Cal. Public Resources Code § 6815

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