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(A) Every permittee shall, either before or at the time of securing his or her permit, deliver to the Agency a bond approved as to form by the City Attorney and as to surety by the Secretary, payable to the city in an amount as provided in this chapter indemnifying and insuring the city against any loss or injury which it or any persons may suffer and against any damage occurring to any public property of the city or to any public street, avenue, alley, way or place within the city or to any private property resulting directly or indirectly from:
(1) The drilling or redrilling of, and/or the existence of the operation, the abandonment of the well referred to in the permit;
(2) The violation of the terms and conditions of the permit;
(3) The failure of the permittee to remove a derrick or its appurtenances; or
(4) Any wrongful conduct or acts or omission to act by the permittee or any of his or her agents, employees or contractors whose activity is related to the well referred to in the permit.
(B) The bond or bonds as provided in this chapter shall be kept in full force and effect at all times by the permittee and shall cover each and every well for which the permittee has been granted a permit, until the activity for which the permit was granted has been completed and a written consent to the permittee’s release from the bond obligation has been granted by the Council. If a permittee does not keep such bond in full force and effect, as provided in this section, the Council may declare any such permit forfeited, and all rights of the permittee therein and named thereunder shall cease and terminate.
(`78 Code, § 14.12.030.)
Bonds shall be in the form generally used by the State of California Oil and Gas Industry and shall be in the amount and contain provisions as provided in this section.
(A) Single bonds. A corporate surety bond shall be in the sum of $5,000 and shall be executed by the operator as principal and by the authorized surety company as surety. It shall provide that the principal named in the bond shall faithfully comply with all the provisions of this title as to drilling or redrilling and maintaining all production facilities until property abandoned in conformity with the provisions of this title. The bond shall secure, indemnify and insure the city against all costs, charges, claims, causes of action, damages and expenses brought against it or incurred by it by reason of the failure of the principal to fully comply with the provisions of this title. The bond shall include the correct name or number of the well and such other information as may be necessary to readily identify the oil well. Any operator may, at the discretion of the Agency, furnish negotiable securities in a form prescribed by the Agency or cash in lieu of a corporate surety bond.
(B) Blanket bonds. The following provisions shall apply to blanket bonds:
(1) Any operator may, in lieu of filing a single bond for each well as required by §§ 14.12.010 and 14.12.020, file a bond covering all his or her oil operations within city in the amount of $10,000 if the oil operator has ten or fewer wells, $20,000 if he or she operates 25 or fewer wells and $25,000 if he or she operates more than 25 wells;
(2) Individual operators may collectively pool their wells for the purpose of obtaining a blanket bond. If they do so, they may provide a bond under the conditions of this subsection.
(`78 Code, § 14.12.040.)
Whenever the Agency finds that a default has occurred in the performance of any requirement or condition of these regulations, written notice thereof shall be given by the Agency to the principal and the surety on the bond. The notice shall specify the work to be done or the conditions and requirements to be fulfilled, the estimated cost thereof and the period of time deemed by the Agency to be reasonably necessary for the completion of such work. After receipt of such notice, the surety shall, within the time specified therein, either cause or require the work to be performed or the conditions and requirements to be fulfilled, or failing therein, shall pay to the Agency the estimated cost of doing the work as set forth in the notice, plus an additional amount equal to 25% of the estimated cost. Upon receipt of such moneys, the Agency shall proceed in such manner as is deemed necessary to cause the required work to be performed and completed, or the conditions and requirements fulfilled, but no liability shall be incurred therein except for the expenditure of the sum in hand. In the event a well has not been properly abandoned under the regulations of the State Division of Oil and Gas, such additional money as is necessary to restore the drill site in conformity with these regulations may be demanded from the surety.
(`78 Code, § 14.12.050.)
Any bond issued in compliance with these regulations shall be terminated and canceled, and the surety shall be relieved of all obligations thereunder when the well has been properly abandoned in conformity with all provisions of this title and all regulations of the State Division of Oil and Gas and the Agency has received notice of such abandonment or upon receipt of a satisfactory substituted bond.
(`78 Code, § 14.12.060.)
A substituted bond may be filed in lieu of any bond on file with the Agency pursuant to this title. The Agency shall accept and file the same if it meets the requirements established by the Agency and is in proper form. The bond for which it is substituted shall be exonerated by the Council if the Agency finds that all of the conditions of the bond have been satisfied and no default exists as to performance upon which the bond is conditioned.
(`78 Code, § 14.12.070.)
Whenever a well is to be drilled or serviced closer than 150 feet to a residential structure, or to private open space contiguous to a residential structure, or closer than the setback requirements of this title, and the well drilling and servicing equipment is or will be, in the opinion of the Agency, subject to toppling or endangering life and limb, the operator shall file with the City Clerk an insurance policy of not less than $2,000,000 coverage, subject to the approval as to form by the City Attorney indemnifying and securing the city, its agents, employees, officers and Council members against all claims or causes of action for any injury or loss which may be suffered by any person or for any damage to any property resulting therefrom.
(`78 Code, § 14.12.080.)
Except as provided in § 14.12.080, whenever insurance is required by this title, the following coverage amounts shall be required unless the Agency establishes a greater amount based on special circumstances: $100,000 property damage and $100,000/$300,000 personal liability indemnifying and securing the city, its Council members, agents, officers and employees against all claims and causes of action by persons who may be injured or whose property may be damaged as a result of the permittee’s conduct, including its agents, employees, officers and contractors in the exercise of its privileges under a permit granted pursuant to this title. No additional public liability or property damage insurance shall be required for drilling additional wells on the same property. The operator shall agree to keep on file with the city during its operations under the permit a certificate or certificates of insurance duly executed by the operator’s insurance carrier or carriers, which certificate or certificates shall serve as evidence of the continued existence in full force and effect of the insurance policies.
(`78 Code, § 14.12.090.)