Motion for Leave to Amend Pleadings in TRC CYPRESS GROUP, LLC VS DAVID SHABAZIAN| Trellis.Law

On February 21, 2021 a Complaint,Petition was filed involving a dispute between Trc Cypress Group, Llc, A California Limited Liability Company, Trc Operating Company, Inc., A California Corporation, and California Department Of Conservation, Geology Energy Management Division, David Shabazian, Director, California Department Of Conservation, David Shabazian, Director, Department Of Coservation, Uduak-Joe Ntuk, Uduak-Joe Ntuk, Supervisor, Geologic Energy Management Division, Gabe Tiffany, for 02-CV Writ of Mandate-Civil Unlimited in the District Court of Kern County.

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1 JEAN M. PLEDGER (State Bar No. 204685)
SHANNON M. MILLER (State Bar No. 337616)
2 PLEDGER LAW, LLP
1925 G Street
3 Bakersfield, CA 93301
Telephone: (661) 316.7888
4 Email: Jean@Pledger.Law
5 Attorneys for TRC Operating Company, Inc. and
TRC Cypress Group, LLC
6

8 SUPERIOR COURT OF THE STATE OF CALIFORNIA

9 COUNTY OF KERN, METROPOLITAN DIVISION

11 TRC OPERATING COMPANY, INC., a Case No. BCV-21-100386, SDS
California corporation; and
12 TRC CYPRESS GROUP, LLC, a California
limited liability company, THIRD AMENDED VERIFIED
13 COMPLAINT FOR:
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Plaintiffs/Petitioners,
14 v. 1. DECLARATORY AND
INJUNCTIVE RELIEF [Gov. Code
15 DAVID SHABAZIAN, DIRECTOR, §11350];
CALIFORNIA DEPARTMENT OF
16 CONSERVATION; 2. DECLARATORY AND
UDUAK-JOE NTUK, SUPERVISOR, INJUNCTIVE RELIEF [Code Civ.
17 CALIFORNIA DEPARTMENT OF Proc. §§526, 1060];
CONSERVATION, GEOLOGIC ENERGY
18 MANAGEMENT DIVISION; and 3. INVERSE CONDEMNATION
DOES 1 -10, inclusive, [U.S. Constitution, Fifth and
19 Fourteenth Amendments, and
Defendants/Respondents. California Constitution, Article 1,
20 Section 19]; and
21 4. PETITION FOR WRIT OF
MANDATE [Code Civ. Proc.
22 §1085].
23 Assigned to Hon. Eric J. Bradshaw
Dept/Div.: J
24
Action filed: February 22, 2021
25 Trial Date: Not yet Assigned
26

27 Plaintiffs/Petitioners, TRC Operating Company, Inc. and TRC Cypress Group, LLC

28 (collectively “TRC”), seek declaratory relief pursuant to Government Code section 11350 to

1.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 declare all or portions of Title 14, California Code of Regulations, sections 1724.11 and 1724.13
2 invalid on the grounds that substantial evidence does not support defendants/respondents, David
3 Shabazian, Director, California Department of Conservation (“Director”) and Uduak-Joe Ntuk,
4 Supervisor, California Department of Conservation, Geologic Energy Management Division
5 (“Supervisor”) determination that such regulations or portions thereof are necessary to effectuate
6 the purpose of California Public Resources Code sections 3013 and 3106. Collectively Director
7 and Supervisor are herein referred to as “CalGEM.” TRC also seeks an injunction enjoining
8 CalGEM from enforcing these invalid regulations.
9 TRC also seeks declaratory relief under Code of Civil Procedure section 1060 to declare
10 the rights and duties of TRC and CalGEM as related to 14 CCR §§ 1724.11 and 1724.13 and the
11 rights and duties of TRC and CalGEM regarding CalGEM’s determination concerning the
12 application of these regulations to TRC.
13 TRC further seeks damages for the taking of TRC’s property by way of inverse
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14 condemnation without just compensation to TRC by CalGEM.
15 Finally, TRC petitions the Court for a Writ of Mandate, requiring CalGEM to provide
16 written approval to TRC to resume injection in its cyclic-steamed wells located in the Midway
17 Sunset oil field near Sandy Creek on the grounds that the regulations under which CalGEM
18 ordered TRC to cease injection in these wells are invalid and on the grounds that CalGEM cannot
19 support its determination that TRC’s cyclic steamed wells are causing oil to come to the surface.
20 I. GENERAL ALLEGATIONS.
21 1. At all times mentioned in this petition, plaintiff/petitioner, TRC Operating
22 Company, Inc. has been and now is a corporation duly organized and existing under the laws of
23 the State of California and the operator of certain wells located in the Midway Sunset oil field at
24 or near Sandy Creek.
25 2. At all times mentioned in this petition, plaintiff/petitioner, TRC Cypress Group,
26 LLC has been and now is a limited liability company duly organized and existing under the laws
27 of the State of California and the owner of certain wells located in the Midway Sunset oil field
28 at or near Sandy Creek. TRC Operating Company, Inc. and TRC Cypress Group, LLC are

