(a) Previous to high or opening gauge all free water shall be drawn from the tank until the maximum level of nonmerchantable oil and water shall be at least four inches below the bottom of the outlet connection.

(b) All oil to be gauged and shipped shall be in a marketable condition, i.e., the percentage of bottom sediment and water as shown on test shall not exceed 3 percent, if dehydration or cleaning costs are to be allowed.

(c) Where a tank sample shows a bottom sediment and water content greater than 3 percent and the contents are shipped, the gravity of the wet oil shall be reduced to 3 percent wet gravity and such gravity shall form the payment of the state royalty.

(d) Where an adjustment is made from a wet gravity to another wet gravity or to a dry gravity, the adjustment shall be made by the calculation of the American Petroleum Institute gravity of the oil in the mixture or emulsion or by means of the correction chart published by the Division of State Lands for that purpose, such chart being known as “Gravity of Oil in Mixtures or Emulsions of Oil and Water.” In all adjustments of gravity by calculation, or the use of a correction chart, the specific gravity of the water in the mixture or emulsion shall be considered as 1.0000 at 60 degrees F. unless prior written approval has been secured for another value of specific gravity as determined by tests of the water produced.