(A) Generally. In the event a permit is approved for issuance by the city under the terms of this chapter for the drilling and operation of a well, no actual drilling operation shall be commenced until the permittee shall file with the City Secretary and maintain in current status sufficient security in the form of a bond or certificate of deposit approved for form by the city attorney, or cash in lieu of the full amount of the bond, in such principal sum of not less than $50,000. No less than 10% of such bond herein shall be a cash bond. The remaining amount may be in the form of a surety bond executed by a reliable insurance company authorized to do business in the state as surety, and with the permittee as principle, running to the city for the benefit of the city and all persons concerned. Any certificate of deposit filed as permitted herein in lieu of the surety portion of the bond shall be free of any prior claim or obligation and shall not be pledged as security for any other purposes save and except as specified herein. Any such bond or other security pledged as required herein shall be effective on or before the date it is filed with the City Secretary and remain in force and effect for a period of at least six months subsequent to the expiration of the term of the permit issued herein.
(B) Supplemental security. If the proceeds of the security required herein shall be applied to remedy noncompliance as provided in§ 113.090 of this chapter, the permittee shall be required to immediately provide additional security of a like kind to maintain at all times the level of security as required under this chapter. Failure to maintain security at all times as required under this chapter shall constitute cause for revocation of permit as provided in § 113.037.
(C) Additional security. If at any time the City Council shall reasonably deem any permittee’s bond or other security to be insufficient, the City Council may require the permittee to file a new bond or additional security.
(D) Conditions of security. Any security filed as required under the provisions of this section shall be conditioned, on penalty of forfeiture or partial forfeiture to the city without written notice, on the following:
(1) The permittee shall comply with all of the terms and conditions of this chapter;
(2) The permittee shall promptly pay all fines, penalties or other assessments imposed upon permittee by reason of permittee’s breach of any of the terms, provisions and conditions of this chapter;
(3) The permittee shall remedy any and all damage to streets, curbs, gutters, water lines, fire hydrants and other property of the city, occasioned in any manner by permittee in connection with the drilling, operation or abandonment of said well;
(4) The permittee shall promptly fulfill all obligations under this chapter, and shall conduct the drilling operations in full conformance with the requirements herein, including, but not limited to, abatement of dust and dirt, removal of mud from public streets and thoroughfares, watering of non-paved access roads, timely construction and erection of all fence structures as required herein, and other similar terms and provisions;
(5) The permittee shall promptly clear all premises of all litter, trash, waste and other substances used, allowed or occurring in the drilling or producing operations, and shall, after abandonment, grade, level and restore said property in conformance with the city’s drainage control ordinance; and
(6) The permittee shall in all things fulfill the requirements of the site plan, and if required, any reclamation or restoration of the site stated as a condition of the issuance of the permit.
(E) Reduction in principal amount. If after completion of a well, the permittee has complied with all the provisions of this chapter and the permit requirements set forth in § 113.035, the permittee may apply to the city to have the bond or other security reduced to a sum of not less than $10,000 for the remainder of the time the well produces. If the oil and gas official approves the reduction, the permittee shall submit a bond or certificate of deposit in the correct principal amount, or cash in lieu thereof, and otherwise in conformance with the provisions of this section as a substitute for any other security previously pledged under the provisions of § 113.032(A). The requirement that $5,000 of the security requirement be in the form of a cash bond applies to the reduced security amount.
(F) Blanket bond. A permittee holding more than one permit may provide security for more than one operating well in the form of a blanket bond or certificate of deposit in the approved form specified herein, or cash in lieu thereof, in the principal amount of not less than $10,000 per well covered by said security. The blanket security will secure all wells operated by the permittee within the city limits of the city provided said blanket security conforms to the requirements of this section.
(G) Return of security. For each completed well covered by security under this section that ceases to produce and is subsequently plugged and abandoned in accordance with the requirements of the Commission, the security for said well shall be returned to the principal or in the case of blanket security, said well shall no longer require such security. To qualify for release of security as set out herein, the permittee must provide copies of official Commission forms verifying the plugging and abandonment of the well and must remove all surface equipment used in the operation of the well including, but not limited to, pumps, compressors, storage tanks and separator tanks.
(H) Violation of conditions. It shall be unlawful for the principal of any bond filed in accordance with this section to violate any condition of such bond.
(Ord. 2006-1019(2), passed 10-19-2006) Penalty, see § 113.99