Wyoming Administrative Code
Agency 020 - Environmental Quality, Dept. of
Sub-Agency 0011 - Water Quality
Chapter 24 - Class VI Injection Wells and Facilities Underground Injection Control Program
Section 24-26 - Financial Responsibility
Universal Citation: WY Code of Rules 24-26
Current through September 21, 2024
(a) Owners or operators of Class VI wells shall establish, demonstrate, and maintain financial responsibility for all applicable phases of the geologic sequestration project, including complete site reclamation in the event of default. The phases of a geologic sequestration project are:
(i) Permitting/characterization;
(ii) Testing and monitoring, pursuant to
Section
20 of this Chapter;
(iii) Operations, including injection and
well-plugging, pursuant to Sections
18 and 23 of this Chapter;
(iv) Post-injection site care, including
plume stabilization, monitoring, measurement, verification, corrective action,
and other actions needed to ensure that underground sources of drinking water
are not endangered from the time of well-plugging until site closure is
certified by the Administrator and above ground-reclamation is completed,
pursuant to Section 24 of this Chapter; and
(v) Emergency and remedial response pursuant
to Section 25 of this Chapter.
(b) The owner or operator shall develop and annually update in accordance with paragraph (f) of this Section, a written financial assurance cost estimate.
(i) The
financial assurance cost estimate shall include the cost in current dollars of:
(A) Performing corrective action on other
wells in the area of review that require corrective action under Section
13 of this Chapter;
(B) Plugging the injection wells under
Section 23 of this Chapter;
(C)
Post-injection site care and site closure under Section 24 of this
Chapter;
(D) Testing and monitoring
under Section
20 of this Chapter; and
(E) Emergency and remedial response under
Section 25 of this Chapter.
(ii) The financial assurance cost estimate
shall consider the following events:
(A)
Contamination of underground sources of water including, drinking water
supplies;
(B) Mineral rights
infringement;
(C) Single
large-volume release of carbon dioxide that impacts human health and safety or
that causes ecological damage;
(D)
Low-level leakage of carbon dioxide to the surface that impacts human health
and safety or that causes ecological damage;
(E) Storage rights infringement;
(F) Property and infrastructure damage,
including changes to surface topography and structures;
(G) Entrained contaminant releases of
contaminants other than carbon dioxide;
(H) Accidents and unplanned events;
(I) Well capping and permitted abandonment;
and
(J) Removal of above-ground
facilities and site reclamation.
(iii) The owner or operator shall consider
the Risk Activity Matrix in Appendix A of this Chapter to develop the financial
assurance cost estimate.
(iv) The
financial assurance cost estimate shall be based upon a multidisciplinary
analytical framework such as Monte Carlo or other commonly accepted stochastic
modeling tools.
(A) Cost curves shall combine
risk probabilities, event outcomes, and damages assessment to calculate
expected losses under a series of events.
(B) For all cases of potential damages, the
probability distributions should be identified for 50 percent, 95 percent, and
99 percent probabilities of occurrence.
(v) The owner or operator shall perform the
financial assurance cost estimate for each phase separately.
(vi) The owner or operator shall base the
financial assurance cost estimate on the costs to the regulatory agency of
hiring a third party (that is not within the corporate structure of the owner
or operator) to perform the required activities.
(vii) The financial assurance cost estimate
shall account for the entire area of review delineated pursuant to Section
13 of this Chapter.
(viii) The owner or operator shall submit an
updated financial assurance cost estimate to the Administrator annually within
thirty (30) days of the anniversary date when the original financial assurance
cost estimate was submitted.
(c) The financial responsibility instruments used shall be from the following list of qualifying instruments and shall be submitted on a Wyoming Department of Environmental Quality form:
(i) Irrevocable Trust Funds with
government-backed securities;
(ii)
Surety Bonds;
(iii) Irrevocable
Letter of Credit;
(iv) Cash;
or
(v) Federally Insured
Certificates of Deposit.
(d) The qualifying instruments shall be sufficient to cover the cost of the financial assurance cost estimate required in paragraph (b) of this Section.
