Before an oil or gas drilling permit may be issued by the City Council, the permittee shall file with the city, subject to the approval of the City Council, one of the following guarantees, conditioned that the permittee shall comply with the terms and conditions of this chapter in the operation of the well for either natural or artificial production or injection; and conditioned that the permittee will promptly pay fines, penalties and other assessments imposed upon the permittee by reason of breach of any of these terms, provisions and conditions, and that the permittee will promptly restore to their former condition the streets, sidewalks and other public property of the city which may be disturbed or damaged in the permittee’s operation, and that the permittee will promptly clear all premises of all litter, trash, waste and other substances, and will, after abandonment, grade, level and restore the property to the same surface condition, as practicable as is possible, as existed prior to commencing operations; and further that the permittee shall indemnify and hold harmless the city from any and all liability attributable to granting the permit. Said bond, deposit or letter of credit shall become effective on or before the date the same is filed with the city and remain in full force and effect for at least 12 months subsequent to the expiration of the conditional use permit or well abandonment, whichever occurs later. The bond or letter of credit submitted shall cover all wells drilled or operated by operator within the city. The guarantee shall be in one of the following forms, and shall remain in full force and effect, and be maintained in such amount, for the life of the well:
(A) The applicant shall provide a bond in the principal sum of $25,000. The bond shall be executed by a reliable insurance company authorized to do business in the state, with the applicant as principal, running to the city for the benefit of the city and all persons concerned.
(B) The applicant shall deposit cash or other instrument readily convertible into cash at face value, either with the city or in escrow with a bank or savings and loan institution, in the amount of $25,000. In the case of any escrow account, the applicant shall file with the City Council an agreement between the financial institution and himself or herself guaranteeing the following:
(1) That the funds of the escrow account shall be held in trust until released by the City Council and may not be used or pledged by the applicant as security in any other matter during that period; and
(2) That in the case of a failure on the part of the applicant to comply with the provisions of this chapter, the financial institution shall immediately move the funds in the account so as to be available to the city to use in the correction of violations of this chapter.
(C) The applicant shall provide an irrevocable letter of credit from a bank or other reputable institution, certifying the following:
(1) That the creditor does guarantee funds of not less than $25,000 for a term not less than one year;
(2) That, in the case of failure on the part of the applicant to comply with the provisions stated in this chapter, the creditor shall pay to the city immediately and without further action such funds as are necessary to finance the correction of the violations, up to the stated limit of credit; and
(3) That this letter of credit may not be withdrawn or reduced in amount until approved by the City Council.
(Ord. 814, passed 6-11-2018) Penalty, see § 113.999