N.M. Admin. Code § 19.15.34.15

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

Section 19.15.34.15 - FINANCIAL ASSURANCE REQUIREMENTS FOR RECYCLING CONTAINMENTS

A. Financial assurance.

(1) Containment operators without existing financial assurance pursuant to 19.15.8 NMAC shall furnish financial assurance acceptable to the division in the amount of the recycling containment's estimated closure cost or $25,000, whichever is greater.

(2) Containment operators providing the division with an existing financial assurance pursuant to 19.15.8 NMAC do not require additional financial assurance. These containments are limited to only the wells owned or operated by the owners of the containment. Containments delivering fluids to wells not owned or operated by the owners or operators of the containment must provide financial assurance pursuant to Paragraph (1) of Subsection A of 19.15.34.15 NMAC.

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 proper operation and site closure of the recycling containment as required by New Mexico statutes and division rules. The operator shall notify the division of any material change affecting the financial assurance within 30 days of discovery or notice of such change.

C. Forfeiture of financial assurance. The division shall give the operator 20 days written notice and an opportunity for a hearing prior to forfeiting any 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 a corporate surety licensed to do business in the state, and shall not be subject to cancellation.

(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 five years unless the applicant shows good cause for a shorter time period 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. Demand may be issued 30 days prior to expiration of the letter of credit if the operator has not provided replacement financial assurance by that time.

(3) Cash accounts. An applicant shall provide financial assurance in the form of a federally insured or equivalently protected cash account or accounts in a financial institution, provided that 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, the division may direct payment of all or part of the balance of such cash account (excluding interest accrued on the account) to itself or its designee for the recycling facility's closure.

E. Replacement of financial assurance.

(1) The division may allow an operator to replace existing forms of financial assurance with other forms of financial assurance that provide equal coverage prior to the expiration of the existing financial assurance.

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

F. Review of adequacy of financial assurance. The division may at any time not less than five years after initial acceptance of financial assurance for a recycling containment, initiate a review of such financial assurance's adequacy. Additionally, whenever the division determines that a recycling containment has not achieved the closure standards specified in 19.15.34.14 NMAC, the division may review the adequacy of the recycling containment's financial assurance, without regard to the date of its last review. Upon determination, after notice to the operator and an opportunity for a hearing, that the financial assurance is not adequate to cover the reasonable and probable cost of a recycling containment's closure and post closure monitoring, the division may require the operator to furnish additional financial assurance.

G. The division shall release a financial assurance upon the operator's or surety's written request if the recycling containment has been closed and the location remediated in accordance with 19.15.34 NMAC or has been covered by another financial assurance approved by the division. The division shall not approve a request for change of operator of a recycling containment until the new operator has the required division approved financial assurance.

H. The division may use funds in the oil and gas reclamation fund to remediate the impacts of a recycling containment if deemed necessary by the division director in the event of an emergency or insufficient financial assurance. In either case, the costs expended by the division may be recovered from the operator pursuant to Section 70-2-38 NMSA 1978. The operator is responsible for all costs of remediation of the recycling containment even if the costs exceed the financial assurance.

N.M. Admin. Code § 19.15.34.15

Adopted by New Mexico Register, Volume XXVI, Issue 06, March 31, 2015, eff. 3/31/2015