Environmental Repair in the Energy Transition

For nearly a century, American laws have required mines, oil and gas companies, and other potentially hazardous industries to restore land affected by their activities to a safe condition when they are done with it. These laws represent a grand bargain—they allow operators to make profitable but damaging use of land today in exchange for the promise of expensive remediation tomorrow. However, this bargain has proven hard to enforce. Dozens of “zombie” mines scar mountains in Kentucky. Unrecorded “orphaned” wells poison groundwater in Texas. Over the past century, these laws have become the center of a legal arms race. Fossil fuel companies attempt to dodge, delay, or abandon their obligations while regulators attempt to stop them. When companies escape their obligations, the public must bear the costs of environmental repair or suffer catastrophic harm.

This Article offers the first comprehensive account of this century-old doctrine: the law of environmental repair. In doing so, it documents a regime in crisis and identifies a new systemic risk to environmental repair law: the global transition to renewable energy. The energy transition threatens to destroy the fossil fuel companies liable for environmental repair obligations while simultaneously undermining the legal tools that enforce those companies’ environmental promises. In response to this threat, and to the long-standing failures of environmental repair law, this Article proposes a new model of environmental law, the “environmental earnout.” Environmental earnouts are conceptually simple: They hold back part of the profits from damaging land uses until environmental repair is complete. While simple, environmental earnouts offer a new and sophisticated tool to reshape the fundamental bargain of environmental repair and protect the public from the environmental harm caused by abandoned fossil fuel infrastructure.

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Introduction

The abandoned oil well behind the Simmons family barn bubbled when it rained.[1] The well was one of several located on the Simmonses’ property, a horse farm nestled against Cuyahoga Valley National Park, Ohio.[2] In 1969, just a few miles downstream in Cleveland, a fire on the oil-slicked Cuyahoga River became a powerful symbol for the rising environmental movement.[3] But in 2017, despite half a century of vigorous activism that saw environmentalism erected as a pillar of American law, methane was hissing from the ground behind the Simmonses’ barn.[4]

Methane is bad news. While methane itself is not directly toxic to humans, it is a highly potent pollutant that contributes to global climate change and hazardous ground-level ozone formation.[5] When methane is released into groundwater, it can spark complex chemical reactions that contaminate aquifers.[6] Recent studies suggest that even trace methane from abandoned wells comes laced with a wide range of “volatile organic chemicals,” or VOCs, including cancer-causing benzene.[7] At higher concentrations, the risks of methane become even more dramatic. In April of 2017, around the time the Simmons family first noticed the leak behind their barn, a family home in Firestone, Colorado, was destroyed in a mysterious explosion.[8] A two-year investigation traced the explosion to methane leaks from a disused well that had seeped into the basement of the house.[9] When the owner and his brother-in-law connected a water heater in the home’s basement, the resulting fireball blew the house from its foundations, killing the two men instantly and injuring a woman and child who were upstairs.[10] In short, the leaking well behind the Simmonses’ barn was a problem they could not afford to ignore.

The family spent years looking for help. Pine Top, Inc., the oil and gas company that had drilled the well in 1983, was long defunct.[11] Ohio had a program to help seal abandoned wells, which plugged fifteen similar wells in fiscal year 2017.[12] However, the program was swamped by a waitlist of twenty thousand other wells.[13] In 2021, a national charity, the Well Done Foundation, connected the family with three North Carolina high schoolers who agreed to “adopt” the well and help pay for its closure. They fundraised for months; donors ranged from major philanthropists to the ten-year-old cousin of one of the teens, who “gave all of his birthday money, a total of $120, to the cause.”[14] In 2024, seven years after the Simmons family first heard the methane leaks, workers began pouring concrete to cap the well.[15]

There are 2.2 million abandoned and unplugged oil and gas wells in the United States.[16]

For nearly a century, American law has required mines, oil and gas companies, and other hazardous industries to restore land affected by their activities to a safe and usable condition when they are done with it.[17] This duty to restore land goes by many names—abandonment,[18] reclamation,[19] decommissioning,[20] restoration[21]—and arises under a staggering range of legal regimes, including private contracts,[22] state permitting rules,[23] and federal statutes.[24] While these rules govern wildly different activities, all adopt the same structure: They tie the right to undertake a profitable but damaging land use today to an obligation to restore affected land to a safe and usable condition when the damaging activities end. However, this obligation has proven hard to enforce. Dozens of “zombie mines” scar mountains in Kentucky.[25] Unrecorded “orphaned” wells poison groundwater in Texas.[26] In response to these challenges, extensive bodies of legal scholarship address each regime under which this duty is found, from nuclear power plants to offshore oilfields to wind and solar farms.[27] However, decades of scholarship have offered only tactical, rather than structural, reforms. Until recently, few scholars have viewed this parallel collection of contractual and statutory duties as a distinct body of environmental law, with distinct structures, doctrines, and challenges.[28] In recent years, however, a new wave of scholarship has begun to situate these obligations in property theory, examine the implications of these “end-of-life” duties, and document the sophisticated legal strategies that liable companies use to escape their environmental repair obligations.[29]

This Article builds on this pathbreaking scholarship to develop the first comprehensive account of a century-old doctrine: the law of environmental repair. This Article documents the structures of environmental repair law and the century-long battle between regulators and liable operators to reform or subvert those structures. In doing so, it identifies for the first time the novel, systemic threat that climate change and the accompanying transition to renewable energy pose to environmental repair law. In response, this Article proposes a new model of environmental repair, the environmental earnout, which holds back a portion of the profits from damaging land uses and returns them when environmental repair is complete. This reform, while simple, promises to fundamentally reshape environmental repair law to protect families like the Simmonses from bearing the financial costs, and environmental consequences, of the fossil fuel industry’s failure to restore land.