(e) The qualifying financial responsibility instruments shall comprise protective conditions of coverage that include at a minimum cancellation, renewal, continuation provisions, specifications on when the provider becomes liable following a notice of cancellation, and requirements for the provider to meet a minimum rating, minimum capitalization, and the ability to pass the bond rating test when applicable.
(i) An owner or operator shall provide that
their financial mechanism may not cancel, terminate or fail to renew except for
failure to pay such financial instrument.
(A)
If there is a failure to pay the financial instrument, the financial
institution may elect to cancel, terminate, or fail to renew the instrument by
sending notice by certified mail to the owner or operator and the
Director;
(B) The cancellation
shall not be final for 120 days after receipt of cancellation notice;
(C) Within sixty (60) days of notice of
cancellation, the owner or operator shall provide to the Director an alternate
financial responsibility demonstration that meets the requirements of
paragraphs (c), (d), (e), (f), and (g) of this Section; and
(D) If an alternate financial responsibility
demonstration is not acceptable (or possible), any funds from the instrument
being cancelled shall be released within sixty (60) days of notification by the
Director.
(ii) Owners or
operators shall renew all financial instruments, if an instrument expires, for
the entire term of the geologic sequestration project. The instrument may be
automatically renewed as long as, at a minimum, the owner or operator has the
option of renewal at the face amount of the expiring instrument.
(iii) Cancellation, termination, or failure
to renew may not occur and the financial instrument shall remain in full force
and effect in the event that on or before the date of expiration:
(A) The Administrator deems the facility
abandoned.
(B) The permit is
terminated, revoked, or a new permit is denied.
(C) Closure is ordered by the Director, a
U.S. district court, or other court of competent jurisdiction.
(D) The owner or operator is named as debtor
in a voluntary or involuntary proceeding under Title 11 (Bankruptcy), U.S.
Code.
(E) The amount due is
paid.
(f) The qualifying financial responsibility instruments are subject to approval by the Director. The use and length of pay-in-periods for trust funds and escrow accounts are also subject to approval by the Director.
(i) No Class VI permit shall be issued until
and unless the Director has considered and approved the financial
responsibility demonstration for all phases of the geologic sequestration
project.
(ii) The Director may
negotiate a satisfactory financial responsibility demonstration or deny a
demonstration.
(iii) The owner or
operator shall provide any updated information related to financial
responsibility instruments on an annual basis, and if there are any changes,
the Director shall evaluate the financial responsibility demonstration and
determine whether the instruments used are adequate. The owner or operator
shall maintain financial responsibility requirements regardless of the status
of the Director's review of the financial responsibility
demonstration.
(iv) The owner or
operator shall provide an adjustment of the financial assurance cost estimate
to the Administrator within sixty (60) days of receiving notice that the
Administrator has determined that a demonstration of financial assurance is not
adequate to cover the cost of corrective action, injection well-plugging,
post-injection site care and site closure, and emergency and remedial
response.
(v) During all phases of
the geologic sequestration project, the owner or operator shall adjust the
financial assurance cost estimate for inflation within sixty (60) days prior to
the anniversary date of the establishment of the financial instruments used to
comply with this Section and provide this adjustment to the Administrator. The
owner or operator shall also provide to the Administrator written updates of
adjustments to the cost estimate within sixty (60) days of any amendments to
the area of review and corrective action plan, the injection well plugging
plan, the post-injection site care and site closure plan, the emergency and
remedial response plan, and mitigation or reclamation costs that the State may
incur as a result of any default by the permit holder.
(vi) Any decrease or increase to the
financial assurance cost estimate shall be subject to approval by the
Administrator. During all phases of the geologic sequestration project, the
owner or operator shall revise the cost estimate no later than sixty (60) days
after the Administrator has approved a request to modify the area of review and
corrective action plan, the injection well-plugging plan, the post-injection
site care and site closure plan, or the emergency and response plan, if the
change in the plan increases the cost. If the change to the plan decreases the
cost, any withdrawal of funds is subject to approval by the Administrator. Any
decrease to the value of the financial assurance instrument is subject to
approval by the Administrator.
