(a) Application for sulphur production agreement. A proposed sulphur unit agreement shall set out:      
        (1) the total acreage in the unit, the number of state acres in the unit, and number of privately owned acres in the unit;       
        (2) a listing of the leases included within the proposed unit and recording information for such leases in the public records;       
        (3) a plat outlining the entire unit and showing in red the state acreage included in the unit;       
        (4) how production is to be allocated to each lease; and       
        (5) for each state lease, the state's royalty interest and any costs or deductions allowed against that interest.       
      (b) Approval of unit agreement.      
        (1) Any sulphur unit agreement which proposes to commit royalty interests in PSF lands or state agency lands shall be submitted to the SLB pooling committee for examination, investigation, and presentation to the SLB or the appropriate board for lease.       
        (2) Upon determination by the SLB that the unit agreement applied for is in the best interests of the state, the unitization will be approved.       
        (3) Any unit agreement which covers lands leased for sulphur under §10.5 of this title (relating to Mining Leases on Relinquishment Act Lands) shall be executed by the surface owner before consideration by the SLB. Any such unit agreement must be approved by the SLB under this section before it is effective.       
        (4) Any sulphur unit agreement which proposes to commit royalty interests in state lands or areas other than PSF lands must be approved by the appropriate board for lease and must be found to be in the best interests of the state.       
      (c) Provisions of unit agreement. A sulphur unit agreement may contain the following provisions:      
        (1) that operations incident to the drilling of a well upon any portion of the unit shall be deemed for all purposes to be the conduct of such operations upon each tract in the unit;       
        (2) that the production allocated by the agreement to each tract included in a unit shall, when produced, be deemed for all purposes to have been produced from such tract;       
        (3) that the state's royalty interest shall be paid only on that portion of the production from the unit which is allocated to the tract in accordance with the agreement;       
        (4) that each lease included in the unit shall remain in effect so long as the agreement remains in effect, and that upon termination of the agreement each lease shall thereafter continue in effect under its own terms and provisions;       
        (5) such other terms, conditions, and provisions as may be deemed to be in the best interest of the state.       
      (d) Rule of construction. No term, condition, or provision of an approved unit agreement shall be read to burden an interest of the state with any cost, liability, or be read to otherwise adversely impact upon the state's interest unless such burden or adverse impact was expressly raised before and approved by the SLB or appropriate board for lease.     
     Source Note:        The provisions of this §10.6 adopted to be effective March 22, 1989, 14 TexReg 1280; amended to be effective December 10, 2009, 34 TexReg 8776