§ 16-7. Permittee's bonds and insurance.

In the event a permit is issued by the oil and gas inspector, no actual operations shall be commenced until the permittee shall file with the City bonds and a certificate of insurance, as follows:

A. 

A bond in the principal sum of at least one hundred thousand dollars, such bond to be executed by a reliable insurance company authorized to do business in the state, as surety, and with the applicant as principal, running to the City for the benefit of the City and all persons concerned, conditioned that the permittee will comply with the terms and conditions of this chapter in the operation of the well for either natural or artificial production, injection or disposal. Such bond shall become effective on or before the date the same is filed with the City and remain in force and effect for at least twelve months subsequent to the expiration of the permit term; in addition the bond will be conditioned that the permittee will promptly pay fines, penalties and other assessments imposed upon the permittee by reason of his breach of any of the terms, provisions and conditions of this chapter; that the permittee will promptly restore the streets, sidewalks and other public property of the City which may be disturbed or damaged in the permittee's operations to their former condition; that the permittee will promptly clear all premises of all litter, trash, waste and other substances and will, after abandonment, grade level and restore such property to the same surface condition, as practicable as is possible, as existed prior to commencing operations; and, further, that the permittee shall indemnify and hold harmless the City from all liability attributable to granting the permit.

If, after the completion of a producing well, the permittee has complied with all of the provisions of this chapter, such as removing the derrick and clearing the premises, he may apply to the oil and gas inspector to have such bond reduced to a sum of not less than fifty thousand dollars for the remainder of the time such well produces without reworking. During reworking operations the amount of the bond shall be increased to the original amount.

B. 

In addition to the bond required in subsection A of this section, the permittee shall obtain a bond in the principal sum of at least one million dollars; or policies of public liability insurance, including contractual liability, which policies in the aggregate shall provide a minimum coverage of at least one million dollars; or, with the City council's prior approval, a letter of indemnity of not less than one million dollars. No policy shall include any exclusion for property damage caused by explosion hazard, collapse hazard, blowout and cratering or underground property damage, or for damage resulting from discharge, dispersal, release or escape of other oil or petroleum substance or derivative into or upon any watercourse or body of water. Such bond or insurance policy shall be executed by a reliable insurer licensed to do business in the state. Such bond, insurance policy or letter of indemnity shall run to the benefit of the City and all persons concerned, conditioned that the permittee will comply with every applicable federal and state and local law, rule, ordinance, regulation, standard or directive relating to the maintenance of the safe and beneficial physical, chemical and biological properties of any natural waters of the City; that the permittee shall obtain the necessary permits from the City and state with regard to any operations which have the potential of rendering such waters harmful or detrimental or injurious to the public health, safety and welfare; that the permittee shall bear all the costs necessary and incidental to the correction of any pollution to such waters caused by the permittee or the permittee's agents, servants, employees, subcontractors or independent contractors; that the permittee shall pay all fines, penalties, assessments or judgments resulting directly or incidentally from the permittee's activities and which result in pollution of City waters; and that the permittee shall indemnify and hold harmless the City from all liability attributable to granting the permit or from the operation of such well.

C. 

In addition to the bonds required in subsections A and B of this section, the permittee shall carry policies of standard comprehensive public liability insurance, including contractual liability covering bodily injuries and property damage, naming the permittee and the City, issued by an insurer authorized to do business within the state. Such policies, in the aggregate, shall provide for the following minimum coverage: (1) Bodily injuries, five hundred thousand dollars per person; one million dollars per accident; (2) Five hundred thousand dollars.

(1) 

The permittee shall file with the City certificates of such insurance as above stated and shall obtain the written approval thereof of the oil and gas inspector, who shall act thereon promptly after the date of such filing.

(2) 

Such insurance policies shall not be canceled without written notice to the oil and gas inspector at least thirty days prior to the effective date of such cancellation. In the event such policies are canceled, the permit granted shall immediately thereupon terminate, without any action on the part of the oil and gas inspector, and the permittee's rights to operation under such permit shall cease until the permittee files additional insurance as provided herein.

(3) 

If, after completion of a producing well, the permittee has complied with all of the provisions of this chapter, such as removing derricks, clearing premises and the like, he may apply to the oil and gas inspector to have such insurance policies reduced as follows: Bodily injuries, two hundred fifty thousand dollars per person and five hundred thousand dollars per accident; and property damage, two hundred fifty thousand dollars.