{"data":{"id":"us-ky/krs-353.590","jurisdiction":"us-ky","citation":"KRS 353.590","heading":"Application for permit -- Fees-- Plat -- Plugging and restoration bonds --","body":"Blanket bonds -- Corporate guarantee -- Use of forfeited funds -- Oil and gas\nwell plugging fund -- Well closure orders -- Requirements for permitted\nstratigraphic test wells -- Wells not included in \"water supply well\" -- Review\nunder KRS 353.700.\n(1) Any person seeking a permit required by KRS 353.570 shall submit to the\ndepartment a written application in a form prescribed by the department. A person\nunder eighteen (18 ) years old shall not be eligible for a permit issued under this\nchapter.\n(2) Each application shall be accompanied by a specified fee as follows:\n(a) The fee shall be three hundred dollars ($300) for each well to be drilled,\ndeepened, or reopened for any purpose relating to the production,\nrepressuring, or storage of oil or gas, and for each water supply well,\nobservation well, and geological or structure test hole.\n(b) If the department receives delegation of authority for administration of the\nunderground injection control program under Section 1425 of the Safe\nDrinking Water Act (Pub. L. 93 -523 as amended), the department may, by\nadministrative regulation, establish a fee or schedule of fees in an amount not\nto exceed fifty dollars ($50) per well, in add ition to the fees imposed by\nparagraph (a) of this subsection, upon each application to drill, deepen, or\nreopen a well for any purpose relating to the production, repressuring, or\nstorage of oil or gas, and for each water supply well, observation well, an d\ngeological or structure test hole. The fees or schedule of fees to be established\nby administrative regulation shall not exceed an amount sufficient to recover\nthe costs incurred by the department in administering the Underground\nInjection Control Program less any other state or federal funds which are made\navailable for this purpose.\n(c) All money paid to the State Treasurer for fees required by paragraph (b) of\nthis subsection shall be for the sole use of the department in the administration\nof the Underground Injection Control Program under Section 1425 of the Safe\nDrinking Water Act (Pub. L. 93-523 as amended).\n(3) Applications for each deep well shall be assessed a fee according to the following\nschedules:\n(a) For a vertical deep well:\n1. With a total vertical depth of seven thousand (7,000) feet or less, the fee\nshall be five hundred dollars ($500); and\n2. With a total vertical depth greater than seven thousand (7,000) feet, the\nfee shall be six hundred dollars ($600); and\n(b) For a horizontal deep well:\n1. With a total measured well depth of ten thousand (10,000) feet or less,\nthe fee shall be five thousand dollars ($5,000);\n2. With a total measured well depth greater than ten thousand (10,000)\nfeet, the fee shall be six thousand dollars ($6,000); and\n3. Five hundred dollars ($500) for each additional lateral.\n(4) For a horizontal deep well, each additional deep horizontal well located on the same\nwell pad shall be assessed the following fee:\n(a) Three thousand dollars ( $3,000) for a total measured well depth up to ten\nthousand (10,000) feet; and\n(b) Four thousand dollars ($4,000) for a total measured well depth greater than\nten thousand (10,000) feet.\n(5) All money paid to the State Treasurer for licenses and fees requir ed by KRS\n353.500 to 353.720 shall be for the sole use of the department and shall be in\naddition to any moneys appropriated by the General Assembly for the use of the\ndepartment.\n(6) Each application shall be accompanied by a plat, which shows the locatio n and\nelevation of each well, prepared according to the administrative regulations\npromulgated under KRS 353.500 to 353.720. The plat shall be certified as accurate\nand correct by a professional land surveyor licensed in accordance with the\nprovisions of KRS Chapter 322.\n(7) When any person submits to the department an application for a permit to drill a\nshallow well, or to reopen, deepen, or temporarily abandon any well which is not\ncovered by surety bond, the department shall, except as provided in this s ection,\nrequire from the shallow well operator the posting of a bond. For any well permit\nissued after June 27, 2019, the department shall require two dollars ($2) of bond\namount for every foot of true vertical well depth. For applications for well transfe rs\nfiled after June 27, 2019, pursuant to subsection (23) of this section, bonding shall\nbe two dollars ($2) for every foot of true vertical well depth and shall be posted by\nthe transferee operator. Failure to post the required bond shall result in an ord er\nissued by the department:\n(a) Requiring the proper plugging and abandonment of the shallow well or wells;\nor\n(b) Refusing to transfer the requested shallow well or wells.