N.M. Admin. Code § 19.11.2.18

Current through Register Vol. 35, No. 21, November 5, 2024

Section 19.11.2.18 - FINANCIAL ASSURANCE FOR GEOTHERMAL WELLS AND FACILITIES

Upon notification by the division that it has approved a new geothermal well or facility permit, a geothermal well or facility permit modification or a geothermal well or facility renewal permit but prior to issuing the permit, an applicant shall submit acceptable financial assurance for the geothermal well or facility affected by the permit action.

A. The applicant shall submit acceptable financial assurance in the amount of the plugging and abandonment cost for each geothermal well being permitted or, if permitting a geothermal facility, the estimated closure cost of the entire facility, including the plugging and abandonment costs for all geothermal wells and pits. The geothermal well's estimated plugging and abandonment cost or the geothermal facility's estimated closure cost shall be the amount provided in the plugging and abandonment or closure plan the applicant submitted with its application unless the division determines that such estimate does not reflect a reasonable and probable well plugging and abandonment or facility closure cost, in which event, the division shall determine the estimated well plugging and abandonment or facility closure cost and shall include such determination in its draft permit. If the applicant disagrees with the division's determination of estimated well plugging and abandonment or facility closure cost, the applicant may request a hearing as provided in 19.11.3.8 NMAC. If the applicant so requests, and no other person files a request for a hearing regarding the application, the hearing shall be limited to determination of well plugging and abandonment or facility estimated closure cost.

B.Terms of financial assurance. The financial assurance shall be on division-prescribed forms, payable to the state of New Mexico and conditioned upon the geothermal well's or facility's proper operation, and proper well plugging and abandonment or facility closure in compliance with state of New Mexico statutes, division rules and the geothermal well or facility permit terms. The permittee shall notify the division of a material change affecting the financial assurance within 30 days of discovery of such change.

C.Forfeiture of financial assurance. The division shall give the permittee and any surety 20 days' notice and an opportunity for a hearing prior to forfeiting financial assurance.

D.Forms of financial assurance. The division may accept the following forms of financial assurance.

(1)Surety bonds. A surety bond shall be executed by the applicant and by a corporate surety licensed to do business in the state, and shall be non-cancelable.

(2)Letters of credit. A letter of credit shall be issued by a bank organized or authorized to do commercial banking business in the United States, shall be irrevocable for a term of not less than 10 years and shall provide for automatic renewal for successive, like terms upon expiration, unless the issuer has notified the division in writing of non-renewal at least 90 days before its expiration date. The letter of credit shall be payable to the state of New Mexico in part or in full upon receipt from the director or the director's authorized representative of demand for payment accompanied by a notice of forfeiture.

(3)Cash accounts. An applicant may provide financial assurance in the form of a federally insured or equivalently protected cash account or accounts in a financial institution, provided the operator and the financial institution shall execute as to each such account a collateral assignment of the account to the division, which shall provide that only the division may authorize withdrawals from the account. In the event of forfeiture pursuant to Subsection C of 19.11.2.18 NMAC, the division may, at any time and from time to time, direct payment of all or part of the balance of such account (excluding interest accrued on the account) to itself or its designee for the well's plugging and abandonment or facility's closure.

E.Replacement of financial assurance.

(1) The division may allow a permittee to replace existing forms of financial assurance with other forms of financial assurance that provide equivalent coverage.

(2) The division shall not release existing financial assurance until the permittee has submitted, and the division has approved, an acceptable replacement.

N.M. Admin. Code § 19.11.2.18

Adopted by New Mexico Register, Volume XXIX, Issue 04, February 27, 2018, eff. 2/27/2018