2.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 collectively referred to herein as “TRC.”
2 3. Defendant/Respondent, David Shabazian is the Director of the California
3 Department of Conservation (“Director”), through and under the Geologic Energy Management
4 Division, is charged with the regulation of drilling, operation, maintenance, and plugging and
5 abandonment of onshore and offshore oil, gas, and geothermal wells within the State.
6 4. Defendant/Respondent, Uduak-Joe Ntuk is the Supervisor of the Geologic
7 Energy Management Division (“Supervisor”) and under the direction of the Director, is charged
8 with the regulation of drilling, operation, maintenance, and plugging and abandonment of
9 onshore and offshore oil, gas, and geothermal wells within the State.
10 5. Defendants/Respondents, DOES 1-10, inclusive, are sued under fictitious names.
11 Their true names and capacities are unknown to TRC. TRC are informed and believe and thereon
12 allege that each of the fictitiously named defendants/respondents is responsible in some manner
13 for the occurrences alleged in this complaint, and that TRC’s damages as alleged in this
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14 complaint were proximately caused by those defendants. When their true names and capacities
15 are ascertained, TRC will amend this complaint by inserting names for those DOES 1 - 10,
16 inclusive, and their capacities herein.
17 II. FACTUAL BACKGROUND.
18 6. TRC is the owner and operator of oil wells located in Section 22, Township 32
19 South, Range 23 East in the Midway Sunset oil field near Taft, California.
20 7. TRC’s wells produce oil from the diatomite formation. The oil in the diatomite
21 formation is produced by cyclic steaming which places steam into the well over a period of up
22 to several days and after a brief interval the well is returned to production.
23 8. TRC’s wells are located immediately west of an oil producing property owned by
24 another oil producer, Berry Petroleum Company. Berry Petroleum’s property, known as the
25 Buena Fe lease, contains Sandy Creek, an ephemeral creek bed.
26 9. Since in or about 1997, oil appeared on the surface of the Buena Fe lease near
27 Sandy Creek and such oil has been continually present since that time. (“Buena Fe Seep”). TRC
28 is informed and believes that Berry Petroleum and its predecessors operated and managed the