\n(8) Plugging and reclamation bonds for vertical deep wells shall be twenty -five\nthousand dollars ($25,000). However, the commission may establish a higher\nbonding amount for vertical deep wells if the anticipated plugging and reclamation\ncosts exceed the minimum bonding amounts established in this section.\n(9) The minimum amount of plug ging and reclamation bond for a horizontal deep well\nshall be forty thousand dollars ($40,000). However, the commission may establish a\nbond amount greater than forty thousand dollars ($40,000) if the anticipated\nplugging and reclamation costs exceed the minimum bond.\n(10) (a) All bonds required to be posted prior to June 27, 2019, under this section for\nplugging shallow wells shall:\n1. Be made in favor of the department;\n2. Be conditioned that the wells, upon abandonment, shall be plugged in\naccordance wit h the administrative regulations of the department and\nthat all records required by the department be filed as specified; and\n3. Remain in effect until the plugging of the well is approved by the\ndepartment, or the bond is released or forfeited by the department.\n(b) All bonds required to be posted after June 27, 2019, under this section for\nplugging shallow wells shall:\n1. Be made in favor of the department;\n2. Be conditioned on the wells, upon abandonment, being plugged and the\ndisturbed areas reclaimed i n accordance with applicable statutes and the\nadministrative regulations promulgated thereunder, and on all records\nrequired by the department being filed as specified; and\n3. Remain in effect until the plugging of the well and the reclamation of\nthe disturbed area is approved by the department, or the bond is released\nor forfeited by the department.\n(c) All bonds required to be posted under this section for plugging deep wells\nshall:\n1. Be made in favor of the department;\n2. Be conditioned that the wells, upon abandonment, shall be plugged and\nthe disturbed area reclaimed in accordance with the statutes and the\nadministrative regulations of the department and that all records required\nby the department be filed as specified; and\n3. Remain in effect until th e plugging of the well and the reclamation of\nthe disturbed area is approved by the department or the bond is released\nby the department.\n(11) An operator may petition the department to amend the drilling depth and bond\namount applicable to a particular we ll and shall not proceed to drill to a depth\ngreater than that authorized by the department until the operator is so authorized,\nexcept pursuant to administrative regulations promulgated by the department.\n(12) (a) Any shallow well blanket bond filed by an  operator prior to June 27, 2019,\nshall remain in effect until the plugging or transfer of all the wells secured by\nthe blanket bond, or the blanket bond is released or forfeited by the\ndepartment. In the event that a number of the wells are plugged, transferred, or\nboth, that result in the operator being eligible for a blanket bond in a lower\namount, the department shall release the bond to a lower amount based upon\nthe tiered structure in existence at the time the bond was issued. After June 27,\n2019, in the event that an operator with a shallow well blanket bond that was\nfiled prior to June 27, 2019, drills or acquires additional wells and has\nremaining capacity on the blanket bond after June 27, 2019, the operator may\nsecure such wells with the existing blanket bond up to the limits of the bond.\nHowever, the number of wells that are eligible to be covered by a blanket\nbond filed prior to June 27, 2019, that were in a tier with more than five\nhundred (500) wells shall be limited to one thousand (1,000) wells.\n(b) After June 27, 2019, any shallow well operator, in lieu of an individual bond,\nmay file with the department a blanket bond according to the following tiered\nstructure:\n1. One (1) to twenty -five (25) wells require a twenty thousand dollar\n($20,000) bond;\n2. Twenty-six (26) to one hundred (100) wells require an additional thirty\nthousand dollar ($30,000) bond;\n3. One hundred one (101) to five hundred (500) wells require an ad ditional\none hundred fifty thousand dollar ($150,000) bond; and\n4. Five hundred one (501) to one thousand (1,000) wells require an\nadditional one hundred thousand dollar ($100,000) bond.