(a) In general.
(1) The operator shall provide the insurance required in this section at its own expense.
(2) The operator shall keep the insurance in effect until the gas inspector approves the abandonment and restoration of the operation site.
(3) Companies approved by the State of Texas with an AM Best Rating of A or better and acceptable to the city must issue the insurance.
(4) The operator shall provide the gas inspector with a copy of the certificates of insurance.
(5) Upon the gas inspector’s request, the operator shall provide copies of the insurance policies and all endorsements at no cost to the city.
(6) Failure of the city to request required insurance documentation does not constitute a waiver of the insurance requirement.
(7) Depleting, wasting, or defense within limits provisions are not permitted in any of the insurance required in this section.
(b) Modification of insurance.
(1) The office of risk management may modify the insurance requirements of this section when necessary based upon economic conditions, recommendation of professional insurance advisors, changes in law, court decisions, or other relevant factors.
(2) The operator shall modify the insurance as requested and shall pay the cost of any modifications.
(c) Subcontractor insurance.
(1) The operator shall require each subcontractor performing work on the operation site to obtain insurance that is appropriate for the services the subcontractor is performing.
(2) The subcontractor shall provide the subcontractor’s insurance at its own expense to the operator and gas inspector.
(3) The subcontractor’s insurance must name the operator as an additional insured.
(4) The subcontractor shall keep the subcontractor’s insurance in effect until the gas inspector approves the abandonment and restoration of the operation site.
(5) Companies approved by the State of Texas with an AM Best Rating of A or better and acceptable to the city must issue the subcontractor’s insurance.
(6) The operator shall provide the gas inspector with a copy of the certificates of insurance for each subcontractor at least 30 days before the subcontractor begins work.
(7) Upon request, the operator shall provide the gas inspector with copies of the subcontractor’s insurance policies and all endorsements at no cost to the city.
(d) Required provisions. All insurance contracts and certificates of insurance must have an endorsement:
(1) stating that the city is an additional insured to all applicable policies;
(2) stating that coverage may not be cancelled, non-renewed, or materially changed in policy terms or coverage without 30-days advance written notice by mail to the:
(A) gas inspector; and
(B) City of Dallas, Director, Office of Risk Management, 1500 Marilla, 6A-South, Dallas, TX 75201;
(3) waiving subrogation against the city, its officers, employees, and elected representatives for bodily injury (including death), property damage, or any other loss to all applicable coverages;
(4) stating that the operator’s insurance is the primary insurance;
(5) stating that liability, duty, standard of care obligations, and the indemnification provision are underwritten by contractual liability coverage that includes these obligations;
(6) identifying the operation site by address; and
(7) identifying the gas inspector as the certificate holder.
(e) Required coverage. Subject to the operator’s right to maintain reasonable deductibles, and subject to a maximum deductible or self-insured retention of $250,000, the operator shall obtain insurance coverage in the following types and amounts:
(1) Workers’ compensation insurance with statutory limits.
(2) Employer’s liability insurance with the following minimum limits for bodily injury by:
(A) accident, $1,000,000 per each accident; and
(B) disease, $1,000,000 per employee with a per-policy aggregate of $1,000,000.
(3) Business automobile liability insurance covering owned, hired, and non-owned vehicles, with a minimum combined bodily injury (including death) and property damage limit of $2,000,000 per occurrence. If the operator is subject to the Motor Carrier Act, endorsement form MCS 90 is required and a copy must be attached to the certificate of insurance.
(4) Commercial general liability insurance covering explosion, collapse, underground blowout, cratering, premises/operations, personal and advertising injury, products/completed operations, independent contractors, and contractual liability with the following minimum combined bodily injury (including death) and property damage limits of:
(A) $2,000,000 per occurrence;
(B) $2,000,000 products/completed operations aggregate; and
(C) $2,000,000 general aggregate.
(5) Environmental impairment or pollution legal liability insurance covering handling, removal, seepage, storage, testing, transportation, and disposal of materials.
(A) Coverage must include loss of use of property; cleanup cost; and defense, including costs and expenses incurred in the investigation, defense, or settlement of claims in connection with any loss arising from the operation site.
(B) Coverage must apply to sudden and accidental pollution resulting from the escape or release of smoke; vapors; fumes; acids; alkalis; toxic chemicals; liquids or gases; waste material; or other irritants, contaminants, or pollutants.
(C) Coverage must include gradual pollution or pollution legal liability with time element pollution for a minimum combined bodily injury (including death) and property damage limit of $10,000,000 per occurrence.
(D) Coverage must be maintained with a minimum combined bodily injury (including death) and property damage limit of $10,000,000 per occurrence.
(6) Umbrella liability insurance following the form of the primary liability coverage described in Paragraphs (1) through (4) and providing coverage with minimum combined bodily injury (including death) and property damage limit of $25,000,000 per occurrence and $25,000,000 annual aggregate. Increased primary liability limits equivalent to the umbrella liability insurance limits specified will satisfy the umbrella liability insurance requirements.
(A) A copy of the declaration page of the policy must be attached to the certificate of insurance.
(B) Coverage must include explosion, collapse, underground blowout, cratering, sudden and accidental pollution, handling, removal, seepage, storage, testing, transportation, and disposal of materials. A copy of the endorsements providing this coverage must be attached to the certificate of insurance.
(7) Control-of-well insurance to provide coverage for the cost of regaining control of an out-of-control (wild) well including the cost of re-drilling and clean up of an incident with minimum limit of $10,000,000. Coverage must include seepage, pollution, stuck drill stem, evacuation expense of residents, loss of equipment, experts, and damage to property that the operator has in the operator’s care, custody, or control.
