Ariz. Admin. Code § R12-7-103 - Bond

A. An operator shall file a performance bond with the Commission before drilling a new well, re-entering an abandoned well, or assuming responsibility as the operator of an existing well. Choosing one of the following options, an operator shall provide a performance bond for each well or a blanket performance bond payable to the Oil and Gas Conservation Commission, State of Arizona and conditioned upon the faithful performance by the operator of the duty to drill each well, plug each dry or abandoned well, repair each well causing waste or pollution, maintain and restore each well site and otherwise act in a manner that is consistent with A.R.S. Title 27 Chapter 4 and this Chapter:

1. For individual wells, an operator shall provide a $10,000 bond for each well drilled to a total depth of 10,000 feet or less or a $20,000 bond for each well drilled deeper than 10,000 feet, or

2. For multiple wells, an operator shall provide one of the following blanket bonds to cover all wells:

a. $25,000 for 10 or fewer wells;

b. $50,000 for more than 10 but fewer than 50 wells; or

c. $250,000 for 50 or more wells.

B. An operator shall provide a bond in the form of a surety bond, executed by the operator as principal and a corporate surety, authorized to do business in Arizona; a certified check; or a certificate of deposit at a federally insured bank, authorized to do business in Arizona.

C. Transfer of property does not release the bond. If an operator plans to transfer a property and desires release from the bond, the following rules apply:

1. The operator shall notify the Commission in writing of the proposed transfer, providing the location of each well, the date and number of each permit to drill, and the name, address, and telephone number of the proposed transferee;

2. The operator shall obtain from the proposed transferee a declaration to the Commission in writing, accepting the transfer and responsibility for each well. As the new operator, the proposed transferee shall submit a new bond or bonds unless the transferee has previously provided a blanket bond that complies with subsection (A)(2);

3. If the Commission approves the transfer, the transferor is released from all responsibility with respect to the well or wells, and the Commission shall notify the transferor and the bonding company in writing of the release.

Notes

Ariz. Admin. Code § R12-7-103

Former Rule 102; Former Section R12-7-103 renumbered and amended as Section R12-7-104, former Section R12-7-102 renumbered and amended as Section R12-7-103 effective September 29, 1982 (Supp. 82-5). Amended effective January 19, 1994 (Supp. 94-1). Amended by final rulemaking at 11 A.A.R. 2948, effective September 10, 2005 (Supp. 05-3).