Ohio Code 1509.07 – Liability insurance coverage
(A)(1)(a) Except as provided in division (A)(1)(b) or (A)(2) of this section, an owner of any well, except an exempt Mississippian well or an exempt domestic well, shall obtain liability insurance coverage from a company authorized or approved to do business in this state in an amount of not less than one million dollars bodily injury coverage and property damage coverage to pay damages for injury to persons or damage to property caused by the drilling, operation, or plugging of all the owner’s wells in this state. However, if any well is located within an urbanized area, the owner shall obtain liability insurance coverage in an amount of not less than three million dollars for bodily injury coverage and property damage coverage to pay damages for injury to persons or damage to property caused by the drilling, operation, or plugging of all of the owner’s wells in this state.
Terms Used In Ohio Code 1509.07
- Bond: includes an undertaking. See Ohio Code 1.02
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Exempt domestic well: means a well that meets all of the following criteria:
(1) Is owned by the owner of the surface estate of the tract on which the well is located;
(2) Is used primarily to provide gas for the owner's domestic use;
(3) Is located more than two hundred feet horizontal distance from any inhabited private dwelling house other than an inhabited private dwelling house located on the tract on which the well is located;
(4) Is located more than two hundred feet horizontal distance from any public building that may be used as a place of resort, assembly, education, entertainment, lodging, trade, manufacture, repair, storage, traffic, or occupancy by the public. See Ohio Code 1509.01
- Gas: means all natural gas and all other fluid hydrocarbons that are not oil, including condensate. See Ohio Code 1509.01
- Horizontal well: means a well that is drilled for the production of oil or gas in which the wellbore reaches a horizontal or near horizontal position in the Point Pleasant, Utica, or Marcellus formation and the well is stimulated. See Ohio Code 1509.01
- Material and substantial violation: means any of the following:
(1) Failure to obtain a permit to drill, reopen, convert, plugback, or plug a well under this chapter;
(2) Failure to obtain, maintain, update, or submit proof of insurance coverage that is required under this chapter;
(3) Failure to obtain, maintain, update, or submit proof of a surety bond that is required under this chapter;
(4) Failure to restore a disturbed land surface as required by section 1509. See Ohio Code 1509.01
- Oil: means crude petroleum oil and all other hydrocarbons, regardless of gravity, that are produced in liquid form by ordinary production methods, but does not include hydrocarbons that were originally in a gaseous phase in the reservoir. See Ohio Code 1509.01
- Person: includes any political subdivision, department, agency, or instrumentality of this state; the United States and any department, agency, or instrumentality thereof; any legal entity defined as a person under section 1. See Ohio Code 1509.01
- Pool: means an underground reservoir containing a common accumulation of oil or gas, or both, but does not include a gas storage reservoir. See Ohio Code 1509.01
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Property: means real and personal property. See Ohio Code 1.59
- Rule: includes regulation. See Ohio Code 1.59
- state: means the state of Ohio. See Ohio Code 1.59
- Urbanized area: means an area where a well or production facilities of a well are located within a municipal corporation or within a township that has an unincorporated population of more than five thousand in the most recent federal decennial census prior to the issuance of the permit for the well or production facilities. See Ohio Code 1509.01
- Well: includes a stratigraphic well. See Ohio Code 1509.01
(b) A board of county commissioners of a county that is an owner of a well or a board of township trustees of a township that is an owner of a well may elect to satisfy the liability coverage requirements specified in division (A)(1)(a) of this section by participating in a joint self-insurance pool in accordance with the requirements established under section 2744.081 of the Revised Code. Nothing in division (A)(1)(b) of this section shall be construed to allow an entity, other than a county or township, to participate in a joint self-insurance pool to satisfy the liability coverage requirements specified in division (A)(1)(a) of this section.
(2) An owner of a horizontal well shall obtain liability insurance coverage from an insurer authorized to write such insurance in this state or from an insurer approved to write such insurance in this state under section 3905.33 of the Revised Code in an amount of not less than five million dollars bodily injury coverage and property damage coverage to pay damages for injury to persons or damage to property caused by the production operations of all the owner’s wells in this state. The insurance policy shall include a reasonable level of coverage available for an environmental endorsement.
