Code of Colorado Regulations
400 - Department of Natural Resources
404 - Oil and Gas Conservation Commission
2 CCR 404-1 - PRACTICE AND PROCEDURE
Section 707 - REVIEW OF FINANCIAL ASSURANCE

Universal Citation: 2 CO Code Regs 404-1 ยง 707

Current through Register Vol. 47, No. 17, September 10, 2024

a. Director's Review of Financial Assurance.

(1) Annual Review. Beginning July 1, 2023, the Director will conduct a review of every registered Operator's Financial Assurance at least once every fiscal year to ensure that the Operator is in compliance with its approved Financial Assurance Plan and that the Operator continues to satisfy the eligibility requirements for the Option under which its Financial Assurance Plan was approved. The Director will document the results in writing of every annual review, and make the results available to the public on the Commission's website.
A. The Director's review may include whether the Operator's Financial Assurance should be updated to reflect inflation.

B. The Director's review may include the Operator's insurance coverage and whether any Financial Assurance the Operator has provided is sufficient to address the Operator's Remediation obligations under the Commission's 900 Series Rules.

C. The Director's review will include the verification of the existence of Financial Assurance instruments, confirmation that required restrictions are applied, verification of balances, and confirmation that the Commission is authorized to access the funds.

D. If the Director determines that an Operator has not provided adequate Financial Assurance pursuant to the Commission's 700 Series Rules or is not in compliance with the Operator's approved Financial Assurance Plan, the Director will notify the Operator in writing and provide a reasonable timeframe for the Operator to cure the deficiency. The Director may also require the Operator to file a revised Financial Assurance Plan pursuant to Rule 702.b.(4).

E. If the Operator disagrees with the Director's determination, the Operator may file an application for a Financial Assurance hearing pursuant to Rule 503.g.(11).

(2) Discretionary Review. If the Director has reasonable cause to believe that the Commission may become burdened with the costs of fulfilling an Operator's Plugging and Abandonment, Reclamation, or Remediation obligations under the Act or the Commission's Rules because the Operator has demonstrated a pattern of non-compliance with the Commission's Rules or other unique circumstances, the Director may file an application for a Financial Assurance hearing pursuant to Rule 503.g.(11) to obtain the Commission's approval of a plan for the Operator to provide additional Financial Assurance beyond what would otherwise be required under the Commission's 700 Series Rules.

b. Commission's Review of Financial Assurance.

(1) Regular Review. If an Operator's Commission-approved Financial Assurance Plan requires regularly scheduled Commission review during a hearing, the Operator will seek a Financial Assurance hearing pursuant to Rule 503.g.(11) in accordance with the terms of the Order approving the Financial Assurance Plan.

(2) Commission's Own Motion.
A. At any time, the Commission may commence a Financial Assurance hearing for any Operator on its own motion pursuant to Rule 503.a.

B. Procedure for Commission Hearing.
i. Notice. If the Commission commences a hearing on its own motion pursuant to this Rule 707.b.(2), the Secretary will provide notice to the Operator pursuant to Rule 504.b.(10).B.

ii. Evidence. The Operator will submit all information requested by the Commission into the evidentiary record for the hearing pursuant to Rule 503.g.(11), including but not limited to information regarding the status and production of its Wells, its present Financial Assurance, and relevant metrics of its financial status.

iii. Financial Assurance Plan.The Commission may require an Operator to submit a Financial Assurance Plan pursuant to Rule 702.b prior to the Financial Assurance hearing.

(3) Commission Order. The Commission's final order regarding the Operator's Financial Assurance may require an Operator to provide additional Financial Assurance beyond what is ordinarily required by the Commission's Rules based on the unique circumstances of the Operator, if those circumstances demonstrate a risk of the Operator being unable to comply with its obligations to Plug and Abandon Wells, perform proper Reclamation, or perform proper Remediation.

Disclaimer: These regulations may not be the most recent version. Colorado may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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