La. Admin. Code tit. 43 § V-953

Current through Register Vol. 50, No. 9, September 20, 2024

Section V-953 - Financial Assurance Instrument [Formerly LAC 43:I.1153]

A. Before the board may issue an AESL or approve an assignment of an existing AESL, the lessee or proposed assignee must provide either:

1. a lease-specific bond in an amount set by the board, in an amount no less than $500,000;

2. an approved financial assurance instrument in the amount required in Paragraph A.1 of this Subpart and as authorized by the board pursuant to §955

B. Each bond or other financial assurance must guarantee compliance with all terms and conditions of the AESL. The board may require the lessee to provide a new bond, or it may require the lessee to increase the amount of its existing bond to satisfy any additional financial assurance requirements. lessee shall comply with this requirement by providing either:

1. a certificate of deposit issued exclusively to DNR in a form prescribed by the board from a financial institution acceptable to the board;

2. a performance bond issued exclusively to DNR in a form prescribed by the board from a financial institution acceptable to the board;

3. a line of credit available exclusively to DNR, with DNR bearing no liability, in a form prescribed by the board issued by a financial institution acceptable to the board.

C. The board may require supplemental financial assurance in an amount determined by the board for a specific AESP.

D. The lessee will be considered in compliance with the financial assurance requirements under this Subpart if the lessees designated lease operator provides a lease-specific bond in the amount required in Paragraph A.1. of this Subpart or other approved financial assurance that guarantees compliance with all terms and conditions of the AESL.

E. The dollar amount of the minimum, lease-specific financial assurance in Paragraphs A.1. and B. of this Subpart will be adjusted to reflect changes in the Consumer Price Index-All Urban Consumers ("CPI-U") or an industry-equivalent index if the CPI-U is discontinued.

F. No CPI-U adjustment may be made within the five year period following the adoption of this rule. Subsequent CPI-U based adjustments may be made every five years thereafter.

G. The lessee may not terminate the period of liability of the financial assurance instrument or cancel the financial assurance instrument. The financial assurance must continue in full force and effect even though an event has occurred that could diminish or terminate a surety's obligation under state law.

H. Evidence of financial assurance is required to be submitted by January 31of each calendar year. Failure to submit updated evidence of financial assurance may cause the board, through OMR, to levy liquidated damages of $100 per day until such evidence is received.

La. Admin. Code tit. 43, § V-953

Promulgated by Department of Natural Resources, Office of Mineral Resources, LR 38:139 (January 2012), repromulgated LR 411759 (9/1/2015).

AUTHORITY NOTE: Promulgated in accordance with R.S. 30:124.