment for the first payment or for subsequent payments.

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

ROYALTIES AND OTHER NONWORKING INTERESTS

      NRS 522.115  Respective rights; information to be reported with remittance; liability for failure to report information. [Effective through November 24, 2014, and after that date unless the provisions of Senate Joint Resolution No. 15 (2011) are approved and ratified by the voters at the 2014 General Election.]

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

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

      (b) The lessor’s interest, the mineral owner’s royalty interest and the overriding royalty interest must not be decreased by the costs of production.

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

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

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

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

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

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

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

             (7) The net value of total sales after deductions or adjustments that reduce the amount paid to the owner of an interest;

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

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

             (10) A name and an address where the owner of an interest may receive clarification of the information reported pursuant to this paragraph and additional information concerning the owner’s interest. If information is requested by certified mail, an answer must be mailed by certified mail within 30 days after receipt of the request.

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

      3.  As used in this section, the term “costs of production” means all costs incurred for the exploration and development of, primary or enhanced recovery of oil or gas from, and operations associated with the 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 storing of oil or gas; and

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

Ê The term does not include the reasonable and actual direct costs associated with transporting oil from storage tanks to the market, gas from the point of entry into the pipeline to the market or the processing of gas in a processing plant.

      (Added to NRS by 1991, 960)

      NRS 522.115  Respective rights; information to be reported with remittance; liability for failure to report information. [Effective November 25, 2014, if the provisions of Senate Joint Resolution No. 15 (2011) are approved and ratified by the voters at the 2014 General Election.]

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

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

      (b) The lessor’s interest, the mineral owner’s royalty interest and the overriding royalty interest must not be decreased by the costs of production.

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

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

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

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

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

             (5) The total amount of state taxes on the net proceeds from mineral extraction and royalties subject to the excise tax pursuant to the provisions of NRS 362.100 to 362.240, inclusive, taxes ad valorem and other taxes on the production from an oil or gas well, if the payment of those taxes reduces the amount paid to the owner of an interest;

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

             (7) The net value of total sales after deductions or adjustments that reduce the amount paid to the owner of an interest;

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

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

             (10) A name and an address where the owner of an interest may receive clarification of the information reported pursuant to this paragraph and additional information concerning the owner’s interest. If information is requested by certified mail, an answer must be mailed by certified mail within 30 days after receipt of the request.

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

      3.  As used in this section, the term “costs of production” means all costs incurred for the exploration and development of, primary or enhanced recovery of oil or gas from, and operations associated with the 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 storing of oil or gas; and

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

Ê The term does not include the reasonable and actual direct costs associated with transporting oil from storage tanks to the market, gas from the point of entry into the pipeline to the market or the processing of gas in a processing plant.

      (Added to NRS by 1991, 960; A 2013, 3142, effective November 25, 2014, if the provisions of Senate Joint Resolution No. 15 (2011) are approved and ratified by the voters at the 2014 General Election)

      NRS 522.118  Applicability; alteration of previous agreement prohibited.

      1.  The provisions of NRS 522.115 govern the relationship between the parties to an oil and gas lease, or other agreement, concerning the determination and reporting of royalties, overriding royalties, working interests or other nonworking interests from the sale of the production from an oil or gas well located in this state, unless otherwise specifically provided within such a lease or other agreement that has been reduced to writing and executed by all of the affected parties.

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

      (Added to NRS by 1991, 961)

HYDRAULIC FRACTURING PROGRAM

      NRS 522.119  Development of program; regulations.

      1.  The Division of Minerals and the Division of Environmental Protection shall, jointly, develop a hydraulic fracturing program to:

      (a) Assess the effects of hydraulic fracturing on the waters of the State of Nevada;

      (b) Require a person who engages in hydraulic fracturing to disclose each chemical used to engage in hydraulic fracturing; and

      (c) Provide for notice to members of the general public concerning activities relating to hydraulic fracturing in this state.

      2.  The Commission on Mineral Resources shall adopt regulations to implement the hydraulic fracturing program required by subsection 1.

      3.  As used in this section:

      (a) “Division of Environmental Protection” means the Division of Environmental Protection of the State Department of Conservation and Natural Resources.

      (b) “Hydraulic fracturing” means the process of pumping a fluid into or under the surface of the ground to create fractures in the rock to facilitate the production or recovery of oil or gas.

      (Added to NRS by 2013, 2775)

PENALTIES; INJUNCTIVE RELIEF

      NRS 522.120  Penalties.

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

      2.  If any person, for the purpose of evading this chapter, or any regulation or order of the Division, makes or causes to be made any 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 any such record, account or memorandum, full, true and correct entries as required by this chapter, or by any such regulation or order, or removes from this state or destroys, mutilates, alters or falsifies any such record, account or memorandum, that person is guilty of a gross misdemeanor.

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

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

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

      NRS 522.130  Injunctive relief.

      1.  Whenever it appears that any person is violating or threatening to violate any provision of this chapter, or any regulation or order of the Division, the Division shall bring suit against that person in the district court of any county where the violation occurs or is threatened to restrain the person from continuing the violation or from carrying out the threat of violation. Upon the filing of any such suit, summons issued to the person may be directed to the sheriff of any county in this state for service by the sheriff or the sheriff’s deputies. In any such suit, the court may grant to the Division, without bond or other undertaking, such prohibitory and mandatory injunctions as the facts may warrant.