This Article proceeds in four parts. Part I traces the origins of environmental repair obligations and provides the first account of environmental repair as a cohesive and distinct body of law. Modern environmental repair law is characterized by a grand bargain between regulators and operators: Operators are allowed to make profitable (but damaging) use of land today in exchange for the promise of expensive remediation tomorrow. In documenting the law of environmental repair, this Article describes a regime in crisis. Part II chronicles the legal “arms race” that has shaped the law of environmental repair, as regulators seek to enforce environmental repair laws while operators attempt to escape their obligations. Part III discusses a new, systemic threat that has emerged as this struggle has played out. While regulators and scholars have focused on tactical reforms to decades-old doctrines, the global transition to renewable energy is already placing novel pressures on the structures of environmental repair law. Climate change and the energy transition threaten to accelerate the day many environmental repair obligations come due, while simultaneously bankrupting the fossil fuel operators liable for these costs and destroying the financial assurance securing these environmental debts.[30]

In response to the failures of environmental repair reforms and the growing threat that the energy transition poses to this fragile system of law, Part IV proposes a new model of environmental repair: the environmental earnout. Environmental earnouts adopt the logic of transactional law and hold back a portion of the profits from damaging land uses until operators satisfy their environmental repair obligations. While environmental earnouts are conceptually simple, they represent a significant structural reform to environmental repair that offers a new and theoretically sophisticated governance tool to environmental regulators. If properly applied, environmental earnouts can encourage fossil fuel operators to fulfill their environmental obligations while protecting the public from the environmental harm caused by abandoned fossil fuel infrastructure.

I. The Law of Environmental Repair

The United States is covered in infrastructure that, one day, will reach the end of its life.[31] Nearly one million active oil and gas wells[32] pump fossil fuels to refineries, processing plants, and commercial customers through nearly three million miles of pipelines—enough to circle the world more than one hundred times.[33] The country is studded with more than five hundred coal mines, each producing, on average, more than a million tons of coal each year.[34]

Environmental repair laws require the owners and operators of these projects to clean up after themselves—to remove their installations at the end of their useful lives and make their abandoned sites safe. Environmental repair duties arise under a staggering range of independent legal frameworks, from international treaties[35] to private contracts.[36] Regardless of form, these independent legal frameworks share a common goal: They seek to prevent damaging but profitable activities like mining from degrading land.[37] Many environmental laws, like “natural resource damage laws,” attempt to protect the environment by setting liability standards and holding polluters responsible for third-party environmental harm.[38] In contrast, environmental repair laws adopt a fundamentally different strategy: They create an affirmative obligation for operators of potentially hazardous projects to restore land affected by their activities to a safe condition.[39]

As this Article documents for the first time, these parallel environmental repair regimes form a coherent body of law, with common rules, doctrines, and challenges. This Section describes the origins and structure of environmental repair laws. Part I.A traces the rise of environmental repair obligations in the early twentieth century to fill gaps left by common law doctrines. Part I.B outlines the governance challenges facing environmental repair laws and draws together decades of scholarship to provide a comprehensive account of the structures of environmental repair law developed to address these challenges.

A. The Origins of Environmental Repair

The United States has grappled with the environmental burden of abandoned infrastructure for centuries. The earliest American mineral laws adopted “a view of land strictly as a commodity to use and dispose.”[40] Environmental disputes, when they arose, represented discrete conflicts between competing landowners and did not address long-term environmental degradation.[41] As a result, many early mines “dug and abandoned in the 19th century by miners working with pickaxes and shovels” remain environmental hazards.[42] Today, hikers in national parks are routed away from mines that, nearly two centuries later, release water “so acidic that it can actually burn a person’s skin.”[43]

Lawmakers responded to this growing devastation, which often evaded third-party liability rules, by crafting a new legal duty: the duty of environmental repair.[44] This Section briefly describes the legal background from which environmental repair laws arose and then charts the rise of modern environmental repair law.

1.   The Background of Environmental Repair Law

Environmental repair law grew from the harrowed earth of mining law. In the mid-nineteenth century, settlers found gold and silver in the American West, and the federal government was “presented . . . for the first time, with the question of how to regulate mineral lands.”[45] Distracted by other issues, including the looming Civil War, Congress failed to act.[46] Miners flooded west and, without federal regulation, developed mining laws from the bottom up—first through locally created “mining districts,” and then through uniform codes in newly formed states.[47] These laws primarily addressed property conflicts and gave little thought to environmental harm.[48]

The lack of environmental law did not prevent environmental disputes. Mines often used water to separate worthless “tailings” from valuable ore[49] and released water laden with industrial chemicals like cyanide and mercury, which polluted watersheds, sickened livestock, and poisoned towns.[50] These releases even spurred environmental suits between competing miners. Upstream mines frequently discharged water so polluted it was unusable by downstream mines.[51]

Without a statutory framework, early environmental disputes alleged common law claims such as nuisance and trespass.[52] Plaintiffs faced an uphill battle under common law standards that permitted “reasonable” uses of property and before judges who placed a high value on mining as a public good.[53] Even when plaintiffs succeeded, the common law claims they asserted recognized only third-party harm and provided no general shield against environmental degradation.[54]

As the environmental impact of mining became undeniable, people looked for new legal tools to prevent pollution.[55] Some local mining districts adopted early environmental laws controlling the dumping of refuse.[56] An Idaho mining district, for instance, adopted the following regulation: “Each claim shall have the right to drain through any other claim or claims, but shall confine his dumpings to his own ground.”[57] When environmental laws arose at the state level, they appeared as liability frameworks: standards of care, enforced in their breach with third-party damages.[58] An 1861 Colorado statute, for example, provided that “it shall be the duty of every miner to take care of his own tailings, upon his own property, or become responsible for all damages that may arise therefrom.”[59] As these laws emerged and tort and property suits rendered mine operators increasingly vulnerable to environmental liability, operating agreements and mineral leases began to consider long-term environmental damage.[60] For example, mine owners “increasingly insert[ed] no-pollution clauses in mine lease agreements” in response to “legal liability for cyanide pollution” resulting from chemical processes used in gold mining.[61] This private innovation gave rise to the first environmental repair laws.