3.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 Buena Fe Seep as an “oil sump,” defined by Public Resources Code section 3780, or “sump”
2 defined in Title 14 California Code of Regulations, section 1760(w), or as a natural oil seep, and
3 the Buena Fe Seep was managed and regulated by CalGEM and its predecessor, the Department
4 of Oil, Gas and Geothermal Resources (“DOGGR”), and other governmental agencies that
5 regulate such seeps pursuant to the relevant laws and regulations.
6 10. On February 21, 2014, TRC received a Project Approval Letter (“PAL”) from
7 DOGGR which PAL provides TRC with approval to operate its cyclic-steam wells in the
8 diatomite zone in the Midway Sunset oil field, with certain requirements. A true and correct
9 copy of TRC’s PAL is attached hereto as Exhibit A and is incorporated herein by this reference.
10 11. TRC’s PAL sets forth a requirement to cease injection if a surface expression
11 develops within a certain radius of any of TRC’s wells. Such cessation of steam injection is to
12 continue “until the surface expression ceases to be active.” The PAL also provides that the
13 cessation restriction can be waived by CalGEM if TRC “can demonstration that wells within the
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14 given radius do not have an adverse impact on the surface expression.” (TRC’s PAL, para. 23.)
15 Despite repeated requests by TRC to allow them to provide such evidence that TRC’s wells do
16 not adversely affect the Buena Fe Seep, CalGEM has failed and refused and continues to fail and
17 refuse to allow TRC the opportunity to so.
18 12. TRC’s PAL defines a “surface expression” as, “Oil, steam, and/or water . . .
19 flowing to the surface as a result of cyclic steam operations, either through new or existing
20 seeps, fissures, or other conducts (surface expression(s) associated with improperly cased
21 and/or cemented wells.” (TRC’s PAL, para. 1 (emphasis added).)
22 13. On July 15, 2015, after years of complying with numerous cease and desist orders
23 from DOGGR in response to a surface expression located on Chevron U.S.A., Inc.’s property
24 immediately to the west of TRC’s Midway Sunset property; DOGGR deemed all orders satisfied
25 and issued TRC a “Terms of Satisfaction of Emergency Remedial Order No. 1068 . . . and Project
26 Approval Letter Additions” (“Project Approval Letter Additions”). A true and correct copy of
27 the Project Approval Letter Additions is attached hereto as Exhibit B and incorporated herein
28 by this reference.

4.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 14. Notably, neither TRC’s PAL issued in February 2014, or the Project Approval
2 Letter Additions issued in July 2015 discuss any requirement or any obligation of TRC to take
3 any action regarding the Buena Fe Seep, which clearly existed for nearly twenty years prior to
4 the issuance of these approvals to TRC and is not located on TRC’s property.
5 III. NEW REGULATIONS CONCERNING SURFACE EXPRESSIONS.
6 15. On or about January 21, 2016, CalGEM posted a Notice of Pre-rulemaking on the
7 Development of Updates to Underground Injection Control Regulations. A true and correct copy
8 of this notice is attached hereto as Number 1 of Exhibit C entitled “Rulemaking File” and such
9 Rulemaking File, in total, is incorporated herein by this reference. 1
10 16. On July 27, 2018, CalGEM published its Notice of Proposed Rulemaking Action
11 to adopt regulations regarding Chapter 4 of Title 14 of the California Code of Regulations
12 (“Notice”). A true and correct copy of the Notice is attached hereto a Number 10 of Exhibit C.
13 17. The Notice states that CalGEM proposed to add sections 1720.1, 1724.7.1,
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14 1724.7.2, 1724.8, 1724.10.1, 1724.10.2, 1724.10.3, 1724.11, 1724.12, 1724.13, and 1724.14;
15 amend sections 1724.6, 1724.7, 1724.10, and 1748; and delete existing sections 1724.8, 1748.2,
16 and 1748.3 of Subchapters 1 and 1.1 of Chapter 4 of Division 2 of Title 14 of the California
17 Code of Regulations.
18 18. The Notice further states that, “Public Resources Code sections 3013 and 3106
19 authorize the Department [of Conservation] to adopt the proposed regulations.” In addition,
20 CalGEM states the proposed regulations will “implement, interpret, make specific, or reference
21 sections 3106 and 3236.5 of the Public Resources Code.”
22 19. Public Resources Code section 3013 authorizes the Director, and the Supervisor
23 acting with approval of the Director, to adopt rules and regulations to “carry out the purposes of
24 this division.”
25 20. Public Resources Code section 3106 sets forth the duties of the Supervisor which
26 includes, among other things, the supervision of the “drilling, operation, maintenance, and
27
1
TRC has provided all portions of the Rulemaking File provided by CalGEM online at
28 https://www.conservation.ca.gov/calgem/Pages/Oil,-Gas,-and-Geothermal-Rulemaking-and-Laws.aspx. TRC has no
information or belief, however, regarding the completeness of the online Rulemaking File.
5.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 abandonment of wells . . . so as to prevent, as far as possible, damage to life, health, property,
2 and natural resources . . .”
3 21. Public Resources Code section 3236.5 sets forth the Supervisor’s discretion to
4 impose a civil penalty on any person who violates the provisions of Chapter 1 of Title 14 of the
5 California Code of Regulations. Such civil penalty, however, “shall be imposed by an order of
6 the supervisor pursuant to Section 3225 upon a determination that a violation has been
7 committed by the person charged.” (Pub. Resources Code §3236.5(a) (emphasis added).)
8 22. The Final Text of Regulations (Number 26 of Exhibit C), set out the relevant
9 following regulations:
10 A. “Low-energy seep” means a surface expression for which the operator has
11 demonstrated all of the following to the Division:
12 (1) The fluid coming to the surface is low-energy and low-temperature;
13 (2) The fluid coming to the surface is not injected fluid; and
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14 (3) The fluid coming to the surface is contained and monitored in a
15 manner that prevents damage to life, health, property, and natural resources. (C.C.R. §
16 1720.1(h).)
17 B. “Surface expression” means a flow, movement, or release from the
18 subsurface to the surface of fluid or other material such as oil, water, steam, gas, formation solids,
19 formation debris, material, or any combination thereof, that is outside of a wellbore and that
20 appears to be caused by injection operations. (C.C.R. § 1720.1(n).)
21 C. “Underground injection projects shall not result in any surface
22 expression.” (14 CCR §1724.11(a).)
23 D. “The operator shall immediately cease injection in a well if there is a
24 surface expression within 150 feet of its wellhead . . . If the surface expression continues to flow
25 for more than five days, then the operator shall immediately cease injection in a well if the
26 surface expression is within 600 feet of its wellhead. If a surface expression continues to flow
27 for more than 10 days, then the Division will determine an expanded radius around the surface
28 expression with which injection shall cease. The Division will determine the expanded radius

