California Code, Public Resources Code - PRC § 6815.1

Whenever the commission exercises a right to take oil, gas, or other hydrocarbons in kind pursuant to any lease the commission shall make and enter into contracts or agreements for the disposition and sale of such oil, gas, or other hydrocarbons only with the highest responsible bidder upon competitive bidding, and in accordance with procedures set forth in rules and regulations adopted by the commission.  All specifications and forms for the purpose of inviting bids in connection with such disposition and sale shall be adopted by the commission prior to publication of notice to bidders.  Should no bids be received, or should the commission determine to reject any and all bids because of the insufficiency thereof, the commission may negotiate and enter into agreements for such disposition and sale under terms and conditions deemed by the commission to be in the best interests of the State.