Md. Code Regs. 26.19.01.13

Current through Register Vol. 51, No. 19, September 20, 2024

Section 26.19.01.13 - Oil and Gas Bond Performance and Release Procedures

A. The liability on the performance bond required in Regulation .06C(5) of this chapter is conditioned on compliance with the law, regulations, permit, orders of the Department, and the regulations and approvals, if any, of the Critical Area Commission under COMAR 27.01 and shall continue until the:

(1) Ownership of the well has changed and the permits have been transferred, with Departmental approval, at which time the seller's bond shall be released;

(2) Department has approved the:

(a) Physical plugging of the well;

(b) Reclamation of the well site;

(c) Receipt of all logs, plugging records, and samples; and

(d) Performance of all requirements of these regulations and the drilling and operating permit; or

(3) Drilling and operating permit terminates because drilling was not started within 18 months, and the Department approves the reclamation of the site.

B. A bond or other security shall contain a provision that it cannot be cancelled by the surety, bank, or other issuing entity except after not less than 90 days written notice to the permittee and Department. At least 45 days before the cancellation date indicated in the notice, the permittee shall file with the Department a commitment from a surety, bank, or other issuing entity, to provide a substitute bond or other security which shall be effective on the cancellation date indicated in the notice.

C. The permittee may apply for bond release from the Department upon meeting all the requirements of these regulations and the drilling and operating permit.

D. Upon written request by the permittee, the Department shall notify the surety and the principal by U.S. mail when the liability under the bond has been terminated.

E. The performance bond shall be forfeited on failure of the permittee to perform in a manner set forth in the authorized drilling and operating permit and the reclamation plan, or upon revocation of the permit.

F. The Department shall notify the permittee by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, of its intention to initiate a forfeiture proceeding.

G. Following receipt of the forfeiture notice by the permittee, the permittee has 30 days to show cause why the bond should not be forfeited.

H. On the permittee's showing of cause, the Department shall provide sufficient time for the permittee to comply with all permit conditions.

I. On failure of the permittee to show cause, the bond shall be forfeited nisi, and notice by the Department shall be given by certified mail, return receipt requested, to the permittee and surety of the forfeiture.

J. If the permittee fails to comply with the permit conditions following forfeiture nisi within the time period set by the Department, the bond shall be forfeited absolute.

K. On an absolute forfeiture, the Department shall use the funds made available by the forfeiture to complete abandonment procedures and reclaim the area authorized by the drilling and operating permit.

Md. Code Regs. 26.19.01.13