\n(c) After June 27, 2019, well operators who have more wells than can be\naccommodated by the blanket bonding structure established in paragraph (b)\nof this subsection or as in effect pursuant to paragraph (a) of this subsection\nmay, in lieu of individual bonds, incrementally increase the amount of their\nblanket bonds filed w ith the department according to the tiers established in\nparagraph (b) of this subsection. Nothing contained in this subsection shall\nrequire a well operator with a blanket bond in existence prior to June 27,\n2019, to increase the amount of its blanket bond as to the wells covered by the\nexisting blanket bond.\n(13) If the operator is a corporate subsidiary, the operator further shall provide a\ncorporate guarantee in which the guarantor shall be the parent corporation of the\noperator of the wells covered und er the bond. The corporate guarantee shall\nprovide:\n(a) That if the operator fails to perform with the proper plugging and\nabandonment of any well covered by the blanket bond, the guarantor shall do\nso or provide for alternate financial assurance; and\n(b) The corporate guarantee shall remain in force unless the guarantor sends\nnotice of the cancellation by certified mail to the operator and to the\ndepartment. Cancellation shall not occur, however, during the one hundred\ntwenty (120) day period beginning on the first day that both the operator and\nthe department have received notice of cancellation, as evidenced by the\ncertified mail return receipts.\n(14) An operator shall not be eligible to file a new blanket bond or add additional wells\nto an existing blanket bond if the operator has:\n(a) Any outstanding, unabated violations of KRS Chapter 353 or the regulations\nadopted pursuant thereto which have not been appealed;\n(b) A forfeiture of a bond, whether an individual bond or portion of a blanket\nbond, on any p ermit where the operator has not entered into an agreed order\nwith the department for the plugging and proper abandonment of the well or\nwells on the forfeited permit or permits; or\n(c) A permit or permits, upon which a bond or portion of a bond has been\nforfeited and the proceeds from the forfeiture have been spent by the\ndepartment to plug or reclaim the permitted well or wells, unless the operator\nhas made restitution to the department for all costs associated with the\nforfeiture, plugging, and proper abandonment.\n(15) Any deep well operator, in lieu of an individual bond, may file with the department\na blanket bond according to the following:\n(a) One (1) to ten (10) vertical deep wells require a two hundred thousand dollar\n($200,000) bond; and\n(b) One (1 ) to ten (10) horizontal deep wells require a three hundred twenty\nthousand dollar ($320,000) bond.\n(16) A deposit in cash or a bank -issued irrevocable letter of credit may serve in lieu of\neither of the individual well or blanket bonds.\n(17) Individuals acquiring a single well for domestic use may post a combination bond\nwhich shall consist of a cash bond in the amount of one thousand dollars ($1,000)\nplus a lien on the property to cover future plugging costs. Only one (1) combination\nbond may be posted by each individual.\n(18) A certificate of deposit, the principal of which is pledged in lieu of a bond and\nwhose interest is payable to the party making the pledge, may serve for an\nindividual well bond. A certificate of deposit, the principal of which is pl edged in\nlieu of a bond and whose interest is payable to the party making the pledge, may\nserve for a blanket bond, provided that the first five thousand dollars ($5,000) of the\nblanket bond is posted with the department in cash.\n(19) The bond or bonds ref erred to in this section shall be executed by the well operator\nas principal and, if a surety bond, by a corporate surety authorized to do business in\nthe Commonwealth.\n(20) A deposit in cash shall serve in lieu of either of the above bonds; all cash bonds\naccepted by the department shall be deposited into an interest -bearing account, with\nthe interest thereon payable to the special agency account known as the oil and gas\nwell plugging fund, created in subsection (27) of this section, to be used in\naccordance with the purposes described therein. All cash bonds being held by the\ndepartment on July 13, 1990, shall likewise be deposited in the interest -bearing\naccount, with the proceeds to be used for the purposes established for the oil and\ngas well plugging fund.