6.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 based on consideration of the flow rate of the surface expression, geologic factors, and
2 operational parameters.” (14 CCR §1724.11(d).)
3 E. “The Division may direct injection to cease at any injection well,
4 regardless of its distance from a surface expression, if the Division finds reason to believe that
5 the injection well is causing or contributing to a surface expression.” (14 CCR §1724.11(e).)
6 F. “Wells that have ceased injecting pursuant to subdivisions (d) or (e) may
7 not resume injection until the Division is satisfied that the cause of the surface expression has
8 been determined and remediated and the appropriate Division district deputy has provided the
9 operator with written approval to restart injection. With the advance written approval of the
10 Division, the operator may be allowed to conduct limited injection for purposes of identifying
11 the cause of a surface expression.” (14 CCR §1724.11(g).)
12 G. “As long as the Division concurs that a surface expression is a low-
13 energy seep, the surface expression is not subject to the prohibition of subdivision (a) or the
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14 response requirements of subdivisions (d) through (g).” (14 CCR §1724.11(j).)
15 H. “The operator shall cease injection into the affected injection well and
16 immediately notify the Division if any of the following occur: . . . The Division instructs the
17 operator in writing to suspend injection.” (14 CCR §1724.13(a)(9).)
18 I. “The operator shall comply with all operational and remedial directives
19 of the Division related to the reason for ceasing injection and shall not resume injection into
20 the well without subsequent written approval from the Division.” (14 CCR §1724.13(b).)
21 23. In a joint report by Lawrence Livermore National Laboratory (“LLNL”) and
22 CalGEM, a review of cyclic steam operations was conducted in various locations, including a
23 review of the Buena Fe Seep (“LLNL Report”). The LLNL Report called the Buena Fe Seep a
24 “long-term seep-like activity,” and confirmed that the seep “began in the mid to late 1990’s.”
25 The LLNL Report further states that the seep has “continuously seeped fluid, predominately
26 water” and has not “experienced excessively high-temperature fluid (fluid temperature is usually
27 a few degrees above ambient), steam or high-pressure fluid releases.” The LLNL Report also
28 confirms that the Buena Fe Seep had not changed in characteristics but that the CalGEM