(vii) Whenever the current financial
assurance cost estimate increases to an amount greater than the face amount of
a financial instrument currently in use, the owner or operator, within sixty
(60) days after the increase, shall either cause the face amount to be
increased to an amount at least equal to the current financial assurance cost
estimate and submit evidence of such increase to the Administrator, or the
owner or operator shall obtain other financial responsibility instruments to
cover the increase. Whenever the current financial assurance cost estimate
decreases, the face amount of the financial assurance instrument may be reduced
to the amount of the current financial assurance cost estimate only after the
owner or operator has received written approval from the
Administrator.
(g) The owner or operator may demonstrate financial responsibility by using one (1) or multiple qualifying financial instruments subject to the following requirements:
(i) Owners or operators that
propose to demonstrate financial assurance with surety bonds shall meet the
following requirements:
(A) A corporate surety
shall not be considered good and sufficient unless:
(I) It is licensed to do business in the
State;
(II) The estimated bond
amount does not exceed the limit of risk as provided for in W.S. §
26-5-110, nor raise the total of all bonds
held by the applicant under that surety above three (3) times the limit of
risk; and
(III) The surety agrees:
(1.) Not to cancel bond unless the Department
gives prior written approval of a good and sufficient replacement surety with
transfer of the liability that has accrued against the operator on the permit
area, site, or facility;
(2.) To be
jointly and severally liable with the permittee, owner, or operator.
(3.) To provide immediate written notice to
the Department and operator once it becomes unable or may become unable due to
any action filed against it to fulfill its obligations under the
bond.
(B) If
for any reason the surety becomes unable to fulfill its obligations under the
bond, the operator shall provide the required notice. Failure to comply with
this provision shall result in suspension of the permit.
(C) The surety bond shall be submitted on a
Wyoming Department of Environmental Quality form.
(ii) Owners or operators that propose to
demonstrate financial assurance with cash, or government securities, or a
combination of both, shall meet the following requirements:
(A) Securities that are unencumbered shall
only include those that are United States government securities or state
government securities that are acceptable to the Director. Government
securities shall be endorsed to the order of the Department and placed in
possession of the Department. Possession shall be in the form of the cash value
of the irrevocable trust for the full amount of the reclamation obligation and
payable to the Department and federally insured.
(B) An owner or operator shall satisfy the
requirements of this subsection by establishing an irrevocable trust that
conforms to the requirements below and submitting an originally signed
duplicate of the trust agreement to the Director for consideration.
(I) The irrevocable trust shall be submitted
to the Director on the Wyoming Department of Environmental Quality Irrevocable
Trust Form and be signed by the owner, operator, or guarantor as principal and
the financial institution as Trustee, and made payable to the
Department;
(II) The Trustee shall
be a bank organized to do business in the United States that has the authority
to act as a trustee and whose trust operations is regulated and examined by a
federal agency;
(III) The
irrevocable trust shall be cash funded for the full amount of the financial
assurance obligation to be provided in the irrevocable trust before it may be
approved to satisfy the requirements of financial assurance in lieu of a bond.
For purposes of this subsection, "the full amount of the financial assurance
obligation to be provided" means the amount of coverage required to be provided
by paragraphs (b) and (i) of this Section, less the amount of financial
assurance obligation that is being provided by other financial assurance
mechanisms being used to demonstrate financial assurance by the owner,
operator, or guarantor;
(IV) Any
bond may be canceled by the surety only after ninety (90) days written notice
to the Director, and upon receipt of the Director's written consent, which may
be granted only when the requirements of the irrevocable trust have been
fulfilled; and
(V) Irrevocable
trust forfeiture proceedings shall occur only after the Department provides
notice to the owner or operator and trustee pursuant to W.S. 3511-701 that a
violation exists and the Environmental Quality Council has approved the request
of the Director to begin forfeiture proceedings.
