La. Admin. Code tit. 43 § I-2305

Current through Register Vol. 50, No. 6, June 20, 2024

Section I-2305 - Site-Specific Trust Accounts; Accounting Method

A. Prior to the establishment of the first site-specific trust account on any oilfield site, where there are one or more wells associated with a transfer of ownership interest, any party to the transfer may file an application with the secretary, on a form provided by the department, requesting approval of a site-specific trust account based on a site assessment estimate, for restoration of the site so transferred, in compliance with oilfield site restoration under LAC 43:XIX.101 et seq.

B. After a site-specific trust account has been established on any oilfield site, including one or more wells, any subsequent transfer of any interest in one or more wells included in the account shall be reported to the secretary, on a form provided by the department. The secretary shall review the reported transfer and determine whether any modifications or adjustments to the account shall be made. Once a site-specific trust account has been approved the secretary shall issue a letter of determination to the transferror indicating that he shall be exempt from liability in accordance with this Part.

C. Upon application to the department, on a form provided by the department, by the seller and the purchaser of an oilfield site transferred prior to August 15, 1993, subject to agreement by the assistant secretary for the office of conservation, a site-specific trust account may be established, or, a prior established private trust account may be transferred to the oilfield site restoration fund. Any trust account being transferred shall be subject to review and may be modified to meet the requirements of these rules.

D. Once a site-specific trust account has been established the secretary may modify the funding requirements of the account at any time during the life of the oilfield site, upon recommendation of the commission, the assistant secretary, or upon his own determination, based upon changes in operation, site conditions, or trust account status. After approval and establishment of a site-specific trust account only the responsible party shall be liable for payment of any modifications or adjustments required by the secretary.

E. When a transfer of an ownership interest (where there is an existing trust account), is reported to the secretary, as required by this Part, the secretary may, after review, determine, based on the nonsubstantial nature of the interest being transferred or the adequacy of the trust account, that no adjustment or modification to the existing trust agreement is necessary. If this occurs the secretary shall issue a letter of determination to the transferror indicating that he shall be exempt from liability in accordance with this Part.

F. The party or parties to a transfer who propose to establish a site-specific trust account shall:

1. propose a funding schedule, based on the site restoration assessment, which will fully fund the site restoration at the end of the economic life of the oilfield site;

2. pay some contribution into the trust account at the time of transfer and make quarterly payments into the trust account throughout the economic life of the oilfield site.

G. Site-specific trust account funds shall only be used to restore the specific site to which they are dedicated.

H. At the end of the economic life of an oilfield site the responsible party shall restore the site according to the standards set forth in LAC 43:XIX.101 et seq. If the responsible party has restored the site, upon approval by the assistant-secretary, the monies in the site-specific trust account shall be returned to him.

I. The commission may establish accounting procedures which will enable every transfer, whether it be one well site, a group of well sites, or a field, to be set up in one account for purposes of payment to the account. However, each well site may be accounted for in sub-accounts for purposes of tracking the individual production for its adequacy in maintaining support of the trust. The accounting procedure may also provide for moving a sub-account to a new or existing trust account in the event of a partial transfer of properties subsequent to an initial trust being established thereby segregating the transferred properties.

La. Admin. Code tit. 43, § I-2305

Promulgated by Department of Natural Resources, Office of Conservation, LR 21:398 (April 1995), repromulgated LR 21:472 (May 1995).

AUTHORITY NOTE: Promulgated in accordance with R.S. 30:80 et seq.