7.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 regulations effective on April 1, 2019 “led to a recent evaluation” and the shut-in of TRC’s wells.
2 IV. CALGEM’S LETTER ORDERING TRC TO CEASE INJECTION.
3 24. Neither TRC’s PAL issued in 2014 nor the Project Approval Letter Additions
4 issued in 2015 set forth any requirement or any obligation of TRC to take any action regarding
5 the Buena Fe Seep that existed for almost two decades prior to granting TRC’s PAL and Project
6 Approval Letter. Yet, without any prior notice or contact to TRC, and without any reactivation
7 or increase in the Buena Fe Seep, on November 13, 2020, the Supervisor sent a letter to TRC
8 stating, “CalGEM has determined that a surface expression on the Buena Fe lease at or around
9 35.127264, -119.495037 in the Midway Sunset oil field located in Sandy Creek is related to
10 cyclic steam injection operations.” A true and correct copy of the Supervisor’s November 13,
11 2020, letter is attached hereto as Exhibit D (“Cease Injection Letter”) and is incorporated herein
12 by this reference.
13 25. The Supervisor’s Cease Injection Letter ordered TRC to “immediately cease
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14 steam injection operations within a 600’ radius around the surface expression on the Buena Fe
15 Lease, which is at or around 35.127264, -119.495037 in the Midway Sunset oil field per CCR
16 section 1724.11, subdivisions (d) and/or (e).” (Cease Injection Letter, page 1.) The Cease
17 Injection Letter concludes that injection into any well within 600-foot radius of the surface
18 expression is prohibited “until the CalGEM Inland District Deputy provides written approval to
19 restart injection. See CCR section 1724.11 and 1724.13.” (Cease Injection Letter, page 2.)
20 26. While the Cease Injection Letter identified the “surface expression” with a single
21 point with specific coordinates, a map that accompanied the Cease Injection Letter created a
22 large, oval shaped area in which the marked area appears significantly larger than a “radius” of
23 600’ from the pinpointed “surface expression.” It is this substantially larger area, however, that
24 the Supervisor ordered TRC to shut-in all wells. (Cease Injection Letter, page 5.)
25 V. TRC’S LETTER SEEKING “APPEAL” OF THE ORDER TO CEASE
INJECTION.
26

27 27. The regulations cited by the Cease Injection Letter contain no ability to seek
28 administrative redress of the Supervisor’s determination that a surface expression exists

8.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 requiring a shut-in of wells within a 600’ radius of same. Because of this, on November 20,
2 2020, TRC through its counsel, sent a letter to the Supervisor seeking information concerning
3 TRC’s right to due process and a method to appeal the Supervisor’s determination set forth in
4 the Cease Injection Letter. A true and correct copy of TRC’s Counsel’s letter is attached hereto
5 as Exhibit E and is incorporated herein by this reference.
6 28. On November 25, 2020, the California Department of Conservation, Director’s
7 Office of Appeals, through Graham St. Michel, Advisor, sent separate letters to both counsel
8 for the Geologic Energy Management Division and for TRC requiring both parties to provide
9 information so that the Director’s Office of Appeal could set a hearing, pursuant to Public
10 Resources Code section 3350, to hear TRC’s appeal. The letter sought information concerning
11 the parties’ contact information for the party’s hearing representatives, the dates in which these
12 representatives and counsel were not available for a hearing, and a statement concerning the
13 willingness to be served via email. In addition, the Office of Appeals “invited” the parties to
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14 submit written briefs as to “whether the Director’s Office of Appeals has jurisdiction to hear
15 this dispute under Public Resources Code section 3350 . . .” Thus, the Office of Appeals was
16 clearly uncertain if the Supervisor’s letter was an “order” that gave TRC due process rights of
17 appeal afforded to it under Public Resources Code section 3350. A true and correct copy of the
18 Director’s Office of Appeal’s November 25, 2020, letter is attached hereto as Exhibit F and is
19 incorporated herein by this reference.
20 29. On December 4, 2020, counsel for TRC responded to Graham St. Michel’s
21 November 25, 2020, letter. TRC pointed out that the Supervisor’s direction to cease injection
22 pursuant 14 CCR 1724.11(e) was arbitrary, capricious, and an abuse of discretion given that the
23 Buena Fe Seep was not new, having been at that location for more than two decades and had
24 not been reactivated or increased in flow. In addition, TRC’s counsel sought clarification that
25 the Director had determined that the Cease Injection Letter was an order of the Supervisor issued
26 pursuant to the various relevant sections set forth in Chapter 1 of Division 3 of the Public
27 Resources Code. In addition, if such was an order, the Supervisor was required to state whether
28 this order was one that was stayed during the pendency of the appeal. (“The filing of a written