\n(21) The bond amounts prescribed by subsection (7) of this section shall be applicable\nonly to permits issued after June 27, 2019. All bonds posted for permits issued prior\nto June 27, 2019, shall remain in full force and effect for the duration of th e permits\nsecured by the bonds.\n(22) The blanket bond amounts prescribed by subsection (12) of this section shall be\neffective after June 27, 2019. Any operator having filed a blanket bond with the\ndepartment prior to June 27, 2019, in the event that the c apacity of the bond is\nreached, may at its discretion increase the level of the blanket bond incrementally\nby increasing the blanket bond by the amount of the individual bond prescribed by\nsubsection (12) of this section on any wells drilled subsequent to June 27, 2019,\nuntil the blanket bond has reached the level necessary to conform to the tiers\nprescribed by subsection (12) of this section.\n(23) (a) Prior to commencing use or operation of a well or wells operated in the name\nof a different operator, a well operator seeking to become a successor operator\nshall file an application to transfer the well or wells executed by both the\ncurrent operator and the applicant, pay a fee of fifty dollars ($50) per well to\nthe department, and post the appropriate bond.\n(b) 1. Upon receipt of a request for a well records report made by an operator\nseeking to become a successor operator and approved by the current\noperator, the department shall print a well records report of the wells\nrequested and provide the report to bo th the current operator and the\noperator seeking to become a successor operator.\n2. If the report indicates the existence of outstanding violations or of\nmissing records required to be filed pursuant to this chapter, on any\napplication to transfer a well or wells filed within thirty (30) days of the\ndate of the well report, the successor operator may decline to accept\ntransfer of any wells with outstanding violations or with missing\nrecords, or may agree to accept responsibility for abatement of the\nviolations or the filing of the missing records.\n3. Based upon the successor operator's res ponse to the well record report\nand subject to bonding requirements and the provisions of KRS 353.572,\nthe department shall approve the transfer of the requested well or wells\nor any portion thereof not declined by the successor operator.\n4. The department may not hold a successor operator responsible or liable\nfor missing records not disclosed on the well record report provided by\nthe department prior to transfer, or for missing records that were not\nfiled or completed by a previous operator and for which information\nnecessary to complete the records is not reasonably available.\n(c) Subject to KRS 353.572, upon receipt of written approval of the requested\ntransfer, the successor operator shall assume the obligations of this chapter as\nto the particular well or wells and relieve the current operator of responsibility\nunder this chapter with respect to the well or wells transferred. It shall be the\nresponsibility of the current operator to ensure that the successor operator has\ncomplied with the requirements o f this subsection before relinquishing\noperations to the successor operator and before relief of responsibility under\nthis chapter is granted to the current operator. The current operator shall\nremain responsible, and its bond shall not be released, on any  well or wells\nwith an outstanding violation or missing records for which a successor\noperator declined to accept a transfer.\n(24) If the requirements of this section with respect to any provision of KRS 353.500 to\n353.720 or 353.735 to 353.747, or any adm inistrative regulation or order\npromulgated or issued thereunder, have not been complied with within the time\nlimits set by the department, by administrative regulation, or by this chapter, the\ndepartment shall cause a notice of noncompliance to be served upon the operator by\ncertified mail, addressed to the permanent address shown on the application for a\npermit.\n(a) The notice shall specify in what respects the operator has failed to comply\nwith this chapter or the administrative regulations of the department.