Current through Register Vol. 47, No. 17, September 10, 2024
a.
When Financial Assurance Reverts to Operators. The Director will
release part or all of an Operator's Financial Assurance, including any accrued
interest from a Cash Bond, if the Operator submits a Form 3A requesting release
of the Financial Assurance, and any of the following conditions have been met:
(1)
Full Compliance. The
Director determines that an Operator has fully complied with all of its
statutory and regulatory obligations for Plugging and Abandonment, Remediation,
and Reclamation of all Oil and Gas Facilities subject to the Operator's control
pursuant to the Commission's Rules;
(2)
Transfer of Operatorship.
The Director approves a Form 9 - Subsequent pursuant to Rule 218.g.(4)
certifying that one or more Buying Operator(s) have filed sufficient
replacement Financial Assurance for all Wells, Oil and Gas Locations, and Oil
and Gas Facilities subject to the Operator's control;
(3)
Other Facilities and
Operations. The Operator meets the requirements for release of Financial
Assurance held for a specific category of facility or operation identified in
Rule 703 or for release of a Surface Owner protection bond pursuant to Rule
704.c; or
(4)
Single Well
Financial Assurance for Wells. The Operator fully Plugs and Abandons and
Reclaims a Well that has an associated Single Well Financial
Assurance.
(5)
Abandonment of
Permit without Construction. The Operator abandons a permit for a Well,
Oil and Gas Location, or Oil and Gas Facility without disturbing the surface or
otherwise constructing the applicable facility, and files a Form 4, Sundry
Notice to formally request abandonment of the permit and a field inspection
confirms no disturbance or construction occurred.
b.
Procedure for Director to Access
Financial Assurance. If an Operator fails to fulfill its statutory and
regulatory obligations for Plugging and Abandonment, Remediation, and
Reclamation, the Director will suspend the Operator's Form 1 and Form 10,
Certificate of Clearance and will file an application for a Financial Assurance
hearing pursuant to Rule 503.g.(11) to claim the Operator's Financial
Assurance.
(1)
Hearing
Procedures. The Secretary will serve notice of the Director's hearing
application on the Operator and, where applicable, any applicable third-party
provider of the Financial Assurance pursuant to Rule 504.
A. The Operator, third-party provider of
Financial Assurance, and any other Affected Person may petition to participate
in the hearing pursuant to Rule 507.
B. If no petition is filed, the matter may be
resolved as an uncontested matter on the Commission's consent agenda pursuant
to Rules 508 & 519.
C. At
hearing, the Commission has discretion to order appropriate relief, including
but not limited to permanently revoking the Operator's license to conduct Oil
and Gas Operations in Colorado.
(2)
Director's Action to Claim
Financial Assurance Pursuant to Commission Order. If the Commission
approves the Director's application to claim the Operator's Financial
Assurance, the Director will:
A. Transfer any
Cash Bond to the Oil and Gas Conservation and Environmental Response
Fund;
B. Call any Surety Bond or
Letter of Credit held by a third party for the benefit of the Commission and
deposit the called funds in the Oil and Gas Conservation and Environmental
Response Fund;
C. Foreclose upon
any liens or otherwise secured real or physical property held as a form of
Financial Assurance and deposit the foreclosed funds in the Oil and Gas
Conservation and Environmental Response Fund; and
D. Take any other actions necessary to
liquidate and transfer any other assets held as Financial Assurance into the
Oil and Gas Conservation and Environmental Response Fund.
c.
Recalcitrant Bond
Providers. If a third-party provider of Financial Assurance fails to
comply with the terms of a financial instrument, or with a Commission order
calling a Surety Bond, Letter of Credit, or other form of Financial Assurance,
the Director may designate that third-party provider to be an unacceptable
provider. The Director will maintain a list of all unacceptable Financial
Assurance providers on the Commission's website.
(1)
Reinstatement of Unacceptable
Third-Party Providers. The Director will not accept any new Financial
Assurance that an Operator seeks to provide through an unacceptable provider
until the third-party provider applies for a hearing before the Commission
pursuant to Rule 503.g.(11) and obtains an order of reinstatement from the
Commission.
(2)
Suits to
Recover Financial Assurance. The Commission may file suit pursuant to
§
34-60-109, C.R.S., to recover
Financial Assurance based on a valid Commission order claiming the Financial
Assurance pursuant to Rule 706.b.(2).
d.
Refund of Claimed Financial
Assurance. If any portion of an Operator's Financial Assurance that is
claimed pursuant to Rule 706.b is not needed to cover the costs of Plugging and
Abandonment, Reclamation, and Remediation of an Orphaned Site, the Director
will refund the remainder of the Financial Assurance to the entity that
provided the Financial Assurance. The Director may claim an overhead recovery
fee of 10% of the funds as direct costs charged against any Financial Assurance
that would otherwise be refunded to the entity that provided the Financial
Assurance.
e.
Procedure for
Operator to Pursue Release of Financial Assurance. If the Director or
the Commission fails to timely release all or part of an Operator's Financial
Assurance after the Operator has satisfied its requirements pursuant to Rule
706.a, the Operator may file an application for a Financial Assurance hearing
pursuant to Rule 503.g.(11).
