N.M. Admin. Code § 19.11.2.18 - FINANCIAL ASSURANCE FOR GEOTHERMAL WELLS AND FACILITIES
Upon notification by the division that it has approved a new geothermal well or facility permit, a geothermal well or facility permit modification or a geothermal well or facility renewal permit but prior to issuing the permit, an applicant shall submit acceptable financial assurance for the geothermal well or facility affected by the permit action.
A. The applicant shall submit acceptable
financial assurance in the amount of the plugging and abandonment cost for each
geothermal well being permitted or, if permitting a geothermal facility, the
estimated closure cost of the entire facility, including the plugging and
abandonment costs for all geothermal wells and pits. The geothermal well's
estimated plugging and abandonment cost or the geothermal facility's estimated
closure cost shall be the amount provided in the plugging and abandonment or
closure plan the applicant submitted with its application unless the division
determines that such estimate does not reflect a reasonable and probable well
plugging and abandonment or facility closure cost, in which event, the division
shall determine the estimated well plugging and abandonment or facility closure
cost and shall include such determination in its draft permit. If the applicant
disagrees with the division's determination of estimated well plugging and
abandonment or facility closure cost, the applicant may request a hearing as
provided in
19.11.3.8 NMAC. If the applicant
so requests, and no other person files a request for a hearing regarding the
application, the hearing shall be limited to determination of well plugging and
abandonment or facility estimated closure cost.
B.
Terms of financial assurance.
The financial assurance shall be on division-prescribed forms, payable to the
state of New Mexico and conditioned upon the geothermal well's or facility's
proper operation, and proper well plugging and abandonment or facility closure
in compliance with state of New Mexico statutes, division rules and the
geothermal well or facility permit terms. The permittee shall notify the
division of a material change affecting the financial assurance within 30 days
of discovery of such change.
C.
Forfeiture of financial assurance. The division shall give the
permittee and any surety 20 days' notice and an opportunity for a hearing prior
to forfeiting financial assurance.
D.
Forms of financial assurance.
The division may accept the following forms of financial assurance.
(1)
Surety bonds. A surety bond
shall be executed by the applicant and by a corporate surety licensed to do
business in the state, and shall be non-cancelable.
(2)
Letters of credit. A letter
of credit shall be issued by a bank organized or authorized to do commercial
banking business in the United States, shall be irrevocable for a term of not
less than 10 years and shall provide for automatic renewal for successive, like
terms upon expiration, unless the issuer has notified the division in writing
of non-renewal at least 90 days before its expiration date. The letter of
credit shall be payable to the state of New Mexico in part or in full upon
receipt from the director or the director's authorized representative of demand
for payment accompanied by a notice of forfeiture.
(3)
Cash accounts. An applicant
may provide financial assurance in the form of a federally insured or
equivalently protected cash account or accounts in a financial institution,
provided the operator and the financial institution shall execute as to each
such account a collateral assignment of the account to the division, which
shall provide that only the division may authorize withdrawals from the
account. In the event of forfeiture pursuant to Subsection C of
19.11.2.18 NMAC, the division may,
at any time and from time to time, direct payment of all or part of the balance
of such account (excluding interest accrued on the account) to itself or its
designee for the well's plugging and abandonment or facility's
closure.
E.
Replacement of financial assurance.
(1) The division may allow a permittee to
replace existing forms of financial assurance with other forms of financial
assurance that provide equivalent coverage.
(2) The division shall not release existing
financial assurance until the permittee has submitted, and the division has
approved, an acceptable replacement.
Notes
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