| (a) Fees. In addition to the fee for each injection
well required by §3.78 of this title (relating to Fees and Financial
Security Requirements), the following non-refundable fees must be
remitted to the Commission with the application:
(1) Base application fee.
(A) The applicant must pay to the Commission an application
fee of $50,000 for each permit application for a geologic storage
facility.
(B) The applicant must pay to the Commission an application
fee of $25,000 for each application to amend a permit for a geologic
storage facility.
(2) Injection fee. The operator must pay to the Commission
an annual fee of $0.025 per metric ton of CO2 injected
into the geologic storage facility.
(3) Post-injection care fee. The operator must pay
to the Commission an annual fee of $50,000 each year the operator
does not inject into the geologic storage facility until the director
has authorized storage facility closure.
(b) Financial responsibility.
(1) A person to whom a permit is issued under this
subchapter must provide annually to the director evidence of financial
responsibility that is satisfactory to the director. The owner or
operator must demonstrate and maintain financial responsibility for
corrective action, injection well plugging, post-injection storage
facility care and storage facility closure, and emergency and remedial
response until the director has provided written verification that
the director has determined that the facility has reached the end
of the post-injection storage facility care period.
(2) In determining whether the person is financially
responsible, the director must rely on:
(A) the person's most recent audited annual report
filed with the U. S. Securities and Exchange Commission under Section
13 or 15(d), Securities Exchange Act of 1934 (15 U.S.C. Section 78m
or 78o(d)); and
(B) the person's most recent quarterly report filed
with the U. S. Securities and Exchange Commission under Section 13
or 15(d), Securities Exchange Act of 1934 (15 U.S.C. Section 78m or
78o(d)); or
(C) if the person is not required to file such a report,
the person's most recent audited financial statement. The date of
the audit must not be more than one year before the date of submission
of the application to the director.
(3) The applicant's demonstration of financial responsibility
must account for the entire AOR, regardless of whether corrective
action in the AOR is phased.
(c) Financial assurance. The director shall consider
and approve the applicant's demonstration of financial responsibility
for all the phases of the geologic sequestration project, including
the post-injection storage facility care and closure phase and the
plugging phase, prior to issuance of a geologic storage injection
well permit.
(1) Injection and monitoring wells. The owner or operator
must comply with the requirements of §3.78 of this title for
all monitoring wells that penetrate the base of usable quality water
and this subsection for all injection wells.
(2) Geologic storage facility.
(A) The applicant must include in an application for
a geologic storage facility permit:
(i) a detailed written estimate, in current dollars,
of the cost necessary to perform corrective action on wells in the
area of review, plugging of injection wells, post-injection monitoring
and closure of the facility, and emergency and remedial response that
shows all assumptions and calculations used to develop the estimate;
(ii) a copy of the form of the bond or letter of credit
that will be filed with the Commission; and
(iii) information concerning the issuer of the bond
or letter of credit including the issuer's name and address and evidence
of authority to issue bonds or letters of credit in Texas.
(B) A geologic storage facility shall not receive CO2 until a bond or letter of credit in an amount
approved by the director under this subsection and meeting the requirements
of this subsection as to form and issuer has been filed with and approved
by the director.
(C) The determination of the amount of financial assurance
for a geologic storage facility is subject to the following requirements:
(i) The director must approve the dollar amount of
the financial assurance. The amount of financial assurance required
to be filed under this subsection must be equal to or greater than
the maximum amount necessary to perform corrective action, emergency
response, and remedial action, post-injection monitoring and site
care, and closure of the geologic storage facility, including plugging
of wells, at any time during the permit term in accordance with all
applicable state laws, Commission rules and orders, and the permit.
The cost estimate must be performed for each phase separately and
must be based on the costs to the Commission of hiring a third party
to perform the required activities. A third party is a party who is
not within the corporate structure of the owner or operator;
(ii) A qualified professional engineer licensed by
the State of Texas, as required under Occupations Code, Chapter 1001,
relating to Texas Engineering Practice Act, must prepare or supervise
the preparation of a written estimate of the highest likely amount
necessary to close the geologic storage facility. The owner or operator
must submit to the director the written estimate under seal of a qualified
licensed professional engineer, as required under Occupations Code,
Chapter 1001, relating to Texas Engineering Practice Act; and
(iii) The Commission may use the proceeds of financial
assurance filed under this subsection to pay the costs of plugging
any well or wells at the facility if the financial assurance for plugging
costs filed with the Commission is insufficient to pay for the plugging
of such well or wells.
(D) Bonds and letters of credit filed in satisfaction
of the financial assurance requirements for a geologic storage facility
must comply with the following standards as to issuer and form.
(i) The issuer of any geologic storage facility bond
filed in satisfaction of the requirements of this subsection must
be a corporate surety authorized to do business in Texas. The form
of bond filed under this subsection must provide that the bond be
renewed and continued in effect until the conditions of the bond have
been met or its release is authorized by the director.
(ii) Any letter of credit filed in satisfaction of
the requirements of this subsection must be issued by and drawn on
a bank authorized under state or federal law to operate in Texas.
The letter of credit must be an irrevocable, standby letter of credit
subject to the requirements of Texas Business and Commerce Code, §§5.101
- 5.118. The letter of credit must provide that it will be renewed
and continued in effect until the conditions of the letter of credit
have been met or its release is authorized by the director.
(iii) The qualifying financial responsibility instruments
must comprise protective conditions of coverage. Protective conditions
of coverage must include at a minimum cancellation, renewal, and continuation
provisions; specifications on when the provider becomes liable following
a notice of cancellation if there is a failure to renew with a new
qualifying financial instrument; and requirements for the provider
to meet a minimum rating, minimum capitalization, and ability to pass
the bond rating when applicable.
(I) Cancellation. An owner or operator must provide
that its financial instrument may not cancel, terminate, or fail to
renew except for failure to pay such financial instrument. If there
is a failure to pay the financial instrument, the financial institution
may elect to cancel, terminate, or fail to renew the instrument by
sending notice by certified mail to the owner or operator and the
director. The cancellation must not be final until at least 120 days
after the Commission receives the cancellation notice. The owner or
operator must provide an alternate financial responsibility demonstration
within 60 days of notice of cancellation, and if an alternate financial
responsibility demonstration is not acceptable or possible, any funds
from the instrument being cancelled must be released within 60 days
of notification by the director.
(II) Renewal. If a financial instrument expires, the
owner or operator must renew the financial instrument for the entire
term of the geologic storage project. The instrument may be automatically
renewed as long as the operator has the option of renewal at the face
amount of the expiring instrument. The automatic renewal of the instrument
must, at a minimum, provide the holder with the option of renewal
at the face amount of the expiring financial instrument.
(III) Financial instrument to remain in effect. Cancellation,
termination, or failure to renew shall not occur and the financial
instrument shall remain in full force and effect if on or before the
date of expiration:
(-a-) the director deems the facility abandoned;
Cont'd... |
