Rules & Regulations of the State of Tennessee
Title 0400 - Environment and Conservation
Subtitle 0400-52 - Drilling, Re-Entering, Plugging and Abandoning Exploratory and Exploitation Oil and Gas Wells (Transferred from 1040-02)
Chapter 0400-52-01 - Bond (Transferred from 1040-02-01)
Section 0400-52-01-.01 - AMOUNT OF PLUGGING BOND

(1) A Plugging Bond is required to be in force for a well from the time a drilling or re-entry well permit is granted until the well is plugged and abandoned. The bond shall be for the sum of $2000 for wells from 0 to 2500 feet in depth; $3000 for wells that are deeper than 2500 feet, but less than or equal to 5000 feet in depth; for all wells deeper than 5000 feet the bond shall increase $3000 at the rate of $1.00 for every foot deeper than 5000 feet. The bonds shall be written in such a manner that the Principal and Bonding Agent hereto are firmly bound to the Department, jointly and severally, for the payment of the full penal sum of the bond so that the well shall be plugged and abandoned in accordance with the rules and regulations of the Board. An individual well bond shall be released upon the proper plugging of the well and the filing with the Supervisor of a Plug and Abandon Report (Form CN-0217), driller's log, downhole surveys, well cuttings and cores, and other data as required, or if the permit has been canceled because of lack of proper activity.

(2) The Bonding Agent may notify the Supervisor in writing of its desire to terminate its liability under the bond by giving written notice to the Supervisor. The Supervisor shall thereupon require the Principal in the bond to file a new bond, or to effect a change of operators on the well within 60 days. If the Principal can no longer be contacted, then any interested party may seek a change of operators on the well in accordance with subparagraph (2)(a) of Rule 0400-52-02-.02. If a new bond is filed by the Principal, or a change of operators is approved by the Supervisor, liability under the original bond shall cease and terminate as to acts and operations occurring after the effective date of the new bond or approval of the change of operators, and the original bond shall be released upon written request by the Bonding Agent. If a new bond is not filed within the 60 days, or a change of operators has not been approved, the Supervisor shall revoke the permit secured by the bond and require the Principal to plug the well in accordance with the rules and regulations of the Board. In the event of the failure of the Principal to plug the well, the supervisor may issue a notice of non-compliance to the Principal and the Bonding Agent requiring the Bonding Agent either to cause the well to be plugged, or forfeit the amount of the bond to the Department. The Bonding Agent shall then have 60 days in which to plug the well. If the well has not been plugged within that time limit, then a notice of forfeiture shall be issued, as provided for under Rule 0400-52-01-.06. The Bonding Agent shall then have 21 days in which to petition the Board for a hearing relative to the bond forfeiture, pursuant to the Administrative Procedures Act, T.C.A. § 4-5-101 et seq. If a hearing is requested, no further action shall be taken against the bond until such hearing has taken place and a final order given by the Board. If the well is plugged in the interim, then the notice of forfeiture shall be canceled and the bond released.