      2.  If the Division fails to bring suit to enjoin a violation or threatened violation of any provision of this chapter, or any regulation or order of the Division, within 10 days after receipt of written request to do so by any person who is or will be adversely affected by the violation, the person making the request may bring suit in his or her own behalf to restrain the violation or threatened violation in any court in which the Division might have brought suit. If, in the suit, the court should hold that injunctive relief should be granted, then the Division must be made a party and must be substituted for the person who brought the suit, and the injunction must 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  Application of chapter; lands subject to jurisdiction of United States.

      1.  As the State of Nevada is a sovereign state and not disposed to jeopardize or surrender any of its sovereign rights, this chapter applies to all lands in the State of Nevada lawfully subject to its police powers. It applies to lands of the United States or to lands subject to the jurisdiction of the United States only to the extent that control and supervision of conservation of oil and gas by the United States on its lands fails to effect the intent and purposes of this chapter and otherwise applies to those lands to such extent as an officer of the United States having jurisdiction, or the officer’s authorized representative, approves any of the provisions of this chapter or the order or orders of the Division which affects those lands.

      2.  This chapter applies to any lands committed to a unit agreement approved by the Secretary of the Interior of the United States or his or her authorized representative, except that the Division may, under the unit agreements, suspend the application of this chapter or any part of this chapter so long as the conservation of oil and gas and the prevention of waste is accomplished thereby, but the suspension does not relieve any operator from making such reports as are necessary or advised to be fully informed as to operations under the agreement and as the Division may require under this chapter.

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

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

      1.  Any expenses in connection with Nevada’s affiliation with the Interstate Oil Compact Commission must be paid from the Account for the Division of Minerals created pursuant to NRS 513.103.

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

      3.  The Commission on Mineral Resources shall, by regulation, establish the administrative fee required pursuant to subsection 2 in an amount not to exceed 20 cents for each barrel of oil or each 50,000 cubic feet 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  Nevada to join Interstate Compact.  The Governor is authorized and directed, for and in the name of the State of Nevada, to join with the other states in the Interstate Compact to Conserve Oil and Gas, which was heretofore executed in the city of Dallas, Texas, on February 16, 1935, and which is now on deposit with the Department of State of the United States, and which has been extended to September 1, 1955, all with the consent of the Congress of the United States.

      [1:42:1955]

      NRS 522.170  Contents of Interstate Compact.  The Interstate Compact to Conserve Oil and Gas referred to in NRS 522.160 is as follows:

 

AN INTERSTATE COMPACT TO CONSERVE OIL AND GAS

 

Article I

 

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

 

Article II

 

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

 

Article III

 

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

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

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

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

      (d) The creation of unnecessary fire hazards.

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

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

      The enumeration of the foregoing subjects shall not limit the scope of the authority of any state.

 

Article IV

 

      Each state bound hereby agrees that it will, within a reasonable time, enact statutes, or if such statutes have been enacted, then it will continue the same in force, providing in effect that oil produced in violation 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 the states joining herein to limit the production of oil or gas for the purpose of stabilizing or fixing the price thereof, or create or perpetuate monopoly, or to promote regimentation, but is limited to the purpose of conserving oil and gas and preventing the avoidable waste thereof within reasonable limitations.

 

Article VI

 

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

      The Commission shall have power to recommend the coordination of the exercise of the police powers of the several states within their several jurisdictions to promote the maximum ultimate recovery from the petroleum reserves of said states, and to recommend measures for the maximum ultimate recovery of oil and gas. Said Commission shall organize and adopt suitable 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 compacting states, represented at any meeting, and (2) by a concurring vote of a majority in interest of the compacting states at said meeting, such interest to be determined as follows: Such vote of each state shall be in the decimal proportion fixed by the ratio of its daily average production during the preceding calendar half-year to the daily average production of the compacting states during said period.

 

Article VII

 

      No state by joining herein shall become financially obligated to any other state, nor shall the breach of the terms hereof by any state subject such state to financial responsibility to the other states joining herein.

 

Article VIII

 

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

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

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

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

      [2:42:1955]

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

      1.  The Governor is authorized and empowered, for and in the name of the State of Nevada, to execute agreements for the further extension of the expiration date of the Interstate Compact to Conserve Oil and Gas, and to determine if and when it shall be to the best interest of the State of Nevada to withdraw from the Compact following a notice of 60 days as provided by its terms.

      2.  In the event of withdrawal, the Governor or any succeeding Governor may thereafter, in the Governor’s discretion, effect the reentry of the State into the Compact as herein provided.

      [3:42:1955]

      NRS 522.190  Interstate Oil Compact Commission: State representation.

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

      2.  The Governor shall have the authority to appoint an assistant representative who shall act in the Governor’s stead as the official representative of the State as a member of the Commission. The Governor’s official representative, if not already a state official, shall take the oath of office prescribed by the Constitution and file the same with the Secretary of State.

      [4:42:1955]