2.   The Rise of Modern Environmental Repair

In the early twentieth century, landowners slowly began to bargain for affirmative duties of environmental repair in mineral leases.[62] These early environmentalists, like one Indiana farmer who asked his oil company tenant to “leave the tilling in as good order as found,” expressed clear concern over the long-term damage caused by mineral production.[63] Such private clauses were rare, however; the law did not require environmental repair, and “typical landowners did not bargain for it.”[64]

When landowners successfully bargained for these affirmative duties, courts inconsistently enforced them. In Peevyhouse v. Garland Coal & Mining Co., a staple of 1L Contracts courses, a couple sued a coal company that had leased half of their farm, mined it, and then left it a barren wasteland.[65] Garland’s lease included detailed environmental repair requirements, and a jury awarded the family $5,000 in cleanup costs.[66] On appeal, the Supreme Court of Oklahoma dismissed environmental repair as “unreasonable economic waste,” holding that the true damage from Garland’s environmental destruction amounted only to the change in the farm’s market value: $300.[67] Peevyhouse showed the limits of private environmental law—without public policies that prioritized environmental repair, courts were reluctant to order it as a remedy.[68]

The first generally applicable environmental repair statutes arose in direct response to a new and devastating practice: strip mining.[69] Unlike “deep mining,” which used shafts and tunnels, strip mining removed layers of soil and rock to access minerals directly.[70] Strip mines clouded the air with dust and choked streams with dirt and acidic runoff.[71] Strip mining also caused new communal harms that were not easily constrained by third-party liability regimes. Coal companies ground mountains flat, leaving previously scenic landscapes covered in scars and rubble.[72] The land left behind was nearly worthless, threatening the ability of rural counties that relied on property taxes to provide basic services.[73] A law student’s 1962 note, written in the heart of Appalachian coal country, summarized the devastation in simple terms: “Waste land follows the stripping shovel.”[74]

In 1939, West Virginia responded with the first environmental repair statute.[75] In contrast to the early tailings laws, the statute did not set liability standards or punish third-party harm. Instead, it required operators to replace removed rock and soil once they finished mining and to take other steps “to minimize the hazards of floods, pollution of streams and water, accumulation of stagnant water, and the destruction of said soil for agricultural purposes.”[76] Strip miners were required to post a cash bond or surety for each acre mined, which would be forfeit if the company violated its reclamation obligations.[77] Other states quickly followed suit.[78]

Although the first environmental repair statutes were often weak, heavily influenced by mining interests, and poorly enforced,[79] they spread quickly, cropping up “in almost every state where [surface mining] was substantial” by the late 1960s.[80] These laws legitimized land reclamation as a socially valuable goal, and courts became more willing to enforce environmental repair contracts.[81] In 1977, Congress federalized environmental repair for coal strip mines through the Surface Mining Control and Reclamation Act (SMCRA), which required states to establish minimum reclamation laws or face direct federal regulation by the newly formed Office of Surface Mining Reclamation and Enforcement.[82] In parallel, federal agencies began enacting similar protections and environmental repair obligations for other lands and resources.[83] When Congress amended the Outer Continental Shelf Lands Act (OCSLA) in 1978 to restructure offshore leases, the Department of the Interior built environmental repair obligations into its enacting regulations with limited direction and little fanfare.[84] Environmental repair had become a core part of natural resource law.

B. The Governance Mechanisms of Modern Environmental Repair Law

While there is no uniform body of “environmental repair law,” these laws share a common purpose: They create a prospective duty for damaging but valuable industries to restore land affected by their activities to a safe, stable, and usable condition when they are done with it.[85] These duties create enormous and foreseeable environmental expenses that will be incurred no matter how carefully an operator conducts its activities.[86]

These predictable end-of-life costs distinguish environmental repair laws from natural resource damage laws, which follow “in the tradition of tort law.”[87] Natural resource damage laws hold polluters liable for damages associated with certain prohibited types of environmental harm, and so encourage potential polluters to reduce these uncertain, future costs by avoiding environmentally damaging activities.[88] For example, the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), an archetypal natural resource damage law, requires major polluters to bear the cost of cleaning up contaminated sites where there has been a “release, or threatened release,” of a “hazardous substance.”[89] However, CERCLA does not make polluters liable for environmental restoration costs until they have already caused hazardous contamination.[90] In a sense, CERCLA and other similar liability-oriented regimes use the threat of environmental liability to punish unpermitted pollution and discourage environmental damage ex ante. In contrast, environmental repair laws like SMCRA explicitly allow operators to conduct damaging activities today in exchange for a promise to restore the damage they create.[91] Under environmental repair regimes, some amount of environmental disturbance—drilling a well, digging a mine, building a power plant—is inevitable, and even specifically permitted, so long as the operator promises to conduct environmental restoration when they are done. These regimes make operators immediately liable for relatively fixed obligations that will be discharged decades, or even centuries, from the day they are incurred.[92]

This subtle distinction has a significant implication: Environmental repair laws create what property scholars call a “[t]emporal externality”—they give operators a valuable right today in exchange for predictable costs that “manifest only after the passage of time.”[93] To manage this temporal externality, environmental repair laws must prevent operators from taking profits today and dodging the costs when they appear tomorrow.

Faced with a common goal of environmental restoration and a common challenge in this temporal externality, environmental repair laws have adopted similar forms everywhere they have arisen. This Section draws from decades of resource-specific literature, supported by recent pathbreaking scholarship, to provide the first comprehensive description of environmental repair law. In doing so, it identifies two governance mechanisms that define modern environmental repair law: liability-assigning rules and financial assurance rules. This Section also briefly discusses the quality standards and enforcement mechanisms that often accompany these two central doctrines and play important roles in the practical application of environmental repair obligations.