9.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 notice of appeal shall operate as a stay of the order, except when an order is issued as an
2 emergency order pursuant to Section 3226.” (Pub. Resources Code §3350(b)(1).) If the
3 Supervisor deemed this an emergency order, however, TRC sought information concerning
4 what work it was required to perform in order to “alleviate the emergency.” (Ibid. See also,
5 Pub. Resources Code §3225(b) (“An order requiring an operator to cease and desist operations
6 pursuant to Section 3270.3 shall specify the operations that the operator is required to cease and
7 desist and shall provide a detailed explanation of the steps that the operator shall take before the
8 supervisor will permit the operations to resume.”).) A true and correct copy of TRC’s counsel’s
9 letter to Graham St. Michel on December 4, 2020, is attached hereto as Exhibit G and is
10 incorporated by this reference.
11 30. On December 14, 2020, CalGEM filed a brief with the Director’s Office of
12 Appeals in response to Graham St. Michel’s invitation to the parties to submit written briefs
13 concerning the Office of Appeals’ jurisdiction to hear the matter pursuant to Public Resources
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14 Code section 3350 (“CalGEM’s Brief”). A true and correct of CalGEM’s Brief is attached
15 hereto as Exhibit H and is incorporated herein by this reference.
16 31. CalGEM’s Brief unambiguously states that TRC has no statutory right to an
17 administrative hearing on the grounds that CalGEM had not “elected” to issue an order and that
18 TRC was obligated to “cease injection when so instructed by CalGEM . . .” (CalGEM’s Brief
19 2:13-15 (emphasis added).) However, “[c]essation of injection operation under these regulatory
20 operational restrictions is contemplated to be a temporary measure – as compared to a
21 permanent “rescission” of approval for an underground injection project or injections well (see
22 Cal. Code Regs, tit. 14 § 1724.6, subd. (d); Pub. Resources Code, § 3351, subd. (a)(3).”
23 (CalGEM’s Brief 2:16-19.) Thus, CalGEM’s brief is unmistakable in its claim; the Supervisor
24 is not required to give TRC any due process because “the regulations . .. make itclear that
25 CalGEM can impose operational restrictions such as a suspension of injection approval . . . with
26 written notice.” (CalGEM Brief, 3:8-11(emphasis added).) Indeed, CalGEM explicitly states
27 that TRC’s only recourse is “an opportunity to challenge the validity of CalGEM’s regulation
28 by initiating an action for declaratory relief in a superior court, as provided in Government Code

10.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 section 11350” or “by filing an appropriate writ action in superior court. See, e.g., Code Civ.
2 Proc., §1085.).” (CalGEM Brief, 4:11-15.)
3 32. On December 15, 2020, TRC provided its reply to CalGEM’s Brief. In the reply,
4 TRC asserts “[a]n oil seep in the vicinity of Sandy Creek has been present for almost thirty
5 years … [y]et tellingly, during all these years, prior to the Supervisor’s letter neither CalGEM
6 nor its predecessor, the Division of Oil, Gas and Geothermal Resources, has never called the
7 seep at Sandy Creek a “surface expression” (“TRC’s Reply Brief”). A true and correct copy of
8 TRC’s Reply Brief is attached hereto as Exhibit I and is incorporated herein by this reference.
9 33. The “decades-long” Buena Fe Seep was used as justification by CalGEM to state
10 the flow had lasted for more than five days. CalGEM had determined that the Buena Fe Seep
11 was a low energy, long-term seep long prior to the issuance of the Cease Injection letter, and
12 indeed has very recently confirmed that the Buena Fe Seep does not expound high temperature
13 fluid, steam, or pressure. (See, LLNL Report.) Therefore, the Buena Fe Seep, as a low energy
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14 seep is not subject to prohibitions under CCR § 1724.11 (a) or (d)-(g). This determination
15 further shows CalGEM’s response in issuing the Cease Injection Letter is arbitrary, capricious,
16 and an abuse of discretion.
17 34. On December 18, 2020, Ted Lindstrom, Appeals Officer, Director’s Appeal
18 Office, provided his “decision” concerning the availability of an administrative remedy for
19 TRC. A true and correct copy of the Office of Appeals December 18, 2020, letter is attached
20 hereto as Exhibit J and is incorporated herein by this reference (“Office of Appeals’
21 Determination”).
22 35. In the Office of Appeals’ Determination, Mr. Lindstrom states that the Supervisor
23 sent his November 13, 2020, letter to TRC “instructing Operator to cease injection in wells located
24 within the applicable distance from the surface expression.” Mr. Lindstrom determined that the
25 Supervisor “was not legally required to use an appealable order . . .” Thus, Mr. Lindstrom
26 dismissed TRC’s attempted appeal.
27 ///
28 ///

