36.22.1408    FINANCIAL RESPONSIBILITY

(1) The owner or operator of any injection well outside the exterior boundaries of Indian reservations must comply with the applicable bonding requirements of ARM 36.22.1308 and this subchapter.

(2) Owners or operators proposing to drill or acquire additional injection wells must provide the individual well bonds described in ARM 36.22.1308(1) as appropriate for the depth of the well unless such additional well(s) are covered under a multiple well UIC bond as provided in this rule. The multiple well bond described in ARM 36.22.1308(1)(b) is not available for injection wells.

(3) Injection well operators may propose an alternative multiple well UIC bond to the board's staff. The staff will review the proposed bond and provide a recommendation for its approval, modification, or rejection by the board at its next available scheduled meeting. In support of its request for a multi-well bond the operator may provide cost estimates for plugging and restoring the surface of wells of the type and in the area to be covered by the bond, the operator's estimate of any residual or salvage value that may reduce the costs of plugging, and any other information the operator wishes to provide. In reviewing a proposed bond, the staff must consider the reasonableness of the cost estimates provided, the compliance history of the operator, the operator's history of promptly plugging unneeded wells, and the financial condition of the operator. Multiple well bonds will be in a minimum amount of $50,000.

(4) The board may accept a letter of credit in lieu of a surety bond or certificate of deposit. A letter of credit must meet the following conditions:

(a) it must be issued by an FDIC-insured, Montana commercial bank;

(b) it must be in an amount equal to the bond otherwise required;

(c) it must be for a term of not less than one year, automatically renewable for additional one year period(s), and irrevocable during its term. The bank issuing the letter of credit must notify the board, by registered or certified mail, not less than 120 days prior to the expiration date of the letter of credit if it does not intend to renew the letter;

(d) the letter of credit will remain in the custody of the board; and

(e) the letter of credit must provide that it is immediately payable in full upon demand by the board if the person on whose behalf the letter is issued fails to properly plug each dry or abandoned well and restore the surface of the location as provided by board rules.

(5) The board may reject a letter of credit and demand other security if it has reason to doubt the solvency of the bank or to believe the obligation of the letter of credit has become impaired. The board may require a financial statement from the principal and proof of solvency of the bank at any time before or after acceptance of the letter of credit.

History: 82-11-111, MCA; IMP, 82-11-111, 82-11-121, 82-11-123, 82-11-124, 82-11-127, 82-11-137, MCA; NEW, 1992 MAR p. 2171 and 1996 MAR p. 1308, Eff. 5/10/96; AMD; 1996 MAR p. 1308, Eff. 5/10/96; AMD, 1997 MAR p. 471, Eff. 3/11/97; AMD; 1998 MAR p. 482, Eff. 2/13/98; AMD, 2000 MAR p. 3542, Eff. 12/22/00; AMD, 2007 MAR p. 350, Eff. 3/23/07.