1.   Liability-Assigning Rules

Liability-assigning rules work to ensure that certain parties remain liable for their environmental repair obligation despite the passage of time. Environmental repair obligations are often discharged decades after they are incurred. Over those decades, property with environmental repair obligations may pass between many owners and operators.[94] In response, environmental repair laws contain liability-assigning rules that describe how obligations transfer with, and are tied to, valuable assets.[95]

Liability-assigning rules are essential because environmental repair occurs at the end of a facility’s life, when it is unlikely to produce future revenue.[96] At that point, the facility becomes “negative value property,” which has no market value and “cannot practically be alienated or discarded without improving it.”[97] A rational operator might simply abandon negative-value assets, either “leaving it to others to clean up their mess”[98] or depriving society of “the future productive use of the degraded parcel.”[99] Long-standing common law doctrines prevent operators from abandoning fee simple interests in negative-value land. Environmental repair obligations go one step further by more easily attaching to abandoned assets like mineral rights, easements, and permits.[100] Liability-assigning rules fill these gaps in the common law to encourage the long-term conservation of real property.[101]

Liability-assigning rules often hold the current owner or operator of assets responsible for all repair costs, but some rules may encompass a broader range of parties.[102] For example, Kansas’s oil and gas regulator may order environmental repair from

(1) any person who causes pollution to leak from a well;

(2) the most recent operator to use or drill the well;

(3) the most recent operator to report ownership of the well;

(4) any party that privately attempts to seal, bury, or tamper with the well; and

(5) any person who agrees, by private contract, to accept responsibility from another liable party.[103]

These broad liability nets allow regulators to pursue environmental repair from a range of parties who profit or have profited from damaging activities.

Liability-assigning rules address abandonment risk by controlling how liability transfers from one entity to another.[104] Some take the form of “licensing regimes,” which only allow environmental obligations to be transferred with the approval of a lessor or regulator.[105] Other liability-assigning rules establish “prohibition regimes,” which simply forbid the transfer of environmental repair obligations.[106] One expansive type of prohibition regime, called “trailing liability,” allows transfers of assets but not environmental repair obligations.[107] Instead, once an operator incurs obligations under a trailing liability regime, they remain jointly and severally liable with all other operators, past and future, until environmental repair is conducted.[108]

2.   Financial Assurance Rules

Environmental repair can be incredibly expensive—it cost more than $70,000 to seal the single leaking well behind the Simmons family barn, and removing an offshore oil rig can cost hundreds of millions of dollars.[109] Liability-assigning rules only go so far, and if an operator simply cannot afford its environmental repair costs, they may ultimately fall on the public.[110]

To address this problem, environmental repair laws incorporate “financial assurance” rules, which ensure that liable operators are able to pay environmental repair bills when they come due.[111] “Financial assurance” refers to a broad range of economic tools that protect the public from environmental damage caused by insolvent polluters.[112] These tools serve different purposes under different environmental regimes. Under natural resource damage laws, which hold polluters liable for the damage caused by released pollution, financial assurance acts “as a form of mandatory insurance.”[113] Because these laws create uncertain liability for polluters’ (usually unintended) harm, financial assurance forces potential polluters to assess—and pay for—the riskiness of their activities.[114] Third-party financial assurance providers, like insurance companies, assess the risk that their customers will damage the environment, price that risk, and then monitor their customers’ behavior.[115] This creates a layer of private environmental governance that, hopefully, pushes potential polluters to reduce the environmental risk posed by their activities.[116]

Environmental repair laws, unlike natural resource damage laws, impose fairly predictable expenses.[117] Because environmental repair obligations “are fully known ex ante,” environmental repair laws do not attempt to deter environmental harm by pricing it.[118] Instead, the financial assurance requirements created by these laws serve two functions: They force operators to internalize the costs of environmental repair by setting aside money to pay for it, and, most importantly, they ensure that environmental repair costs will be paid.[119]

Financial assurance for environmental repair can be broadly grouped into three categories: (1) self-insurance, (2) third-party guarantees, and (3) designated funds.[120] These differ significantly, but each is designed to ensure that liable operators will meet their environmental repair obligations when those debts come due. First, self-insurance mechanisms test the “demonstrable wealth and financial stability” of an operator and allow financially healthy operators to assume environmental repair obligations without providing specific collateral.[121] Self-insurance tests may involve general financial measurements, like credit ratings, or focus on specific assets connected to the operator’s environmental repair obligations, like the value of oil and gas reserves on a mineral lease.[122] Second, third-party guarantees are promises by a non-liable party to indemnify an operator’s obligations.[123] This third-party financial assurance may include purchased surety bonds, parent company guarantees, or even public “bonding pools” that function like insurance.[124] Finally, designated funds force operators to prepay some or all of their environmental repair costs into an account that is “ring-fenced from the reach of their creditors.”[125]

Table 1: Financial Assurance for Environmental Repair

Category	Characteristics	Examples
Self-Insurance	Assessments of a party’s financial capacity to conduct environmental repair or of the value of assets owned by a party that are correlated with its financial capacity.	Credit rating requirements, net worth tests, assessments of the value of permits or mineral rights.
Third-Party Guarantees	Third-party pledges to assume or indemnify a party’s environmental repair obligations.	Parent company guarantees, letters of credit, surety bonds.
Designated Funds	Pledges of identified cash or liquid assets.	Decommissioning funds.

