Oregon House Bill 2296 will increase the required well construction bond amounts for individuals drilling wells. The legislation was enacted this past August and will take effect on January 1, 2018.

The Oregon Water Resources Department (OWRD) set and regulate water well construction standards, including the requirement for operators to submit a well construction bond. In addition, the Department is responsible for licensing well drillers, approving landowner permits and inspecting wells.

How does the legislation change water well construction bond requirements?

HB-2296 will help prevent groundwater resources from contamination and waste through proper well construction by increasing the bond amounts and application fees. As a result, the price increase of Oregon well construction bonds are as follows:

• The license bond amount for individuals contracted to drill wells will double from $10,000 to $20,000.
• Licensed water well contractors not performing the work they sought out to complete are required to obtain a permit bond. The bond amount will increase from $5,000 to $10,000.
• The Landowner Permit Application Fee will increase from $25 to $500. This is only applicable to landowners who choose to work on their well without the assistance from a licensed driller.

Furthermore, the bill removes the requirement of a well-drilling machine being a condition for ordering property owners to obtain permits.

How does the amount increase impact well constructors?

The Department anticipates licensed well constructors needing a surety bond will have to pay about $100 more per year for a water well construction bond—though the exact amount to be paid by the constructor will be determined by an underwriter. This increase indicates the cost of repairing or decommissioning an improperly constructed well. The Department estimates about 400 licensed well drillers will be impacted by the Act.

What is the overall impact of the legislation?

There are an estimated 256,800 unknown wells and several thousand new wells drilled in the state of Oregon each year. Wells are used for a number of reasons, such as providing drinking water, information about groundwater levels throughout the state, and water for irrigation and industry. Since wells extend deep underground, it’s important to ensure each one is constructed properly. A poorly constructed well could lead to contaminants seeping into the groundwater and commingled aquifers.

The bill’s proposed changes could potentially lead to an increase in landowner permit applications. Between 30 to 80 landowners apply for permits on a biennial basis, according to the Department. The changes could result in an increased revenue of $28,500 from landowner permit application fees between 2017-19. An increase of $38,000 is estimated for the 2019-21 biennium. Overall, the increase in revenue could result in a greater fiscal impact for the Department.

Have questions about water well construction bonds in Oregon?

Get in touch with a surety expert by calling 1 (800) 308-4358, or, if you’re ready to get started, request your free, no obligation quote.