1. (1) E and P recycling facilities shall be bonded according to this rule to protect the state and oil and gas producers from unnecessary liabilities and cleanup costs in the future. The objectives are to provide the state with adequate security for site reclamation and post closure cost should a facility owner default.

   1. (a) Each E and P recycling facility shall be covered by an approved bond before being permitted.
   2. (b) Any decision by the division can be appealed through an informal hearing proceeding pursuant to Section R649-10-2.

2. (2) Bonding for each E and P recycling facilities will be determined as follows:

   1. (a) Permits for new E and P recycling facilities or modifications and facilities being reviewed for 5-year permit renewals, shall submit site reclamation and post closure cost estimates from a responsible third party contractor for division approval;

      1. (i) Post closure cost estimates shall include the cost to remove and properly dispose of E and P products, remove equipment, and reclaim site to meet division cleanup standards. Estimates shall be based on storage tanks, including large capacity storage tanks, being filled to capacity;
      2. (ii) Post closure cost estimates for long term produced water recycling pond facilities shall include the cost of pond reclamation plus an additional 25% to cover water removal. Operators shall be required to submit two third party bond estimates. The division shall determine if the bond amount is sufficient, and shall require an updated cost estimate by the operator supplying two third party estimates every 5 years;
   2. (b) For each E and P recycling facility, other than a temporary produced water recycling tank facility, the applicant shall bond in the amount of the division approved estimate site reclamation and post closure costs, or $100,000 per facility or $100,000 per pond, whichever is greatest; and
   3. (c) For temporary produced water recycling facilities, the applicant shall bond in the amount of the third party estimate, or the division approved estimate site reclamation and post closure cost.
3. (3) Bonds accepted shall be of the same type as those described in Section R649-3-1.

4. (4) The total bond will be held by the division or financial institution until:

   1. (a) The facility has been closed and inspected by the division in accordance with a division approved closure plan; or
   2. (b) The division approved the transfer of a permit under Subsection R649-9-10(9) and the replacement bonding is in place.

KEY: oil and gas law

Date of Last Change: February 26, 2025

Notice of Continuation: June 30, 2025

Authorizing, and Implemented or Interpreted Law: 40-6-5(3)