Tenn. Comp. R. & Regs. 0400-43-01-.02
A bond is required to be in force for a test hole in the name of the owner or operator from the time a drilling permit is granted until the test hole is abandoned in accordance with this chapter. The bond for an individual test hole shall be for the sum of one thousand dollars ($1,000). An individual test hole bond shall be released upon the proper plugging of the test hole and the filing with the Supervisor of a Plug and Abandon Report.
In lieu of an individual bond, any owner or operator may file with the Supervisor a blanket bond in the sum of ten thousand dollars ($10,000) covering up to twenty-five (25) test holes to be drilled by the principal in the bond with the acceptance and approval by the Supervisor. A blanket bond shall be released upon the proper plugging of all test holes covered by the bond, and the filing of Plug and Abandon Reports with the Supervisor. A surety may notify the Supervisor in writing by registered mail, that the owner or operator is no longer authorized by the surety to obtain permits under said bond. If or when all test holes permitted under said bond have been abandoned in accordance with this chapter, the Supervisor shall release the bond.
An owner or operator's bond and other responsibilities to a test hole or test holes shall be relieved upon approval by the Supervisor of a successor's application for a bond and the tendering of authorization by the permittee requesting the Supervisor to approve the successor's application.
Acceptable bond instruments include: a bond or bonds executed by a corporate surety authorized to do business in Tennessee and that is among those listed as acceptable sureties on federal bonds in Circular 570 of the U.S. Department of the Treasury, irrevocable letters of credit, personal bonds supported by certificates of deposit or personal bonds supported by cash or certified check. The wording of all instruments must be identical to the wording furnished by the Department's Division of Financial Responsibility.
"Notwithstanding any contrary term or condition of the above described Certificate of Deposit, [INSERT NAME OF FINANCIAL INSTITUTION] (the "Financial Institution") hereby covenants, warrants and represents that said Certificate of Deposit shall not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Financial Institution. The Financial Institution further agrees that it shall not release the Certificate of Deposit or the proceeds thereof to anyone other than to the Tennessee Department of Environment and Conservation (the "Department") without the written consent of the Department."
If the requirements with respect to proper plugging upon abandonment and submission of all required records and data on a test hole or test holes have not been met within the time limit set by the Department, the Supervisor shall cause a Notice of Noncompliance to be served upon the operator or owner and to the surety, if any, executing the bond filed by said operator or owner. Said Notice shall be mailed by certified mail to the owner or operator's address as set out in the application for a permit, to the agent for the surety, if any, at the agent's address, if known, and to the surety company, if any, at the address provided to the Tennessee Department of Commerce and Insurance for receipt of notices. The Notice shall specify in what respects the operator or owner has failed to comply with this rule or orders of the Department and shall order said operator or owner to comply in accordance therewith within sixty (60) days after service of said Notice. The surety, if any, shall be afforded the opportunity to act on behalf of the operator or owner within the time set forth in the Notice with regard to the proper plugging of the test hole or test holes and submission of required drilling records.
Tenn. Comp. R. & Regs. 0400-43-01-.02
Authority: T.C.A. §§ 4-5-201 et seq. and 60-1-501 et seq.