26.19.01.06

.06 Drilling and Operating Permit Application Procedures for the Applicant.

A. A person proposing to conduct any of the following operations to obtain or increase the production of oil or gas within the State shall first obtain a drilling and operating permit from the Department before the person:

(1) Prepares a well site for the operation;

(2) Drills a well for oil or gas;

(3) Redrills at a location previously permitted;

(4) Deepens an existing well drilled for oil or gas;

(5) Drills a core hole or stratigraphic test; or

(6) Drills a well for the storage of natural gas or the observation of the storage of natural gas.

B. A person continuously operating or producing an oil well, a gas well, or a gas storage well before July 1, 1991 shall obtain a new drilling and operating permit within 12 months of the effective date of this regulation.

C. An application for a new drilling and operating permit shall be submitted to the Department on forms provided by the Department and shall contain the following:

(1) The names, addresses, business status, and telephone numbers of the applicant, operator, and resident agent;

(2) A plat prepared and certified by a Maryland licensed professional land surveyor or property line surveyor containing the information required in §E of this regulation;

(3) An environmental assessment;

(4) A certificate of liability insurance showing personal injury and property damage liability coverage in the name of the permittee of at least $1,000,000 for each person and $5,000,000 for each occurrence or accident, or proof of self-insurance that is in a form acceptable to the Department under the following criteria:

(a) The applicant has been in continuous operation as a business entity for not less than 5 years, with "continuous operation" meaning that the business was conducted over a period of 5 years immediately preceding the time of application,

(b) The applicant has a current rating for its most recent bond issuance of "AA" or higher as issued by either Moody's Investor Service or Standard and Poor's Corporation,

(c) The applicant's fixed assets in the United States total at least $20,000,000, and the applicant has a ratio of total liabilities to net worth of 2.5 times or less, and a ratio of current assets to current liabilities of 1.2 times or greater,

(d) The applicant submits financial statements for the most recently completed fiscal year accompanied by a report prepared by an independent certified public accountant in conformity with generally accepted accounting principles, and containing the accountant's audit opinion or review opinion of the financial statements that contain no adverse opinion;

(5) A performance bond conditioned on compliance with Environment Article, §§14-101—14-120, Annotated Code of Maryland, this chapter, and the permit issued under this chapter, and which shall be:

(a) Made payable to the Department in an amount not to exceed $100,000 per well, or not to exceed $500,000 as a blanket bond for all of the applicant's wells, and

(b) In the form of irrevocable letters of credit payable to the State from any bank within the State, or a surety bond issued by an insurance company authorized to do business in the State;

(6) A copy of the oil and gas lease that gives the permittee the right to enter and drill at the location shown on the plat, and if the mineral rights have been severed, a copy of the right of entry agreement with the surface owner;

(7) If a pooled unit, copies of all leases in the unit which shall accompany the application showing the right to pool interests;

(8) A copy of an agreement signed by the applicant and the landowner stating that the Department may enter the land, after making a reasonable effort to notify the permittee, the owner, or any subsequent owners, at any reasonable time during the term of the permit and until the performance bond is released;

(9) Certification by the applicant that the applicant has notified, in writing, each landowner and leaseholder of real property that borders the proposed drillable lease area of the applicant's intention to file an application for permit to drill a well;

(10) Notification to owners or leaseholders of property within 2,000 feet of a well proposed in an underground storage reservoir that existed on July 1, 1990;

(11) Written approval by the local zoning authority that all local planning and zoning requirements have been met;

(12) A sediment and erosion control plan approved by the Department of the Environment, or the appropriate soil conservation district;

(13) A stormwater management plan approved by the Department of the Environment or delegated county agency;

(14) A reclamation plan for restoring the well site that includes the criteria stated in §F of this regulation;

(15) A pit design plan that will prevent any drilling liquid from coming into contact with any waters of the State;

(16) A spill prevention, control, and countermeasures plan in accordance with 40 CFR 112;

(17) A statement listing all equipment available for the detection, prevention, and containment of gas leaks and oil spills;

(18) A statement listing all other federal, State, county, and local permits and approvals required, and the status of each; and

(19) Other relevant materials and documents considered necessary by the Department.