3.   Other Rules: Quality Standards and Enforcement

While environmental repair depends on liability rules and financial assurance rules, environmental repair laws often contain other requirements.[126] Notably, these laws nearly always set quality standards for environmental repair.[127] These vary significantly based on the source of obligations and the technical sophistication of the parties: Regulations governing major industries like offshore oil may be highly detailed,[128] while leases drafted by unrepresented farmers may be much less specific.[129] Environmental repair laws may also contain enforcement tools like inspection rights and oversight provisions.[130] These technical requirements shape the cost of environmental repair but generally fall outside the realm of legal scholarship.[131]

Criminal sanctions are another rarely discussed element of environmental repair laws. Several statutes make violations of environmental repair obligations a criminal offense.[132] While environmental repair statutes have imposed criminal sanctions for nearly a century,[133] they have been almost entirely ignored by academics, practitioner-oriented treatises, and even operators themselves.[134] This oversight likely occurs because, in practice, criminal enforcement of environmental repair law is vanishingly rare.[135]

II. Environmental Repair’s Legal Arms Race

Environmental repair laws face a structural challenge. These laws bind enormous, foreseeable environmental liabilities to valuable rights like the right to mine ore or produce power.[136] However, in doing so they create a “[t]emporal externalit[y],” because operators reap the profits from environmentally damaging activities today and bear the cost of environmental cleanup decades or even centuries later.[137] The gap between benefit and burden creates a powerful incentive for operators to collect the benefits of their bargain and then abandon their obligations.[138]

And they do. Some operators sell derelict mines to tiny counterparties that are forced into bankruptcy when the obligations materialize.[139] Others attempt to delay the end of life for wells and pipelines so that environmental repair bills never come due.[140] Still others disappear, whether by formally declaring bankruptcy or simply slipping through the regulatory cracks.[141]

This Section describes how environmental repair laws have been undermined by temporal externalities, and the legal arms race that has resulted as operators attempt to slip through the cracks in environmental repair law and lawmakers, regulators, and contractual counterparties try to prevent this evasion by tweaking both liability and financial assurance rules. Part A outlines the strategies operators have used to delay, divest, or abandon their environmental repair obligations and highlights the difficulties regulators face in responding to this evasion. Part B draws together the siloed bodies of industry-specific legal scholarship that respond to this operator evasion and reviews key proposals to reform environmental repair laws.

A. Avoiding and Enforcing Environmental Repair

Operators make promises to conduct environmental repair long before those promises must be fulfilled. It is not surprising that operators, after making profits for decades on the strength of those promises, often look for ways to wriggle out of them. When operators attempt to dodge their environmental repair obligations, they generally choose one of three strategies: (1) delay, (2) divestment, or (3) abandonment.[142] These strategies align with the central features of environmental repair law. Delays push costs into the future, extending the risk that they might fall on the public. Divestment attempts to exploit liability-assigning rules by shifting environmental repair costs to a third party. Finally, abandonment attempts to default on environmental repair debts through bankruptcy or insolvency, straining financial assurance rules to their breaking point in the process.

1.   Delaying Environmental Repair Obligations

Operators often attempt to escape environmental repair obligations by delaying the date they will come due.[143] These operators usually make at least one of two arguments. First, some operators claim that advances in environmental technology will make remediation faster and more effective in the future.[144] Second, operators argue that they want to preserve the option of reusing their idled infrastructure in the future.[145] This option can be valuable because infrastructure lifespans are rarely fixed. Facilities with environmental repair obligations, like nuclear power plants, may be returned to service years after ceasing operations.[146] Even extractive infrastructure, like mines and oil wells, might be reused decades after being “exhausted.” Changing technologies and market conditions often transform previously “unextractable” resources into profitable commodities.[147] Disused facilities like abandoned offshore oil platforms might also be valuable for new, unrelated activities like supporting offshore wind turbines.[148] These reuse opportunities mean that, even if cleanup were entirely free, an operator might reasonably decide that the opportunity cost of conducting environmental repair was too high.[149]

Delays can still be highly valuable for operators even if costs never decline, infrastructure is never reused, and delays ultimately produce no benefits to society. Operators generally consider the time value of money when they discuss the cost of completing environmental repair.[150] Economic models usually deal with future payments by assigning them a “present value,” created by applying an annualized “discount rate” to estimate the current value of future assets or liabilities.[151] These discount rates take into account the risks associated with delayed payment (nonpayment risk, inflation, etc.) together with the “cost of capital” for the relevant operator, which itself may be estimated based on factors including the operator’s cost of borrowing and the value of alternative investments available to the operator.[152] The logic behind discounting is intuitive and attempts to estimate a real economic phenomenon—a promise of a dollar in a year is worth less than an actual dollar today; a promise of a dollar in twenty years is worth much less than either. However, this logic means that an operator that delays environmental repair can apply its chosen discount rate over a longer period, creating the accounting illusion that its financial position has improved without actually reducing the amount of work it has promised to complete.[153] This incentivizes operators to grasp any plausible reason to delay their repair obligations.[154]

Environmental repair laws often set detailed timelines to prevent operators from delaying their obligations indefinitely.[155] However, regulators can struggle to enforce these rules, especially if doing so requires determining whether an operator is delaying in bad faith, given the existence of socially beneficial excuses to delay environmental repair. These excuses—such as the belief that idled infrastructure may be useful in the future or that remediation costs may decrease—are complex predictions that are difficult to disprove.[156] In practice, this means that environmental regulators often tolerate delays supported by plausible excuses.

For example, two federal agencies within the Department of the Interior, the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE), have struggled for decades to enforce environmental repair timelines for offshore oil and gas operators in federal waters. The Gulf of Mexico is filled with tens of thousands of underwater oil and gas wells, and thousands of offshore platforms.[157] These facilities are regulated by BOEM, which manages the offshore leasing process, and BSEE, which sets and enforces environmental repair requirements.[158] BOEM and BSEE have set several overlapping timelines for environmental repair. As a baseline rule, operators must remove all offshore platforms and plug all wells within a year after their lease terminates.[159] Separately, operators must restore individual sites on a lease that are “no longer useful for operations,”[160] as well as sites that BSEE determines are “not useful for lease operations and [are] not capable of oil, gas, or sulphur [sic] production in paying quantities.”[161]

