Section 10.8 - Assignments, Releases, Reports, Royalty Payments, Inspections, Forfeitures, and Reinstatements(a) Assignments and releases. (1) A lease or permit issued under this chapter may be assigned at any time, unless otherwise stated in the lease or permit, in the manner provided for by TNRC §52.026. The liability of the transferor to properly discharge its obligations under the lease shall pass to the transferee. The commissioner may require the transferee to demonstrate that it has the financial responsibility to properly discharge its obligations under the lease, and may require the transferee to post a bond or provide other security to secure those obligations.(2) After recordation, lessee or permittee shall obtain a certified copy from the county clerk of each recorded assignment covering the state lease or permit. Lessee or permittee shall send such certified copies to GLO within 90 days of the date of recordation, accompanied by the filing fee prescribed in § 3.31 of this title (relating to Fees).(3) An assignment of any lease except a state agency or a Relinquishment Act lease is not effective until a certified copy of such assignment has been filed by the GLO. Failure to file a certified copy of an assignment of any lease, including a state agency or a Relinquishment Act lease, shall subject the lease to forfeiture. An assignment shall not have the effect of releasing the assignor from any liability incurred or claim previously accrued in favor of the state.(4) The lessee or permittee may release the lease or permit back to the state at any time. To release a lease or permit, a lessee or permittee must record the release in each county where the state tract is located and mail a certified copy of each recorded release to GLO accompanied by the filing fee prescribed in § 3.31 of this title (relating to Fees).(5) A release is not effective until a certified copy of the release is filed by the GLO. A release shall not have the effect of releasing lessee or permittee from any liability incurred or claim previously accrued in favor of the state.(b) Reports and payment of royalties. (1) A log, sample analysis, or other information obtained from each test drilled on the area covered by the lease or permit shall be filed with the GLO. Lessee or permittee shall furnish annually on the anniversary date of the lease or permit a map or plat showing all activities on the state lease or permit. In addition, an evaluation map or plat shall be filed in the GLO within 90 days after any drilling program shall have been completed or abandoned, and the correctness of such map shall be sworn to by lessee or permittee or his representative. The map or plat shall show geologic formations penetrated, the depth, thickness, grade, and mineral character of all ore bodies, the water-bearing strata, the elevation and location of all test holes, and other pertinent information.(2) Unless the lease provides otherwise, on or before the last day of the month after the month when production started, the lessee shall file a production and royalty report showing production and royalty for the calendar month when production started. Subsequently, a production and royalty report shall be filed before the last day of each month for production from the preceding calendar month. If more than one mineral is produced under the lease, the GLO may require a production and royalty report for each mineral. Such report shall be on a form prescribed and furnished by the GLO and shall show: (A) the type and amount of each mineral produced during the preceding month;(B) if any leased mineral has been sold during the preceding month, then: (i) the type and amount of each mineral sold;(ii) the purchaser for each type of mineral sold and if the purchaser is in any way related to the lessee, the details of such relationship or affiliation;(iii) the selling price of each mineral as shown by copies of smelter, mint, mill, or refinery, returns, sale receipts, invoices, or other sale documents attached thereto; and(iv) the method and figures used by lessee to calculate the value of each mineral sold as shown by any relevant documents, records, or schedules;(C) if any leased mineral has been used as permitted under the terms of the lease during the preceding month, then: (i) the type and amount of each mineral used; and(ii) the method and figures used by lessee to calculate the value of each mineral used as shown by any relevant documents, records, or schedules.(3) The commissioner may require the lessee to install and use any reasonable method of measuring the amount of minerals reported as mined or produced or sold from the leased premises.(4) Unless otherwise provided by the lease, royalty payments are to be received in the GLO on or before the last day of the month following the month in which leased minerals are produced. However, for the purposes of this paragraph only, "produced" shall mean actually sold or used by lessee. Upon termination, forfeiture, or release of the lease, unpaid royalty for any stockpiled leased minerals shall be due and payable within one month of the effective date of said termination, forfeiture, or release.(5) Except when royalty is taken in-kind, and subject to subparagraphs (A) - (F) of this paragraph, relating to electronic funds transfer, lessees may pay royalties and other monies due by cash or check, money order, or sight draft made payable to the commissioner. Lessees may also pay by electronic funds transfer or in any manner that may be lawfully made to the state comptroller. Information regarding alternative payment methods may be obtained from the GLO Royalty Management Division. Payors are required to make payments by electronic funds transfer in compliance with 34 Texas Administrative Code Chapter 15 in the following circumstances: (A) For leases executed or amended after May 11, 1989, but before September 1, 1991, payors that have made over $500,000 in a category of payments, defined in subparagraph (D) of this paragraph, to the GLO during the preceding state fiscal year shall make payments of $10,000 or more in the current fiscal year for those leases and in that category by electronic funds transfer.