\n(b) If, within forty-five (45) days after mailing of the notice of noncompliance, no\nagreement has been reached with the department regarding the alleged failure\nto comply, and the director determines that the operator has not complied with\nthe requi rements set forth by the department, the bond shall be ordered\nforfeited to the department. The forfeiture order shall become effective thirty\n(30) days after the department gives the operator notice of the order, unless a\npetition has been filed pursuant to KRS 353.700, in which case the forfeiture\norder shall only become effective upon a final determination of the secretary\naffirming the forfeiture order following the conclusion of the petition process.\n(25) (a) In addition to a notice of noncompliance is sued pursuant to subsection (24) of\nthis section, the cabinet may issue a well closure order to any person or\noperator where:\n1. An oil and gas well is in violation of KRS 353.500 to 353.720 or\n353.735 to 353.747, or any administrative regulation or order\npromulgated or issued thereunder, and the violation is causing or could\nbe reasonably expected to cause an imminent threat to human health,\nsafety, or the environment; or\n2. The operation of an oil and gas well by any person without first posting\nbond.\n(b) The well closure order shall be affixed by a red tag marker to the wellhead\nwith a letter of violation and a copy of the well closure order mailed to the\naddress of record for the responsible person or operator, if an address is on file\nwith the division. The letter of violation and well closure order shall notify the\nperson or operator to immediately:\n1. Cease operation of the well; and\n2.  Abate the violation of KRS 353.500 to 353.720 or 353.735 to 353.747,\nor any administrative regulation or order promu lgated or issued\nthereunder.\n(c) Any person operating a well under the circumstances described in paragraph\n(a)2. of this subsection may be ordered to properly plug and abandon the well,\nbut such order does not relieve any prior obligation owed by the curr ent\noperator of record pursuant to KRS 353.180. The well closure order may be\nappealed pursuant to KRS 353.700 within thirty (30) days of issuance.\n(26) A bond forfeited pursuant to the provisions of this chapter may be collected by an\nattorney for the dep artment or by the Attorney General, after notice from the\ndirector.\n(27) All sums received through the forfeiture of bonds shall be placed in the State\nTreasury and credited to a special agency account to be designated as the oil and gas\nwell plugging fund , which shall be an interest -bearing account with the interest\nthereon payable to the fund. This fund shall be available to the department and shall\nbe expended for the plugging of any abandoned wells coming within the authority\nof the department pursuant to this chapter. The plugging of any well pursuant to this\nsubsection shall not be construed to relieve the operator or any other person from\ncivil or criminal liability which would exist except for the plugging. Any\nunencumbered and any unexpended balance of this fund remaining at the end of any\nfiscal year shall not lapse but shall be carried forward for the purpose of the fund\nuntil expended or until appropriated by subsequent legislative action.\n(28) (a) Any permitted stratigraphic test well:\n1. Is subj ect to all requirements under this section and KRS 353.5901,\n353.550, 353.610, and 353.660(1) and (4) as if the stratigraphic test well\nwere defined as a \"well\" in KRS 353.510(14); and\n2. Shall be plugged within one hundred eighty (180) days of completion of\ndrilling the well.\n(b) A stratigraphic test well shall be permitted as an oil and gas production well\nprior to:\n1. Producing oil or gas; or\n2. Deviating from true vertical.\n(c) Any stratigraphic test well converted to an oil or gas production well under\nparagraph (b) of this subsection shall be subject to the requirements of KRS\n353.660(1) to (3).\n(29) For the purpose of this chapter, \"water supply well\" shall not include:\n(a) Any well for a potable water supply for domestic use or for livestock; or\n(b) Any water well used primarily for cooling purposes in an industrial process.\n(30) Any order or final determination of the department under this section shall be\nsubject to review in accordance with KRS 353.700 and any administrative\nregulations promulgated thereunder.","path":["KRS Chapter 353"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=48617","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:39Z","sha256":"cd2cb8371e841f93ecd20dae4c33b4fbd4110fad61098f7e4d001263426a9910","source_id":"us-ky","stale":false,"prev":"us-ky/krs-353.588","next":"us-ky/krs-353.5901"},"notice":"GroundRules: Original legal text. Not legal advice."}