Financial Security
Per 6 NYCRR 551.4, all owners of regulated wells are required to secure and maintain appropriate financial security payable to DEC. Financial security is required to guarantee the performance of well plugging and abandonment per 6 NYCRR 555. Acceptable financial security instruments are as surety bonds, irrevolcable bank letters of credit, assignments of certificates of deposit, and cash or check. In the event of cancellation, non-renewal, or termination of financial security, the registered well operator is responsible for providing replacement financial security to prevent department action to call the proceeds of the surety instrument.
Financial Security Form Templates
- Surety Bond - A surety bond may be used to satisfy a well operator's financial security requirement. A surety bond rider is used to make changes to an existing surety bond. The Adobe Acrobat version of the Surety Bond can be completed on-line and printed for signing and submitted to the Division.
- Irrevocable Letter of Credit (ILOC) - a letter from a bank guaranteeing payment until a specified date of expiration that cannot be cancelled or modified unless all involved parties agree. A letter of credit submitted under financial institution letterhead may be used to satisfy a well operator's financial security requirement. The letter of credit must be established in the name of The New York State Department of Environmental Conservation. Changes to an existing letter of credit must be made by using the Letter of Credit Amendment form.
- Certificate of Deposit - A certificate of deposit may be used to satisfy a well operator's financial security requirement. This fixed-rate savings account cannot be withdrawn for a specified time. It must be assigned to The New York State Department of Environmental Conservation by using the Assignment of Certificate of Deposit Form. The certificate of deposit must be held by the issuing institution, and a copy of the assignment letter must be attached to it. Any derived interest or dividends are the sole property of the principal. Changes to an existing certificate of deposit assignment must be made by using the Certificate of Deposit Amendment form below.
- Certificate of Deposit (CD) (PDF) (15 KB)
- Certificate of Deposit (CD) (Word) (14 KB)
- Certificate of Deposit Amendment (PDF) (216 KB)
- Certificate of Deposit Amendment (Word) (30 KB)
- Cash or Check and Substitute Form W-9 (PDF) (237 KB) - the operator can submit either cash or check with a Substitute Form W-9 to satisfy the financial security requirement.
Use the Financial Security Worksheet (PDF) (196 KB) or the Regulated Well Financial Security Calculator below to determine the amount of financial security required.
Calculating Required Financial Security
Wells with Depths Less Than or Equal to 6,000 feet
Per 6 NYCRR 551.5, financial security is required for wells for which DEC issued a drilling permit on or after October 1, 1963 or for which DEC issued an acknowledgment of a Notice of Intention to Drill on or after June 5, 1973. Each well less than 2,500 feet in depth requires $2,500 in financial security, and each well between 2,500 feet and 6,000 feet in depth requires $5,000 in financial security, with blanket options available for both depth categories.
The calculator below will determine required amounts of financial security. Enter the number of wells from each depth category (depth less than 2,500 feet and depth from 2,500 feet to 6,000 feet) in the appropriate boxes and then click the "Calculate" button.
If you input a number of wells from both depth categories, the calculator will show two filing options:
- Option A requires a separate financial security instrument for each depth category, which is calculated next to the entered number of wells.
- Option B requires one type of financial security instrument. The number of wells from both depth categories are summed. Then, a financial security amount is calculated for the summed wells using only the depth category from 2,500 feet to 6,000 feet.
