2014 Kentucky Revised Statutes CHAPTER 349 - COALBED METHANE DEVELOPMENT 349.120 Well operators to execute bonds or blanket bonds in favor of department -- Establishment of coalbed methane well plugging fund -- Operators' civil and criminal liability.
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349.120 Well operators to execute bonds or blanket bonds in favor of
department -- Establishment of coalbed methane well plugging fund -Operators' civil and criminal liability.
(1)
(2)
(3)
When any person submits to the department an application for a permit to drill
a coalbed methane well, or to reopen, deepen, or temporarily abandon any
coalbed methane well which is not covered by a surety bond, the department
shall, except as provided in this section, require from the well operator a bond
in the sum of five thousand dollars ($5,000). The bonds shall be made in favor
of the Department for Natural Resources, conditioned that the wells upon
abandonment shall be plugged in accordance with the administrative
regulations and that all records required by the department be filed as
specified. All bonds shall remain in effect until the plugging of the well is
approved by the department, or the bond is released by the department. Any
well operator in lieu of the bond may file with the department a blanket bond in
a sum of one hundred thousand dollars ($100,000), covering all coalbed
methane wells drilled or to be drilled in the Commonwealth by the principal in
the bond, and the acceptance and approval by the department of the blanket
bond shall be in full compliance with the above provision requiring an individual
well bond. The department may establish a bond in a sum greater than five
thousand dollars ($5,000) for an individual well or blanket bond in sum greater
than one hundred thousand dollars ($100,000) if the department determines
that the particular circumstances of the drilling of the well or wells warrant an
increase in the bond amount. A deposit in cash or a bank-issued irrevocable
letter of credit may serve in lieu of either of the individual well or blanket bonds.
A certificate of deposit, the principal of which is pledged in lieu of a bond and
whose interest is payable to the party making the pledge, may also be
accepted by the department. If an operator is required to post individual well
bonds exceeding a total of five thousand dollars ($5,000) or elects to post a
blanket bond, the certificate of deposit shall be accepted by the department in
lieu of that portion of the amount of the bonds exceeding five thousand dollars
($5,000). The bond or bonds referred to in this section shall be executed by the
well operator as principal and, if a surety bond, by a corporate surety
authorized to do business in the Commonwealth. A deposit in cash shall serve
in lieu of either of the above bonds; all cash bonds accepted by the department
shall be deposited into an interest-bearing account, with the interest thereon
payable to the special agency account known as the coalbed methane well
plugging fund, created in subsection (3) of this section, to be used in
accordance with the purposes described therein.
A successor to the well operator shall post bond, pay a twenty-five dollar ($25)
fee per well to the department, and notify the department in writing in advance
of commencing use or operations of a well or wells. The successor shall
assume the obligations of this chapter as to a particular well or wells and
relieve the original permittee of responsibility under this chapter with respect to
the well or wells. It shall be the responsibility of the selling operator to require
the successor operator to post bond before use or operation is commenced by
the successor and relief of responsibility under this chapter is granted to the
original permittee.
All sums received through the forfeiture of bonds shall be placed in the State
Treasury and credited to a special agency account to be designated as the
coalbed methane well plugging fund, which shall be in an interest-bearing
account with the interest thereon payable to the fund. This fund shall be
available to the department and shall be expended for the plugging of any
abandoned coalbed methane wells coming within the authority of the
department pursuant to this chapter. The plugging of any coalbed methane
wells pursuant to this subsection shall not be construed to relieve the operator
or any other person from civil or criminal liability which would exist except for
the plugging. Any unencumbered and any unexpended balance of this fund
remaining at the end of any fiscal year shall not lapse but shall be carried
forward for the purpose of the fund until expended or until appropriated by
subsequent legislative action.
Effective:July 13, 2004
History:Created 2004 Ky. Acts ch. 65, sec. 24, effective July 13, 2004.
Legislative Research Commission Note (6/20/2005). 2005 Ky. Acts chs. 11, 85,
95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory
references to agencies and officers whose names have been changed in 2005
legislation confirming the reorganization of the executive branch. Such a
correction has been made in this section.
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