D. When an applicant seeks to directional drill, the applicant shall state the:

(1) Reason for the proposed directional drilling;

(2) Depth at which deviation from the vertical is planned; and

(3) Horizontal distance and direction of the planned objective with reference to the surface location.

E. Drilling and Operating Permit Plat.

(1) The plat or plats shall be drawn in ink on polyester drafting film or similar base-stable material at a scale of 1 inch equals 600 feet.

(2) Information Required to be Included in Plat.

(a) The plat or plats shall include the following information prepared by a licensed land surveyor:

(i) The proposed well location;

(ii) If directional drilling is proposed, both the surface location and the proposed bottom-hole location shall be shown;

(iii) At least two permanently established property tract boundary corners, with bearings and distances to the proposed well established by an on-ground survey;

(iv) Boundaries of the lease or pooled unit containing the well location, with individual lease boundaries within a pooled unit being shown by an on-ground survey, deed calls, or tax map references;

(v) Boundaries of adjoining properties with names and addresses of fee owners, surface owners, mineral owners, and oil and gas lessees;

(vi) All plat lines actually surveyed shall be shown with solid lines, and lines taken only from deed descriptions or tax maps shall be shown by broken lines;

(vii) Ownership and lease information may be based upon current tax records or land record indexes.

(b) The applicant may list ownership and lease information on a supplemental list indexed to the tracts on the plat.

(c) The plat or plats shall include the following information obtained from the best available sources:

(i) Active oil and gas drilling, production wells, abandoned wells, storage wells, and injection wells within 2,640 feet of the proposed well location;

(ii) Water wells within 2,640 feet of the proposed well location;

(iii) Churches, schools, buildings, and occupied dwellings within 2,640 feet of the proposed well location;

(iv) Any part of the Chesapeake Bay Critical Area, 100-year floodplain as established by the Federal Emergency Management Agency flood insurance rate maps, nontidal wetlands, streams, or other bodies of water within 1 mile of the proposed well;

(v) Roads, railroads, and other transportation routes within 2,640 feet of the proposed well;

(vi) Location of active and abandoned underground coal mines and workings within 1 mile of the proposed well;

(vii) Superimposed on the plat, the same proposed well location (both surface and bottom hole locations, if the well is to be directionally drilled) marked with a cross and plotted at the topographic quadrangle map scale of 1 inch equals 2,000 feet, showing distances in feet from the proposed well location to the nearest 2.5 minutes of latitude and longitude to the northeast, as represented at the upper right hand corner of the plat; and

(viii) A legend identifying the different types of wells and other features shown on the plat.

F. Drilling and Operating Reclamation Plan.

(1) The reclamation plan shall describe how roads, well sites, and pits will be reclaimed.

(2) The reclamation plan shall include a:

(a) Proposed time schedule for each major step in the reclamation plan;

(b) Description of measures to be employed to dispose of debris, acid-forming and toxic-forming materials, and materials constituting a fire hazard, and a description of the contingency plans which have been developed to preclude sustained combustion of these materials;

(c) Plan for backfilling, soil stabilization, compacting, grading, and controlling surface drainage following regrading, with contour maps at a scale of 1 inch equals 50 feet and cross sections that show the existing slope and the anticipated final surface configuration of the proposed permit area;

(d) Plan for removal, storage, and redistribution of topsoil, subsoil, or other materials, and revegetation to protect the site from erosion;

(e) Description, including appropriate cross sections and maps, of the measures to be used to plug, case, or manage exploration holes, other bore holes, wells, and other openings within the proposed permit area;

(f) Description of how the free liquid fraction and contaminated materials will be disposed of in accordance with requirements of the Department;

(g) Plan for disposing of the cuttings by:

(i) Land farming into those areas of disturbance;

(ii) Transporting to an approved disposal facility; or

(iii) Other methods of disposal as approved by the Department; and

(h) Plan for eliminating the impermeability of the pit at approximately 10-foot intervals to allow water percolation.