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-.02 - BLANKET PLUGGING BOND

(1) In lieu of an individual bond per well, any well operator may file with the Supervisor a blanket bond in the sum of $20,000 covering a maximum of 10 wells from 0 to 5000 feet in depth; $30,000 covering a maximum of 10 wells that are deeper than 5000 feet, but are less than or equal to 10,000 feet in depth; and no blanket bonds for wells deeper than 10,000 feet either drilled or to be drilled by the Principal in the bond at any one time. Additional wells may be covered by the bond only if wells originally covered by the bond are plugged or transferred to another operator, on a one-for-one basis with the wells to be added to the bond. Otherwise, an additional bond shall be filed for each additional group of 10 wells. The terms of such blanket bonds shall be in full compliance with the requirements for an individual well bond. A blanket bond shall be released upon the proper plugging of all wells of the operator (Principal) covered by the bond, and the filing with the Supervisor of the Plug and Abandon Reports, driller's logs, downhole surveys, well cuttings and cores, and other data as required for such wells. A blanket bond may be canceled by the Bonding Agent, notifying the Supervisor in writing, delivered personally or by registered mail, that the operator is no longer authorized by the Bonding Agent to obtain permits under said bond. If or when all wells permitted under said bond have been plugged and abandoned according to the rules and regulations of the Board, or existing permits have been canceled because of lack of proper activity, the Supervisor shall release the bond.

(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(s) within 60 days. If the Principal can no longer be contacted, then any interested party may seek a change of operators on the well(s) 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 on all wells covered by the bond, 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 changes 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 on all wells covered by the bond, the Supervisor shall revoke the permit(s) secured by the bond and require the Principal to plug the well(s) in accordance with the rules and regulations of the Board. In the event of the failure of the Principal to plug the well(s), the Bonding Agent may either cause the well(s) to be plugged, or forfeit the amount of the bond to the Department. This action shall be initiated by the issuance of a notice of noncompliance, as provided for under Rule 0400-52-01-.07. The Bonding Agent shall then have 60 days in which to plug the well(s). If the well(s) have 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(s) are plugged in the interim, then the notice of forfeiture shall be canceled and the bond released.