(iii) Owners or operators that
propose to demonstrate financial assurance with irrevocable letters of credit
shall meet the following conditions:
(A) The
irrevocable letter of credit shall be payable to the Department in part or in
full upon demand and receipt from the Director of a notice of forfeiture issued
in accordance with paragraph (t) of this Section;
(B) The irrevocable letter of credit shall
not be in excess of ten percent of the issuing or supporting bank's capital
surplus account as shown on a balance sheet liabilities certified by a
certified public accountant;
(C)
The Director shall not accept standby letters of credit;
(D) The Director shall not accept letters of
credit from a bank for any person, on all permits held by that person, in
excess of the limitations imposed by W.S. §
13 - 3402; and
(E) The irrevocable letter of credit shall
provide that:
(I) The bank will give prompt
notice to the owner or operator and the Director of any notice received or
action filed alleging the insolvency or bankruptcy of the bank or alleging any
violations of regulatory requirements that could result in suspension or
revocation of the bank's charter or license to do business;
(II) In the event the bank becomes unable to
fulfill its obligations under the letter of credit for any reason, notice shall
be given immediately to the owner or operator and the Director; and
(III) Upon the incapacity of a bank by reason
of bankruptcy, insolvency, or suspension or revocation of its charter or
license, the owner or operator shall be deemed to be without performance bond
coverage in violation of the Act. The Director shall issue a notice of
violation against any owner or operator who is without bond coverage,
specifying a reasonable period to replace bond coverage, not to exceed ninety
(90) days. During this period the Director or the Director's designated
representative shall conduct weekly inspections to ensure continuing compliance
with other permit requirements, the regulations and the Act. If the notice is
not abated in accordance with the schedule, a cessation order shall be
issued.
(IV) The irrevocable letter
of credit may be cancelled by the surety only after ninety (90) days notice to
the Director, and upon receipt of the Director's written consent, which may be
granted only when the requirements of the bond have been fulfilled.
(F) The irrevocable letter may
only be issued by a bank organized to do business in the U.S. that identifies
by name, address, and telephone number an agent upon whom any process, notice
or demand required or permitted by law to be served upon the bank may be
served.
(I) If the bank fails to appoint or
maintain an agent in this State, or whenever any such agent cannot be
reasonably found, then the Director shall be an agent for such bank upon whom
any process, notice or demand may be served for the purpose of this Chapter. In
the event of any such process, the Director shall immediately cause one copy of
such process, notice or demand to be forwarded by registered mail to the bank
at its principal place of business. The Director shall keep a record of all
processes, notices, or demands served upon him under this paragraph, and shall
record therein the time of such service and his action with reference
thereto.
(II) Nothing herein
contained shall limit or affect the right to serve any process, notice or
demand required or permitted by law to be served upon the bank in any other
manner now or hereafter permitted by law.
(h) The owner or operator shall maintain financial responsibility and resources until:
(i) The Administrator receives the site
closure report and certifies site closure.
(A)
When the conditions of W.S. §
35-11-313(f)(vi)(F) have
been met, the owner or operator may submit a written request to the
Administrator to release the retained financial assurance instruments;
and
(B) The Administrator shall
evaluate the request within sixty (60) days of the receipt of the financial
assurance release request.
(I) If the
Administrator finds the owner or operator has demonstrated the requirements of
W.S. §
35-11-313(f)(vi)(F) have
been met, the Administrator shall prepare a draft recommendation to the
Director to approve the request and provide public notice pursuant to Section
27 of this Chapter.
(II)
Re-submittal of information by an operator for an incomplete demonstration of
the requirements of W.S. §
35-11-313(f)(vi)(F) will
restart the process described in this subsection.
(III) If the Administrator finds the owner or
operator has not demonstrated the requirements of W.S. §
35-11-313(f)(vi)(F) have
been met, the Administrator shall prepare a draft recommendation to the
Director to deny the request.
(C) After receiving public comment and
holding a hearing (if a hearing is held) pursuant to Section 27 of this
Chapter, the Director shall determine whether the operator has demonstrated the
requirements of W.S. §
35-11-313(f)(vi)(F) have
been met.
(I) If the Director finds the owner
or operator has demonstrated the requirements of W.S. §
35-11-313(f)(vi)(F) have
been met, the Director shall notify the owner or operator and request the State
Treasurer to release that portion of the final financial assurance instruments.
The State Treasurer shall then return the financial assurance instruments
constituting that portion of the financial assurance so retained.
(II) If the Director finds the owner or
operator has not demonstrated the requirements of W.S. §
35-11-313(f)(vi)(F) have
been met, the Director shall notify the owner or operator by registered mail
within a reasonable time after the request is filed. The notice shall state the
reasons for denial and shall recommend corrective actions.