(B) For leases executed or amended after August 30, 1991, but before June 9, 1995, payors that have made over $250,000 in a category of payments, defined in subparagraph (D) of this paragraph, to the GLO during the preceding state fiscal year shall make payments of $10,000 or more in the current fiscal year for those leases and in that category by electronic funds transfer.(C) For leases executed or amended on or after June 9, 1995, payors that have made over $25,000 in a category of payments, defined in subparagraph (D) of this paragraph, to the GLO during the preceding state fiscal year shall make all payments in the current fiscal year for those leases and in that category by electronic funds transfer.(D) For purposes of subparagraphs (A) - (C) of this paragraph, each of the following is a separate category of payments: (i) royalties (including shut-in and minimum royalties);(ii) penalties and interest (A lease issued under TNRC Chapter 53, Subchapter C, shall be subject to penalties and interest as described in TNRC §52.131(e) - (j));(iii) other payments to the state agency, excluding interest and extraordinary payments such as payments made in settlement of litigation.(E) The GLO anticipates that those payors that have exceeded the threshold sums set out in subparagraphs (A) - (C) of this paragraph in the preceding state fiscal year will also exceed those sums in the current state fiscal year. The application of subparagraphs (A) - (C) of this paragraph to a specific payor may be waived at the commissioner's discretion to the extent allowed by law, upon a showing that a payor will not exceed the threshold sums set out in subparagraphs (A) - (C) of this paragraph in the current fiscal year, or for other good cause.(F) The GLO will notify each payor to whom this paragraph applies in compliance with 34 Texas Administrative Code Chapter 15.(c) Inspections.(1) The books, accounts, records, contracts, and other documents pertaining to production, transportation, sale, and marketing of minerals leased shall at all times be subject to inspection and examination by the commissioner, or his authorized representative, and copies of such records shall be furnished to the commissioner upon request.(2) All mining, milling, and processing operations shall be subject at any time to inspection by the commissioner or his authorized representative and copies of records or other documents pertaining to these operations shall be furnished to the commissioner upon written request.(3) A contract, agreement or amendment filed in the land office shall be treated as confidential unless otherwise authorized by the lessee.(d) Forfeiture and reinstatement. (1) If the owner of a lease or permit shall fail or refuse to make payment of any sum due, or if the owner or his authorized agent should knowingly make any false return or false report concerning the lease or permit, or if the owner or his agent should refuse the commissioner or his authorized representative access to the records or other data pertaining to operations under the lease or permit, or if any of the material terms of the lease or permit should be violated, the lease or permit shall be subject to forfeiture by the commissioner.(2) A lease or permit shall be considered forfeited when it has been endorsed "forfeited" and the endorsement signed by the commissioner.(3) Upon forfeiture, the commissioner will give written notice to the lessee or permittee stating the date of forfeiture and the reasons for the forfeiture. The notice of forfeiture will be sufficient if mailed to the last known address of the lessee or assignee shown of record in the GLO.(4) A forfeiture may be set aside and all rights under a lease or permit may be reinstated before the rights of another party intervene, upon satisfactory evidence to the commissioner of future compliance with the provisions of the law, of the lease or permit, and of any rules adopted relative to the lease or permit, and any conditions placed upon the reinstatement. Lessee or permittee shall offer the evidence required for reinstatement within 30 days after the date the notice of forfeiture was mailed and after such 30 days shall have no future right of reinstatement. If a lease or permit issued under § 10.5 of this title (relating to Mining Leases on Relinquishment Act Lands) is not reinstated within the 30-day period, the surface owner is entitled to act as the state's agent for leasing the minerals.(e) Reduction of penalty and/or interest. The School Land Board may reduce penalties and/or interest assessed under the Texas Natural Resources Code, § 52.131, and/or any other penalties or interest relating to delinquent or unpaid royalties that have been assessed by the commissioner in the following circumstances: (1) when a lessee brings a deficiency to the General Land Office's attention voluntarily; and/or(2) when a lessee and the General Land Office have reached an agreement regarding the reduction as part of a resolution of an outstanding audit issue.31 Tex. Admin. Code § 10.8
The provisions of this §10.8 adopted to be effective March 22, 1989, 14 TexReg 1280; amended to be effective May 26, 1992, 17 TexReg 3473; amended to be effective April 27, 1994, 19 TexReg 2959; amended to be effective February 5, 1998, 23 TexReg 782; amended to be effective July 11, 2004, 29 TexReg 6308; amended to be effective December 10, 2009, 34 TexReg 8776