Florida Administrative Code › 62 - DEPARTMENT OF ENVIRONMENTAL PROTECTION › 62C - Division of Resource Management › Chapter 62C-26 - CONSERVATION OF OIL AND GAS: PERMITTING › Section 62C-26.002 - Performance Bonds and Securities

Current through Reg. 50, No. 138; July 16, 2024
(1) Before
				a permit to conduct geophysical operations (see Rule
				 62C-26.007, F.A.C.), or to
				construct any oil or gas related well is granted, the owner or operator shall
				post a bond (Oil & Gas Form 2 or 2A) or other form of approved security
				(see subsection  62C-26.002(5),
				F.A.C.), with the Department. This security shall be made payable to the State
				of Florida, executed by the owner or operator as principal, and by a surety
				approved by the General Counsel of the Department, conditioned upon the owner
				or operator complying with all safety and environmental requirements of the
				Department and with the laws of the State of Florida.
(2) The amount of the security for each well
				shall vary in accordance with the table below and shall cover attendant
				facilities integral with the well and necessary for its production, including
				flowlines, tank batteries, and treating facilities. Should the well become a
				producer or class II well, a replacement security must be submitted to cover
				the well and its attendant facilities for its useful life. The total amount of
				coverage for each such well shall be twice the amount cited in the table below.
WELL DEPTH
SECURITY
(FEET)
REQUIRED
0 - 9, 000
$50, 000.00
9, 001 or more
$100, 000.00
(3)
				In lieu of furnishing a separate security for each particular well, an owner or
				operator may file with the Department a blanket bond for multiple operations
				within the State in the amount of $1, 000, 000.00. Each blanket bond may cover
				up to ten wells.
(4) The Department
				reserves the right to require a larger or separate bond or security in addition
				to the single well or blanket bond or security for a particular well or wells
				where the circumstances indicate that the standard condition and amount would
				not be sufficient to cover a reasonable estimate of potential liability for
				damages to persons or property.
(5)
				In addition to bonds, surety may also be provided to the Department in any of
				the following ways:
(a) By depositing cash or
				other securities in the Department of Environmental Protection Petroleum Trust
				Account. Such cash or securities shall be held at interest by the Comptroller
				to satisfy safety and environmental performance provisions of this section. The
				interest shall be credited to the Petroleum Exploration and Production Bond
				Trust Fund. Such cash or other securities shall be released by the Comptroller
				upon request of the applicant and certification by the Department that all
				safety and environmental performance provisions established by the Department
				for permitted activities have been fulfilled;
(b) By providing for a single well or
				geophysical permit a surety in the form of an irrevocable letter of credit
				guaranteed by an acceptable financial institution;
(c) By paying an annual fee to the Petroleum
				Exploration and Production Bond Trust Fund. For those choosing this option the
				following shall apply:
1. For the first year,
				or part of a year, of a geophysical or well construction permit, or upon the
				change of operator, the fee is $4, 000.00 per application.
2. For each subsequent year, or part of a
				year, the fee is $1, 500.00 per existing well or permit.
3. The maximum fee that an applicant or
				permittee may be required to pay into the trust fund for surety coverage is
				$30, 000.00 per calendar year, regardless of the number of existing wells,
				permits, or applications for permits.
4. The Department shall, beginning July 1,
				1993, biennially adjust these fees for inflation in accordance with the
				Construction Cost Index published by the Engineering News
				Record.