Long-standing regulations mandate that coal companies post bonds for land restoration after mining operations are complete. However, coal companies can use financial liquidity to satisfy these bonds, known as self-bonding. Companies are using the fiscal strength of subsidiaries instead of their own accounts to self-bond. Ultimately, a company can appear financially healthy enough to qualify for reclamation bonds, but in the face of a declining industry it may not have enough cash to cover full clean-up of mining sites. Bankruptcy highlights the insufficiency of such reclamation procedures and the supporting bonding process. The author evaluates several ways to cope with the self-bonding problem under the existing bankruptcy framework, including the existing requirements of the good faith and feasibility requirements, and proposes a carved out exception within the Bankruptcy Code disallowing prior coal bankruptcy debtors from self-bonding.
Bankruptcy's Role in the Growing Dilemma of Self-Bonding in the Coal Industry,
Emory Bankr. Devs. J.
Available at: https://scholarlycommons.law.emory.edu/ebdj/vol34/iss1/9