(3) An owner shall maintain the coverage required under division (A)(1) or (2) of this section until all the owner’s wells are plugged and abandoned or are transferred to an owner who has obtained insurance as required under this section and who is not under a notice of material and substantial violation or under a suspension order. The owner shall provide proof of liability insurance coverage to the chief of the division of oil and gas resources management upon request. Upon failure of the owner to provide that proof when requested, the chief may order the suspension of any outstanding permits and operations of the owner until the owner provides proof of the required insurance coverage.
(B)(1) Except as otherwise provided in this section, an owner of any well, before being issued a permit under section 1509.06 of the Revised Code or before operating or producing from a well, shall execute and file with the division of oil and gas resources management a surety bond conditioned on compliance with the restoration requirements of section 1509.072, the plugging requirements of section 1509.12, the permit provisions of section 1509.13 of the Revised Code, and all rules and orders of the chief relating thereto, in an amount set by rule of the chief.
(2) The owner may deposit with the chief, instead of a surety bond, cash in an amount equal to the surety bond as prescribed pursuant to this section or negotiable certificates of deposit or irrevocable letters of credit, issued by any bank organized or transacting business in this state, having a cash value equal to or greater than the amount of the surety bond as prescribed pursuant to this section. Cash or certificates of deposit shall be deposited upon the same terms as those upon which surety bonds may be deposited. If the owner deposits cash, the cash shall be credited to the performance cash bond refunds fund created in section 1501.16 of the Revised Code. If the owner deposits certificates of deposit, the chief shall require the bank that issued any such certificate to pledge securities of a cash value equal to the amount of the certificate that is in excess of the amount insured by the federal deposit insurance corporation. The securities shall be security for the repayment of the certificate of deposit.
Upon a deposit of cash, certificates of deposit, or letters of credit with the chief, the chief shall hold them in trust for the purposes for which they have been deposited.
(3) Instead of a surety bond, the chief may accept proof of financial responsibility consisting of a sworn financial statement showing a net financial worth within this state equal to twice the amount of the bond for which it substitutes and, as may be required by the chief, a list of producing properties of the owner within this state or other evidence showing ability and intent to comply with the law and rules concerning restoration and plugging that may be required by rule of the chief. The owner of an exempt Mississippian well is not required to file scheduled updates of the financial documents, but shall file updates of those documents if requested to do so by the chief. The owner of a nonexempt Mississippian well shall file updates of the financial documents in accordance with a schedule established by rule of the chief. The chief, upon determining that an owner for whom the chief has accepted proof of financial responsibility instead of bond cannot demonstrate financial responsibility, shall order that the owner execute and file a bond or deposit cash, certificates of deposit, or irrevocable letters of credit as required by this section for the wells specified in the order within ten days of receipt of the order. If the order is not complied with, all wells of the owner that are specified in the order and for which no bond is filed or cash, certificates of deposit, or letters of credit are deposited shall be plugged. No owner shall fail or refuse to plug such a well. Each day on which such a well remains unplugged thereafter constitutes a separate offense.
(4) The surety bond provided for in this section shall be executed by a surety company authorized to do business in this state.
The chief shall not approve any bond until it is personally signed and acknowledged by both principal and surety, or as to either by the principal’s or surety’s attorney in fact, with a certified copy of the power of attorney attached thereto. The chief shall not approve a bond unless there is attached a certificate of the superintendent of insurance that the company is authorized to transact a fidelity and surety business in this state.
All bonds shall be given in a form to be prescribed by the chief and shall run to the state as obligee.
(5) An owner of an exempt Mississippian well or an exempt domestic well, in lieu of filing a surety bond, cash in an amount equal to the surety bond, certificates of deposit, irrevocable letters of credit, or a sworn financial statement, may file a one-time fee of fifty dollars, which shall be deposited in the oil and gas well plugging fund created in section 1509.071 of the Revised Code.
(C) An owner, operator, producer, or other person shall not operate a well or produce from a well at any time if the owner, operator, producer, or other person has not satisfied the requirements established in this section.
Last updated September 6, 2023 at 2:33 PM