(A) Requirements. A permit shall not be issued by the oil and gas inspector, and no actual operations shall be commenced, until the permittee shall file with the town a bond and certificate of insurance which is approved by the Town Board of Trustees as follows.
(1) Bond.
(a) A bond in the principal sum of $100,000. Any person who drills or operates any well for the exploration, development or production of oil or gas, or as an injection or disposal well within the town, shall furnish on forms approved by the town and maintained at all times as a blanket site restoration bond or a blanket site restoration irrevocable letter of credit in the principal sum of $100,000. The bond or letter of credit must be executed by an insurance company licensed in and in good standing with the state or bank authorized to do business in the state, as surety or creditor, with the permittee as principal or debtor, running to the town for the benefit of the town and all persons concerned, conditioned that the permittee will comply with the terms and conditions of the town code in the drilling and operation of all oil or gas wells drilled or operated within the town. The bond or letter of credit must become effective on or before the date same filed with the town and remain in full force and effect for at least 12 months subsequent to the expiration of the initial permit term and all subsequent annual terms, and, in addition the:
1. Bond or letter of credit must be conditioned that the permittee must promptly pay all fines, penalties and other assessments imposed upon the permittee by reason of his or her breach of any of the terms, provisions or conditions of the town code;
2. The permittee must promptly restore the streets, sidewalks and other public property within the town, which may be disturbed or damaged during the permittee’s operations, to their former condition;
3. The permittee must promptly clear all premises of all litter, trash, waste and other substances, and must, after plugging and abandonment, grade, level and restore the property to the same surface condition, as far as possible, as existed prior to commencing operations;
4. The permittee shall indemnify and hold harmless the town from any and all liability attributable to granting the permit;
5. The permittee shall promptly pay all sums with respect to deductibles on covered losses under insurance policies required by the town code; and
6. The permittee shall comply with all of the terms of the town code concerning the plugging and abandonment of all such wells.
(b) Each bond or letter of credit submitted shall cover all wells drilled or operated by the person within the town as specifically described; all wells covered by name, legal description and oil and gas permit number, if any. For good cause shown, the town, after notice to a permittee and opportunity for hearing, may require the filing of a blanket bond or letter of credit for all wells within the town in an amount of $100,000. “Good cause” shall include, but shall not be limited to, a showing that the operator or permittee has previously violated the provisions of the town code, or that the operator has multiple wells, that in the sole discretion of the Town Board of Trustees an additional amount of bond shall be required.
(2) Insurance. In addition to the bond required in division (A)(1) of this section, the permittee shall obtain insurance as follows:
(a) An insurance policy of seepage and pollution insurance of $1,000,000 per well for the benefit of the town and all other persons, from an insurance company licensed in and in good standing with the state. This insurance shall remain in full force and effect for at least 12 months subsequent to the expiration of the initial permit term and all subsequent annual terms. In the exercise of their sole discretion, the Board of Trustees of the town shall approve or disapprove such insurance submitted by the permittee. It is recognized that the terms and conditions of seepage and pollution insurance will vary, and the Trustees may accept or reject any policy based upon their collective judgment; and
(b) An insurance policy of standard comprehensive public liability insurance, including contractual liability covering bodily injuries and property damage, naming the permittee as insured and the town as an additional insured, issued by an insurer authorized to do business within the state and in good standing with the state, in the aggregate amount of $1,000,000.
(B) Bond and insurance in effect; actions upon cancellation.
(1) The bond and insurance required in division (A) of this section shall be maintained in full force and effect continuously by the permittee during the initial permit term and all annual renewals thereof and for 12 months following surrender, termination or cancellation of the permit.
(2) The insurance policy or policies and bond shall not be cancelled without written notice to the Town Clerk at least 30 days prior to the effective date of cancellation.
(3) Notice of cancellation shall be by certified mail, return receipt requested. In the event the insurance or bond is cancelled, the permittee shall, prior to the cancellation date, provide replacement insurance policy or policies or bond acceptable to the Town Board of Trustees.
(4) In the event the permittee fails to so furnish acceptable replacement insurance or bond prior to cancellation, the permittee shall immediately cease all operations, and its permit shall immediately terminate without any action on the town’s behalf.
(5) The permittee may not recommence operations of the well until it has filed a new application for reinstatement of its permit, together with all required information and documents of insurance, bond and additional permit fee, as if for a new well.
(6) In addition, an additional bond or irrevocable letter of credit shall be required upon such terms and amount deemed sufficient by the Board of Trustees to protect the town and all other persons from potential loss or harm occasioned by the cancellation of such insurance or bond and for such period of no insurance or bond coverage.
(Ord. 381, passed 8-12-2021)