1. (a) Applicable Laws. All drilling, producing, gathering, transporting, processing and other operations on state lands shall be subject to applicable state and federal laws.
2. (b) Conflict between this chapter and other rules and statutes. Operations on state lands are subject to all valid applicable state and federal regulatory authorities. This chapter supplements the regulatory powers of such authorities.
3. (c) General policy. These rules are not intended to unlawfully impair any existing contract.
4. (d) Exceptions to this chapter. A Board for Lease (Board) may if authorized by law and upon proper written request, grant exceptions to the provisions of this chapter if the Board deems the exceptions to be in the best interest of the state. No such exception shall be effective until a written request by the lessee and a written explanation, approved by the Board and signed by the commissioner, as chairman of the Board, is placed in the appropriate mineral file or other General Land Office file.
5. (e) Compliance. Lessee shall comply with the provisions of the lease. Nothing in this chapter shall be construed as relieving a lessee of this duty or as impairing any remedies available to the state. If a lessee or operator fails to comply with this chapter, the Board may seek any remedy allowed by law, including forfeiture of the lease. Lessee shall be liable for the damages caused by such failure and any costs and expenses incurred while enforcing this chapter and cleaning areas affected by any pollution or discharged waste. A lessee is also responsible for the actions or omissions of its operator as well as for the actions or omissions of lessee's employees, agents, servants, contractors, subcontractors, trustees, receivers, and any other agent in control of any or all of the leasehold interest.
6. (f) Identification. All well locations and other structures shall be marked so as to identify the state tract number, well number, and the company operating the lease. Additionally, any well drilled on property leased under this chapter must be identified as a state well in Railroad Commission records by using "state" as the first word in its designated Railroad Commission name.
7. (g) Inspections. The commissioner of the GLO, the attorney general, the governor, and their representatives, shall at all times have access to the premises upon which wells are being drilled or produced for oil, gas, or other minerals to make inspections of all drilling, producing, gathering, and processing operations, or for any other reason deemed necessary.
8. (h) Records. The General Land Office may from time to time require any records not otherwise required relating to any aspect of lease operations and accounting. Such records shall be provided to the General Land Office within 30 days of the agency's request for their production.
9. (i) Commingling production. Requests to commingle production from state leases should be sent with supporting data to the following address: Commissioner of the General Land Office, Attention: Mineral Leasing Division, Stephen F. Austin Building, 1700 North Congress Avenue, Austin, Texas 78701-1495.
10. (j) Surface Use and Hole Abandonment. Any hole or holes drilled by any exploration party under the terms of a lease issued by the state under this chapter shall be drilled in such manner as to interfere as little as possible with the current use of the surface. Upon the abandonment of such holes, all of the rigging and material shall be removed, and the surface where said hole was drilled shall be restored to its former condition as nearly as possible. Upon abandonment of a well site, all wells shall be plugged and all structures removed in compliance with Railroad Commission and United States Army Corps of Engineer regulations. All fills for roads and drill sites shall be removed if requested by the commissioner.
11. (k) Degree of care. Lessee shall use the highest degree of care in conducting operations on tracts leased under this chapter and shall take all proper safeguards to prevent the discharge of any pollutant, including solid waste, and of any hazardous substances. To satisfy these requirements, lessee, at a minimum, must conduct operations as a reasonably prudent operator using standard industry practices and procedures, must satisfy express lease provisions, and must comply with all valid, applicable federal and state regulations.
12. (l) Reporting Pollution. In the event that any pollution, whether cumulative or the result of an isolated event, occurring on a leased tract reaches a level at which it becomes a violation of state and/or federal law, notice of all relevant facts related to such pollution shall be filed by lessee with the General Land Office within 10 business days of lessee's receipt of notification of the violation from the appropriate state and/or federal authorities.
13. (m) Separator required. All wells producing liquids must be produced through an oil and gas separator of ample capacity and in good working order.

Source Note:The provisions of this §201.6 adopted to be effective November 8, 1998, 23 TexReg 11161.