Despite these expansive rules, BOEM and BSEE have been unable to prevent delays. As of 2024, more than one thousand wells and one hundred platforms on the outer continental shelf are overdue for environmental repair—more than 75 percent of the total number of inactive wells and platforms.[162] Of the one thousand overdue wells, more than 80 percent “had not produced in more than 10 years,” and only 40 percent contained temporary plugs to prevent unextracted oil from leaking into the ocean.[163] Temporary well plugs provide some environmental protection but are no guarantee of environmental repair; some offshore wells can remain “temporarily” plugged for more than sixty years.[164]

This delayed environmental repair comes with a public cost. Concrete corrodes and metal rusts, increasing the risk of environmentally devastating leaks and spills[165] that can kill marine life; devastate marine and coastal ecosystems for decades; and cause multigenerational social, economic, and health crises in near-shore communities.[166] The risk of such spills increases as environmental repair is delayed because aging and poorly maintained structures can be damaged by storms, natural disasters, and even collisions with seagoing vessels.[167] When a 2021 hurricane tore through a tangle of idled pipelines in the Gulf of Mexico, NASA’s Earth Observatory summarized its satellite footage with a simple headline: “Hurricane Ida Leaves a Trail of Oil.”[168]

2.   Divesting Environmental Repair Obligations

Operators also attempt to dodge environmental repair obligations by selling the rights, property, or permits attached to those obligations. While it might seem difficult to sell a facility with burdensome environmental obligations, in practice operators can often find eager buyers.[169] When an operator no longer wants to operate a facility with environmental repair obligations, “the typical move is to sell them to another firm with a different risk profile”—that is to say, one that is willing to take on the risk of environmental repair liability attached to a potentially unprofitable asset.[170]

Operators who buy end-of-life assets may do so for a range of reasons. These operators may predict that rising prices for energy and minerals will make facilities profitable again or may have strategies to make environmental repair cheaper and easier.[171] These explanations, which are essentially the same excuses that justify delay, may be entirely legitimate. However, purchasers may also acquire marginally profitable wells and mines if they expect to lower operating costs by taking on more risk, like by reducing maintenance budgets and safety programs.[172] Operators may also avoid, or recover from, bankruptcy by spinning off their environmental repair obligations into new companies that will never realistically be able to pay these obligations.[173] These transfers threaten the public when environmental repair duties are dumped on operators who will not be able to satisfy them.

Environmental repair laws constrain these risks through liability-assigning rules, which control the transfer of environmental repair obligations.[174] Liability-assigning rules may require new operators to provide financial assurance before the previous owner is released from its obligations.[175] Under some regimes, regulators may even have the right to veto the sale of assets to unqualified or underfunded buyers.[176] Recently, third-party litigation has put pressure on operators’ divestment strategies. In McCormick v. HRM Resources, a case filed in March 2024, landowners with “approximately 200 orphaned oil and gas wells on their property” sued a related set of companies collectively known as HRM Resources, who had sold those end-of-life wells in 2018 to a smaller company, Painted Pegasus Petroleum, LLC (P3).[177] P3 quickly went bankrupt, and the landowners sued HRM Resources for fraudulent transfer. The landowners’ suit alleges “that these transfers followed a common pattern in the industry: smaller operators like HRM acquire marginal wells from large oil companies, extract any remaining value, and then pass the wells further down the chain to even smaller companies, like P3, that dissipate the future plugging costs by declaring bankruptcy or dissolving.”[178]

Suits like McCormick, if successful, may offer ex postpaths to prevent operator divestments. However, regulators may struggle to preemptively assess a specific transfer without the benefit of hindsight.[179] For example, if an operator sells a marginally profitable oil well to a buyer who expects that the value of oil will go up, the risk of that transaction may only become apparent years or decades from the sale. Many metrics used to judge a new operator’s financial status can be manipulated (or simply faked) by operators—for example, through accounting that assumes deferred environmental repair costs.[180]

When regulators fail to spot or prevent a risky transfer, environmental repair liabilities filter down through regulated industries, from stable and prosperous companies to small and marginal risk-takers.[181] This shift increases the threat that these liabilities will eventually fall onto the public.

3.   Abandoning Environmental Repair Obligations

Delay and divestment shift environmental repair costs but cannot eliminate them. As infrastructure trickles down from stable companies to shaky ones, as well casings rust and tailing dams begin to crumble, and as profits dwindle and the bills pile up, operators begin to fail. When they do, they may either quietly dissolve before anyone can demand that they perform environmental repair[182] or formally shed environmental repair obligations in bankruptcy.[183] In either case, the burden of environmental repair may fall on the public.

Bankruptcy has long been viewed as a barrier to environmental enforcement.[184] Bankruptcy allows a company that owes more than it has to renegotiate agreements; discharge debts; and sell, transfer, or abandon property to “maximize the expected value of the pool of assets that will ultimately be divvied up among creditors.”[185] Courts have wide latitude to reshape debts, including at least some environmental repair obligations,[186] and companies with environmental repair obligations may see bankruptcy as a chance to pay less than they owe.[187] In a recent groundbreaking article, Professors Joshua Macey and Jackson Salovaara document how four large coal companies exploited bankruptcy processes to “discharge or otherwise avoid” $1.9 billion of environmental repair obligations.[188]

In theory, environmental repair laws use financial assurance requirements to protect the public from operator defaults and bankruptcies.[189] These rules attempt to ensure, decades in advance, that money will be available to pay for environmental repair.[190] Regulators who establish financial assurance requirements choose between an array of financial instruments, some much riskier than others.[191] Financial assurance requirements that force operators to secure third-party guarantees or lock capital in dedicated funds for decades create immediate costs for regulated industries.[192] As a result, these rules are under constant political pressure.[193]

Attempts to reduce the cost of financial assurance can, in theory, be socially beneficial. Some forms of financial assurance create genuine inefficiencies like transaction, monitoring, and enforcement costs.[194] However, the “costs” operators complain about frequently include the cost of internalizing their own default risk.[195] Regulators may also face pressure from lawmakers to subsidize favored industries by relaxing financial assurance requirements.[196]