(8) If the insurance required in Section 51A-12.203(e)(4)-(6) is written on a claims-made form, coverage must be continuous (by renewal or extended reporting period) for at least 60 months after the gas inspector approves the abandonment and restoration of the operation site. Coverage, including renewals, must contain the same retroactive date as the original policy.
(f) Miscellaneous provisions.
(1) The city’s approval, disapproval, or failure to act regarding any insurance supplied by the operator or a subcontractor does not relieve the operator or subcontractor of full responsibility or liability for damages and accidents. Bankruptcy, insolvency, or the insurance company’s denial of liability does not exonerate the operator or the subcontractor from liability.
(2) If an insurance policy is cancelled or non-renewed, the gas inspector shall suspend the gas well permit on the date of cancellation or non-renewal and the operator shall immediately cease operations until the operator provides the gas inspector proof of replacement insurance coverage.
(g) Performance bond or irrevocable letter of credit. Before issuance of a gas well permit, the operator shall give the gas inspector a performance bond or an irrevocable letter of credit approved as to form by the city attorney.
(1) A bonding or insurance company authorized to do business in Texas and acceptable to the city must issue the performance bond. A bank authorized to do business in Texas and acceptable to the city must issue the irrevocable letter of credit.
(2) The performance bond or irrevocable letter of credit must list the operator as principal and be payable to the city.
(3) The performance bond or irrevocable letter of credit must remain in effect for at least six months after the gas inspector approves the abandonment of the well.
(4) Except as otherwise provided, the amount of the performance bond or irrevocable letter of credit must be at least $50,000 per well.
(A) After a well is completed, the operator may request that the gas inspector reduce the existing performance bond or irrevocable letter of credit to $10,000 per well for the remainder of the time the well produces without reworking. The gas inspector shall reduce the existing performance bond or irrevocable letter of credit if the operator has fully complied with the provisions of this article and the conditions of the SUP, and the gas inspector determines that a $10,000 performance bond or irrevocable letter of credit is sufficient.
(B) If the gas inspector determines the operator’s performance bond or irrevocable letter of credit is insufficient, the gas inspector may require the operator to increase the amount of the performance bond or irrevocable letter of credit to a maximum of $250,000 per well.
(5) Cancellation of the performance bond or irrevocable letter of credit does not release the operator from the obligation to meet all requirements of this article, the gas well permit, and the SUP. If the performance bond or irrevocable letter of credit is cancelled, the gas well permit shall be suspended on the date of cancellation and the operator shall immediately cease operations until the operator provides the gas inspector with a replacement performance bond or irrevocable letter of credit that meets the requirements of this article.
(6) The city may draw against the performance bond or irrevocable letter of credit or pursue any other available remedy to recover damages, fees, fines, or penalties due from the operator for violation of any provision of this article, the SUP, or the gas well permit. The performance bond or irrevocable letter of credit may also be used to mitigate public losses (i.e. damage to infrastructure, loss of sales tax, etc.) related to the loss of control of a well.
(h) Road repair security instrument. Before issuance of a gas well permit, the operator shall give the gas inspector a road repair performance bond or an irrevocable letter of credit approved as to form by the city attorney. The road repair security instrument is in addition to the performance bond or irrevocable letter of credit required by Section 51A-12.203(g).
(1) A bonding or insurance company authorized to do business in Texas and acceptable to the city must issue the performance bond. A bank authorized to do business in Texas and acceptable to the city must issue the irrevocable letter of credit.
(2) The performance bond or irrevocable letter of credit must list the operator as principal and be payable to the city.
(3) The performance bond or irrevocable letter of credit must remain in effect for at least six months after the department of public works completes the final inspection of the right-of-way.
(4) The department of public works shall determine the amount of the performance bond or irrevocable letter of credit based upon, among other factors, the estimated cost to the city of restoring the right-of-way.
(5) Cancellation of the performance bond or irrevocable letter of credit does not release the operator from the obligation to meet all requirements of this article, the gas well permit, and the SUP. If the performance bond or irrevocable letter of credit is cancelled, the gas well permit shall be suspended on the date of cancellation and the operator shall immediately cease operations until the operator provides the gas inspector with a replacement performance bond or irrevocable letter of credit that meets the requirements of this article.
(6) The city may draw against the performance bond or irrevocable letter of credit or pursue any other available remedy to recover damages, fees, fines, or penalties related to the damage of the right-of-way covered by Section 51A-12.204(p).
(i) Well plugging bond. Before issuance of a gas well permit, the operator shall give the gas inspector a well plugging bond.
(1) A bonding or insurance company authorized to do business in Texas and acceptable to the city must issue the well plugging bond.
(2) The well plugging bond must list the operator as principal and be payable to the city.
(3) The well plugging bond must remain in effect for at least six months after the gas inspector approves the abandonment of the well.
(4) Except as otherwise provided in this subsection, the amount of the well plugging bond must be at least $50,000 per well.
(5) Cancellation of the well plugging bond does not release the operator from the obligation to meet all requirements of this article, the gas well permit, and the SUP. If the well plugging bond is cancelled, the gas well permit shall be suspended on the date of cancellation and the operator shall immediately cease operations until the operator provides the gas inspector with a replacement well plugging bond that meets the requirements of this subsection.
(6) The city may draw against the well plugging bond or pursue any other available remedy to recover damages, fees, fines, or penalties due from the operator for violation of any provision of this article, the SUP, or the gas well permit. The well plugging bond may also be used to mitigate public losses (i.e. damage to infrastructure, loss of sales tax, etc.) related to the loss of control of a well. (Ord. Nos. 26920; 28424; 29228; 30239; 30654)