(ii) The well has been converted
in compliance with the requirements of Section
9(b) (xxii) of this
Chapter; or
(iii) The transferor of
a permit has received notice from the Director that the owner or operator
receiving transfer of the permit, the new permittee, has demonstrated financial
responsibility for the well.
(iv)
The owner or operator meets the requirements for release from a financial
instrument in the following circumstances:
(A)
The owner or operator has completed the phase of the geologic sequestration
project for which the financial instrument was required and has fulfilled all
its financial obligations as determined by the Director, including obtaining
financial responsibility for the next phase of the geologic sequestration
project, if required;
(B) The owner
or operator has submitted a replacement financial instrument and received
written approval from the Director accepting the new financial instrument and
releasing the owner or operator from the previous financial instrument;
or
(C) The owner or operator has
submitted a revised financial assurance cost estimate for the remaining phases
of the geologic sequestration project. The revised financial assurance cost
estimate may demonstrate that a partial release of the financial instrument is
warranted and will still provide adequate financial assurance for the remainder
of the geologic sequestration project. Partial release of the financial
instrument is at the discretion of the Director.
(i) Within a reasonable time following certification of site closure by the Administrator, plume stabilization, the completion of all remediation work, and release of all other financial assurance instruments, the owner or operator shall submit a proposed cost estimate for measurement, monitoring, and verification of plume stabilization. The Administrator shall evaluate and determine whether the proposed cost estimate is adequate.
(j) The owner or operator shall notify the Director by certified mail of adverse financial conditions, such as bankruptcy, that may affect its ability to complete injection well plugging and post-injection site care and site closure.
(i) The owner or operator shall notify the
Director by certified mail of the commencement of a voluntary or involuntary
proceeding under Title 11 (Bankruptcy), U.S. Code, naming the owner or operator
or the third-party provider of a financial responsibility instrument as debtor,
within ten (10) days after commencement of the proceeding.
(ii) An owner or operator who fulfills the
requirements of this Section by obtaining an irrevocable trust fund, surety
bond, or irrevocable letter of credit shall be deemed to be without the
required financial assurance in the event of:
(A) Bankruptcy of the trustee or issuing
institution;
(B) A suspension or
revocation of the authority of the trustee institution to act as trustee of the
institution issuing the irrevocable trust fund, surety bond, or irrevocable
letter of credit; or
(C) If the
license to do business in Wyoming of the surety issuing financial assurance is
suspended or revoked.
(iii) Within sixty (60) days after such an
event the owner or operator shall establish other financial assurance that
meets the requirements of paragraphs (c), (d), (e), (f), and (g) of this
Section.
(k) The Department shall conduct bond forfeiture proceedings pursuant to W.S. § 3511 - 421. If the forfeited financial assurance instrument is inadequate to cover the costs of the closure, mitigation, reclamation, measurement, monitoring, verification, and pollution control, the Department may request that the Attorney General bring suit to recover costs against the owner, operator, or permittee.
(l) The owner or operator shall obtain and maintain public liability insurance for a geologic sequestration project.
(i) The public
liability insurance policy shall:
(A) Include
coverage for the major risks identified in Appendix A to this
Chapter;
(B) Provide minimum
coverage that:
(I) Accounts for site-specific
risk factor and bond adjustment factor calculations, based on the previous
year's information; and
(II) Is at
least $15 million per occurrence with an annual aggregate of at least $45
million, exclusive of legal defense costs; and
(C) Include a rider that requires the insurer
to notify the Administrator whenever substantive changes are made to the
policy, including any termination or failure to renew.
(ii) The owner or operator shall recalculate
the minimum coverage amount of the public liability insurance policy annually
and at the same time that the owner or operator updates the financial assurance
cost estimate pursuant to paragraph (b) of this Section. The owner or operator
shall submit a copy of the current public liability insurance policy annually
and at the same time that the owner or operator submits an updated financial
assurance cost estimate pursuant to subparagraph (b)(viii) of this
Section.
(iii) The owner or
operator shall maintain the public liability insurance policy until the
Administrator certifies that plume stabilization has been achieved.
Disclaimer: These regulations may not be the most recent version. Wyoming 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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