Bond

Before any person receives a permit to explore for or produce subsurface minerals, the person shall submit to the commission and obtain its approval of a surety bond or cash bond. An alternate form of security may be approved by the commission after notice and hearing, as provided by law. The operator of a well or facility shall be the principal on the bond covering such activity. Each such surety bond shall be executed by a responsible surety company authorized to transact business in North Dakota. 1. Bond amounts and limitations for projects that involve drill holes: a. For wells drilled to a total depth of less than two thousand feet [609.6 meters], the amount of the bond shall be commensurate with the number of wells, the type of project, and the environmental risk. The amount of a bond will be determined by a formula that assigns reclamation costs based upon the number of drill sites, the depths of the holes, and the anticipated surface restoration costs. b. For wells drilled to a total depth of two thousand feet [609.6 meters], or more, the bond shall be in the amount of fifty thousand dollars and applicable to one well only. When the principal on the bond is drilling or operating a number of wells within the state or proposes to do so, the principal may submit a bond conditioned as provided by law. A well with an approved temporary abandoned status shall have the same status as an exploratory, mineral, or injection well. The commission may, after notice and hearing, require higher bond amounts than those required by this section. Such additional amounts for bonds must be related to the economic value of the well or wells and the expected cost of plugging and well site reclamation, as determined by the commission. 2. Bond terms. Bonds shall be conditioned upon full compliance with North Dakota Century Code chapter 38-12, and all administrative rules and orders of the commission, and continues until any of the following occurs: a. The testholes or wells have been satisfactorily plugged which shall include practical reclamation of the well site and appurtenances; and all logs, plugging records, and other pertinent data required by statute or rules and orders of the commission are filed and approved. b. The mined lands or lands disturbed by any method of exploration or production of subsurface minerals have been restored and approved by the director. c. The liability on the bond has been transferred to another bond and such transfer approved by the commission. 3. Transfer of property under bond. Transfer of property does not release the bond. In case of transfer of property or other interest in a well, extraction facility, or surface mining facility and the principal desires to be released from the bond covering the well or facility, such as producers, not ready for plugging, the principal must proceed as follows: a. The principal must notify the director, in writing, of all proposed transfers of property at least thirty days before the closing date of the transfer. The director may, for good cause, waive this requirement. The principal shall submit to the commission a form 8-sm reciting that a certain property or properties, describing each by quarter-quarter, section, township, and range, is to be transferred to a certain transferee, naming such transferee, for the purpose of ownership or operation. The date of assignment or transfer must be stated and the form signed by a party duly authorized to sign on behalf of the principal. On said transfer form the transferee shall recite the following: "The transferee has read the foregoing statement and accepts such transfer and the responsibility of such property under the transferee's one-well bond, surface mining facility bond, or extraction facility bond." Such acceptance must be signed by a party authorized to sign on behalf of the transferee and the transferee's surety. b. When the commission has passed upon the transfer and acceptance and accepted it under the transferee's bond, the transferor shall be released from the responsibility of well plugging and site reclamation. If such wells include all the wells within the responsibility of the transferor's bond, such bond will be released by the commission upon written request. Such request must be signed by an officer of the transferor or a person authorized to sign for the transferor. The director may refuse to transfer any well from a bond if the well is in violation of a statute, rule, or order. c. The transferee (new operator) of any extraction facility, surface mining facility, or injection well shall be responsible for the plugging and site reclamation of any such property. For that purpose, the transferee shall submit a new bond or, in the case of a surety bond, produce the written consent of the surety of the original or prior bond that the latter's responsibility shall continue and attach to such well. The original or prior bond shall not be released as to the plugging and reclamation responsibility of any such transferor until the transferee submits to the commission an acceptable bond to cover such well. All liability on bonds shall continue until the plugging and site reclamation of such property is completed and approved. 4. Bond termination. The commission shall, in writing, advise the principal and any sureties on any bond as to whether the plugging and reclamation is approved. If approved, liability under such bond may be formally terminated upon receipt of a written request by the principal. The request must be signed by an officer of the principal or a person authorized to sign for the principal. 5. Director's authority. The director is vested with the power to act for the commission as to all matters within this section, except requests for alternative forms of security, which may only be approved by the commission. The commission may refuse to accept a bond if the operator or surety company has failed in the past to comply with statutes, rules, or orders relating to the operation of wells; if a civil or administrative action brought by the commission is pending against the operator or surety company; or for other good cause.