11.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 VI. TRC’S COMPLIANCE WITH CALGEM’S DIRECTIVES AND REQUEST TO
RESUME CYCLIC STEAM INJECTION.
2

3 36. Despite TRC’s allegations that the regulations upon which the Supervisor’s
4 November 13, 2020, letter are based are invalid; TRC has complied with the requirements of the
5 Supervisor’s letter by:
6 a. Immediately ceasing injection in the wells identified by CalGEM;
7 b. Meeting with the Inland District Deputy within 10 days, updated data,
8 and provided substantive proof that TRC’s cyclic steamed wells are not the cause of the surface
9 expression; and
10 c. Preparing and providing a surface expression monitoring and prevention
11 plan to CalGEM pursuant to Title 14 of the California Code of Regulations, section
12 1724.11(b)(1).
13 TRC did not need to place any signage or other warnings near any surface expression
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14 given that no surface expressions exist on TRC’s property.
15 37. On February 10, 2021, TRC sent a letter to the Supervisor confirming that TRC had
16 complied with all requirements and sought to resume cyclic steam injection in those wells that the
17 Supervisor ordered to cease injection. This included an attempt to meet with CalGEM staff, as well
18 as proposing mitigation measures between Berry and TRC, and seeking to answer any
19 data/information request by CalGEM; but CalGEM provided no available remediation measures to
20 TRC to resume steam operations. A true and correct copy of TRC’s letter is attached hereto as
21 Exhibit K and is incorporated herein by this reference.
22 38. On February 18, 2021, the Supervisor responded to TRC stating that CalGEM is
23 “currently unable to rescind the requirement for operators to shut-in injection wells within 600 feet
24 of the Surface Expression. The regulations require the root cause of the surface expression to be
25 determined and remediated prior to the division District Deputy approving injection operations for
26 wells that have ceased injection as a result of a surface expression to resume [citing Section
27 1724.11(g)].” A true and correct copy of the Supervisor’s February 18, 2021, letter is attached
28 hereto as Exhibit L and is incorporated herein by this reference.