These tensions mean that financial assurance requirements are often set too low, or enforced too loosely, to fully protect the public. Between 2007 and 2016, U.S. coal mines forfeited more than 450 reclamation bonds; only 52 percent covered the cost of environmental repair.[197] A 2024 audit showed that Colorado held “at best 7% to 9%” of the financial assurance needed to cover between $6.8 and $8.5 billion of well-plugging costs.[198] Offshore, BOEM holds only $3.5 billion in financial assurance “to cover between $40 billion and $70 billion in total estimated decommissioning costs” for oil platforms.[199] When BOEM tried to increase its financial assurance requirements in 2024, state lawmakers challenged the regulation, calling it an “egregious direct assault” on the fossil fuel industry.[200]

Insolvent operators have even used the inadequacy of their financial assurance as leverage in negotiations with regulators.[201] One insolvent company, Alpha Natural Resources, approached state mining regulators and offered to swap its existing financial assurance for smaller “superpriority claims” that would be paid out first in bankruptcy. As Macey and Salovaara document:

Although Alpha owed a total of $655 million in reclamation liabilities, state regulators agreed to accept a superpriority claim on only $85 million in the event that the company stopped operating. This arrangement seemingly gave Alpha a legal right to abandon over $500 million in cleanup costs that the company would have had to pay had it been forced to liquidate.[202]

Arch Coal followed the same playbook to reduce its financial assurance by more than $390 million.[203] Peabody Energy, then the largest coal company in the world, negotiated $1.4 billion of self-bonded financial assurance down to $200 million of superpriority claims and collateral pledges.[204] These renegotiations increased the money available to coal company lenders and shareholders but dumped the burden of environmental repair onto the public.

B. Proposed Reforms to Environmental Repair

Operators’ attempts to avoid environmental repair obligations, and regulators’ struggles to enforce them, have inspired a great deal of legal scholarship.[205] This scholarship, with very few exceptions, has narrowly focused on specific statutes or resources.[206] Separate literatures address environmental repair duties for nuclear energy,[207] coalfields,[208] hardrock mines,[209] and oil and gas wells,[210] while more recent articles discuss environmental repair obligations for wind[211] and solar facilities.[212] This work has repeatedly produced a wide range of detailed proposals that are highly tailored to individual statutes or resources. However, as a body, these proposals are broadly similar. Most reforms focus on modifying the two pillars of environmental repair law—expanding liability-assigning rules or tweaking financial assurance tools—while a third, smaller body of scholarship suggests reframing environmental repair as a public obligation. This Section discusses proposals to reform environmental repair and the debates that have been repeated across the silos of environmental repair scholarship.

1.   Expanding Liability

Many authors look to liability-assigning rules to prevent operators from evading their environmental repair duties. Liability scholarship often targets specific statutory loopholes[213] or argues that environmental repair duties should attach to a new activity.[214] This work also asks a broader question: How far should liability for environmental repair extend beyond the current operators of end-of-life assets?

Environmental liability rules are often based on the “polluter pays principle,” an assumption that those who cause pollution should bear its costs.[215] This principle can be relatively easy to apply when dealing with a discrete polluting incident like a chemical spill. However, environmental repair obligations are tied to risky activities conducted over decades and to assets that are frequently transferred between operators. While most liability scholars attempt to apply something like a “polluter pays principle” to environmental repair, there is no generally agreed boundary for environmental repair liability. Some authors argue that a broad range of individuals and entities who profited from the underlying risky activity should bear some responsibility for environmental repair.[216] Others outline strategies to pierce corporate veils in pursuit of the profits of environmentally damaging activities.[217] However, some scholars push back on these expansions of liability and argue that liability-assigning rules should focus on those with actual control over whether environmental repair is conducted.[218]

Another branch of the literature focuses on reforms to bankruptcy rules or to doctrines that protect environmental repair obligations from discharge in bankruptcy. These disputes rarely invoke the “polluter pays principle,” but they pose a similar question: Should liability fall to lenders, who indirectly profit from polluting activities, or regulators, who control many elements of the environmental repair process? Some scholars have proposed dramatic interventions, such as abolishing Chapter 11 bankruptcy for environmentally damaging industries or requiring bankruptcy courts to prioritize environmental protection over corporate continuity.[219] Other proposals for bankruptcy reform are more subtle, recommending seniority or nondischargability for environmental repair obligations.[220] As protecting environmental repair debts means shifting losses to other constituencies, these proposals would effectively expand environmental repair liability to the lenders of a bankrupt operator. Some academics viciously oppose such cost-shifting. These scholars argue that protecting unsecured environmental repair obligations in bankruptcy simply allows regulators to “become more lax in their duties [to secure financial assurance], while asserting massively underfunded [environmental repair] claims.”[221]

2.   Expanding Financial Assurance

In theory, financial assurance for environmental repair serves two functions: It ensures that money will be available for environmental repair, and it forces operators that undertake environmentally damaging activities to bear environmental repair costs.[222] A significant body of scholarship starts with a simple question: Do financial assurance requirements effectively protect the public?[223] The answer is, almost uniformly, no.[224] In response, many scholars focus on the tools of financial assurance, their adequacy, and the incentives that they create for operators.

a. Self-Insurance: Capital Efficiency or Public Subsidy?

