25 Pa. Code § 78.309 - Phased deposit of collateral

(a) Operators.

(1) Eligibility. An operator who had a phased deposit of collateral in effect as of November 26, 1997, may maintain that bond for wells requiring bonding, for new well permits and for wells acquired by transfer.

(i) An operator may not have more than 200 wells.

(ii) Under the following schedule, an operator shall make a deposit with the Department of approved collateral prior to the issuance of a permit for a well or the transfer of a permit for a well, and shall make subsequent annual deposits and additional well payments. For the purpose of calculating the required deposit, all of the operator's wells are included in the number of wells.

Number of Wells	Annual Deposit	Per Additional Well
1-10 with no intention to operate more than 10	$50/well	N.A.
11-25 or 1-10 and applies for additional well permits	$1,150	$ 150
26-50	$1,300	$ 400
51-100	$1,500	$ 400
101-200	$1,600	$1,000

(iii) An operator shall make the phased deposits of collateral as required by the bond.

(2) Termination of eligibility. An operator is no longer eligible to make phased deposits of collateral when one or more of the following occur:

(i) The operator shall fully bond the wells immediately, if an operator has more than 200 wells.

(ii) If the operator misses a phased deposit of collateral payment, the operator shall do one of the following:

(A) Immediately submit the appropriate bond amount in full.

(B) Cease all operations and plug the wells covered by the bond in accordance with the plugging requirements of section 210 of the act (58 P. S. § 601.210).

(b) Individuals.

(1) Eligibility.

(i) An individual who seeks to satisfy the collateral bond requirements of the act by submitting phased deposit of collateral under section 215(d.1) of the act (58 P. S. § 601.215(d.1)), may not drill more than ten new wells per calendar year. A well in which the individual has a financial interest is to be considered one of the wells permitted under this section. A partnership, association or corporation is not eligible for phased deposit of collateral under this subsection.

(ii) The individual shall deposit with the Department $500 per well in approved collateral prior to issuance of a new permit.

(iii) The individual shall deposit 10% of the remaining amount of bond in approved collateral in each of the next 10 years. Annual payments shall become due on the anniversary date of the issuance of the permit, unless otherwise established by the Department. Payments shall be accompanied by appropriate bond documents required by the Department.

(iv) The individual shall make the phased collateral payments as required by the bond.

(2) Termination of eligibility. If the individual misses a phased deposit of collateral payment, the individual will no longer be eligible to make phased deposits of collateral and shall do one of the following:

(i) Immediately submit the appropriate bond amount in full.

(ii) Cease operations and plug the wells covered by the bond in accordance with the plugging requirements of section 210 of the act.

(c) Interest earned. Interest earned by collateral on deposit by operators and individuals under this section shall be accumulated and become part of the bond amount until the operator completes deposit of the requisite bond amount in accordance with the schedule of deposit. Interest earned by the collateral shall be retruned to the operator or the individual upon release of the bond. Interest may not be paid for postforfeiture interest accruing during appeals and after resolution of the appeals, when the forfeiture is adjudicated, decided or settled in favor of the Commonwealth.

Notes

25 Pa. Code § 78.309

The provisions of this § 78.309 adopted July 28, 1989, effective 7/29/1989, 19 Pa.B. 3229; amended December 16, 1994, effective 12/17/1994, 24 Pa.B. 6284; amended March 30, 2001, effective 3/31/2001, 31 Pa.B. 1736.

This section cited in 25 Pa. Code § 78.303 (relating to form, terms and conditions of the bond).