12.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 39. On March 4, 2021, in response to a request by TRC to conduct limited steam
2 injection for testing purposes – which is explicitly allowed pursuant to Title 14, California Code of
3 Regulations, section 1724.11(g) [“With the advance written approval of the Division, the operator
4 may be allowed to conduct limited injection for the purposes of identifying the cause of a surface
5 expression.”] – Acting Chief Deputy, Baldev S. Gill, denied TRC’s request stating, “CalGEM
6 believes that . . . continued monitoring of the surface expression flow volumes is required for an
7 undetermined time period going forward at this moment.” (Emphasis added.) A true and correct
8 copy of Acting Chief Deputy Baldev S. Gill’s email is attached hereto as Exhibit M and is
9 incorporated herein by this reference.
10 FIRST CAUSE OF ACTION
11 DECLARATORY AND INJUNCTION RELIEF TO INVALIDATE
TITLE 14 CALIFORNIA CODE OF REGULATIONS,
12 SECTIONS 1724.11(d), (e), and (g) AND SECTION 1724.13(a)(9) and (b)
13 (Government Code §11350)
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14 40. The allegations set forth above in paragraphs 1 through 39, inclusive, are realleged
15 and incorporated herein by this reference.
16 41. TRC seeks to invalidate 14 CCR § 1724.11, and specifically subsections (d), (e),
17 and (g) and 14 CCR § 1724.13, and specifically subsections (a)(9) and (b) pursuant to
18 Government Code section 11350(a) 2 and to enjoin CalGEM from enforcement thereof on the
19 grounds that CalGEM’s determination that the regulations are reasonably necessary to
20 effectuate Public Resources Code section 3106 and/or to “implement, interpret, make specific,
21 or reference sections 3106 and 3236.5 of the Public Resources Code” are not supported by
22 substantial evidence. (See, Gov. Code §11350(b) 3.)
23 42. The regulations in question are not valid because, among other reasons, CalGEM
24 usurped the legislators’ role and intent and eviscerated specific statute’s requirements and
25
2
“Any interested person may obtain a judicial declaration as to the validity of any regulation or order of repeal by
26 bringing an action for declaratory relief in the superior court in accordance with the Code of Civil Procedure.”(Gov.
Code §11350(a).)
27 3
“In addition to any other ground that may exist, a regulation . . . may be declared invalid if . . . the following exists:
(1) The agency’s determination that the regulation is reasonably necessary to effectuate the purpose of the statute,
28 court decision, or other provision of law that is being implemented, interpreted, or made specific by the regulation is
not supported by substantial evidence.”
13.
THIRD AMENDED VERIFIED COMPLAINT FOR DECLARATOR RELIEF, ETC.
1 safeguards to operators that provide required due process. Such legislative intent and safeguards
2 include but are not limited to, a requirement that CalGEM provide operators with details concerning
3 the steps that an operator must take before the Supervisor will permit operations to resume and
4 providing an operator the ability to appeal such orders, and to seek a restraining order if the operator
5 will be “irretrievably injured” by the performance of such order work pending the outcome of an
6 appeal. (See, for example, Public Resources Code sections 3224; 4 3225; 5 and 3350 6.)
7 43. As shown below, CalGEM’s justification for the reasonable necessity of these
8 regulations are not supported by substantial evidence.
9 44. In a proceeding under Government Code section 11350, “the court may only
10 consider the following evidence:
11 (1) The rulemaking file prepared under Section 11347.3.
12 (2) The finding of emergency prepared pursuant to subdivision (b) of Section
13 11346.1.
PLEDGER LAW, PC

14 (3) An item that is required to be included in the rulemaking file but is not
15 included in the rulemaking file, for the sole purpose of proving its omission.
16 (4) Any evidence relevant to whether a regulation used by an agency is
17 required to be adopted under this chapter.”
18 (Gov. Code §11350(d).)
19 45. Section 1724.11(d) gives the Supervisor the discretion to “determine an expanded
20 radius around the surface expression within which injection shall cease” when a surface expression
21 has continued for more than ten days. Both the Initial and the Final Statement of Reasons 7 state

Case Info

Judge

Barmann, Bernard C., Jr. Track Judge’s New Case

Case No.

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Document Filed Date

March 01, 2022

Case Filing Date

February 21, 2021

County

Parties

CALIFORNIA DEPARTMENT OF CONSERVATION, GEOLOGY ENERGY MANAGEMENT DIVISION Respondent
CHEVRON U.S.A. INC. Non-party
DAVID SHABAZIAN, DIRECTOR, CALIFORNIA DEPARTMENT OF CONSERVATION Respondent
DAVID SHABAZIAN, DIRECTOR, DEPARTMENT OF COSERVATION Respondent
FIFTH DISTRICT COURT OF APPEAL Non-party
GABE TIFFANY Defendant
PLEDGER, JEAN M Attorney
SLOAN-TRIBE, WYATT E Attorneys for Defendants
TRC CYPRESS GROUP, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY Petitioner
TRC OPERATING COMPANY, INC., A CALIFORNIA CORPORATION Petitioner
UDUAK-JOE NTUK Respondent
UDUAK-JOE NTUK, SUPERVISOR, GEOLOGIC ENERGY MANAGEMENT DIVISION Respondent
Shannon Miller Attorneys for Plaintiffs

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Complaint,Petition: TRC CYPRESS GROUP, LLC VS DAVID SHABAZIAN

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