Self-insurance mechanisms, sometimes called “self-bonding,” allow operators to guarantee their environmental repair obligations simply by pointing to their own financial strength.[225] Self-insurance is popular because it does not lock collateral in isolated accounts or require fees to third-party guarantors[226]—in short, it is cheap. However, scholars, regulators, and environmental activists frequently argue that self-bonds do little to protect the public from operator defaults.[227]

Debates around self-bonding turn on tradeoffs between economic efficiency and environmental protection. Supporters and opponents both agree that the practice is a boon to operators and can spur economic development by making it cheaper to undertake activities that carry environmental repair obligations.[228] However, these low up-front costs are accompanied by a less legitimate form of cost savings: Self-bonding “provide[s] the ‘space’ for obligations to be disclaimed in bankruptcy.”[229]

Critics of self-insurance have called it “a practice premised on financial solvency” because it works well when the underlying business is profitable but provides little protection when it is not.[230] In theory, self-bonding rules reduce public risk by identifying creditworthy operators. These rules usually set standards for financial health, and regulators may demand additional financial assurance if operators fall below those thresholds.[231] However, self-bonding rules provide little practical protection from default. Firms can collapse quickly, and many regulators simply lack the resources to actively track the financial status of each operator.[232] Even if regulators can identify floundering operators, they are faced with a difficult choice: demand additional collateral and risk driving them into bankruptcy, or hope that the operators will eventually recover enough to pay their environmental repair debts.[233] In response to this fragility, many scholars note that the practice of self-bonding effectively extends a public line of credit to operators and argue that this public subsidy should be eliminated or heavily curtailed.[234]

b. Third-Party Guarantees: Private Monitoring or New Risk?

Some scholars and regulators look to third-party guarantees to solve the monitoring problems posed by self-insurance. Third-party assurance instruments are diverse but all contain the same essential promise: The third-party guarantor agrees to pay an operator’s environmental repair bills if the operator defaults on its environmental obligations.[235] When provided as a financial service,[236] these guarantees add a layer of private regulation—guarantors are incentivized to monitor and price operators’ default risk, and operators are incentivized to provide collateral or disclose information to reduce these prices.[237] This structure is sometimes referred to as a “market-based” regulatory approach.[238]

While third-party guarantors add monitoring capacity, they also represent an independent source of risk. Guarantors, like operators, assume long-term obligations and may be unable to pay those obligations when they come due.[239] While regulators often attempt to monitor guarantors’ financial health,[240] this can prove just as difficult as tracking operators’ finances. For example, prior to 2024, BOEM barred offshore oil and gas guarantors from guaranteeing pledges worth more than 25 percent of their “unencumbered net worth in the United States.”[241] However, in 2023, BOEM acknowledged that it had never actually monitored this requirement and relied on the good faith of guarantors for enforcement.[242]

In addition to default risks, guarantors act to protect their bottom line and may try to abandon guarantees when they realize that operators are likely to go bankrupt. Throughout the twentieth century, mining companies frequently used “surety bonds,” an insurance-like financial product, to guaranty their environmental repair obligations.[243] However, in the 1990s and early 2000s, a series of bankruptcies in the mining sector and increased environmental repair costs caused many surety bond companies to drop mining clients entirely.[244] This withdrawal left operators and regulators scrambling for alternative financial assurance.[245]

In response, some jurisdictions have developed “bond pools,” state-run insurance programs that pool payments from multiple operators to backstop industry-wide obligations.[246] Bond pools may be funded by direct operator fees, resource taxes, or penalties on defaulting operators.[247] However, these bond pools return the burden of financial monitoring to regulators. Monitoring challenges, combined with political pressure, mean that contribution levels are often artificially low, removing any “market-based” benefits provided by third-party guarantees.[248]

c. Designated Funds: Prepayment or “Skin in the Game”?

Scholars of environmental repair have increasingly argued that financial assurance should only take one form: fully funded accounts holding enough collateral to pay the entire cost of remediation.[249] Designated funds are probably the most secure form of financial assurance that exists today.[250] On a theoretical level, they remove almost all of the “temporal externality” associated with environmental repair by forcing operators to bear the costs and profits of their activities at the same time.[251] On a practical level, it is harder for an operator to rescind a payment than it is to dodge an upcoming payment obligation.[252] In a recent review of financial assurance rules, Professors Colin Mackie and Laurel Besco argue that the “forced segregation” of environmental repair funds is the only effective way to ensure that financial assurance fulfills its two purposes: paying for the performance of environmental repair and ensuring that operators fully internalize the environmental costs of their activities.[253]

Designated funds are far from a silver bullet, however. Operators oppose designated funds because they increase the cost of projects by locking up enormous amounts of capital.[254] Even setting aside operators’ concerns, fully prepaid funds only work when the costs of environmental repair are relatively certain,[255] and even the nine-figure “decommissioning trust funds” that nuclear plant operators establish for environmental repair may fall short if operators run into complications and cost overruns.[256] When financial assurance requirements are set below the price of environmental repair, they serve more as penalties than effective payment guarantees.[257]

Inversely, prepaying environmental repair costs may sacrifice opportunities to reduce them. Some scholars argue that it is important for operators to keep “skin in the game” because even predictable costs are rarely “irreducible” and can be affected by operators’ activities.[258] Mackie and Besco acknowledge these limitations and note that designated funds are most effective “[w]here the original cost estimate of undertaking the future works is accurate.”[259]

3.   Environmental Repair as a Public Expense

A handful of scholars argue that environmental repair should be treated as a public expense. Generally, these authors propose that public environmental repair costs should be funded by permit fees or taxes that ultimately, albeit indirectly, force operators to internalize cleanup costs.[260] This scholarship suggests several benefits that might flow from shifting environmental repair duties to the public. Some authors argue that if regulators are formally responsible for environmental repair, they will be better incentivized to control and prevent pollution.[261] Others note that an environmental repair fund could support research and build technological expertise beyond the capacity of individual operators.[262]

These proposals have generally attracted little attention, perhaps because the “polluter pays principle” is deeply embedded in American environmental law.[263] However, lawmakers regularly spend the public’s money to address the mounting failures of environmental repair laws. The Energy Policy Act of 2005 created a program to plug abandoned oil and gas wells on federally owned lands.[264] The Infrastructure Investment and Jobs Act of 2021 appropriated more than $4.5 billion to plug orphaned oil and gas wells,[265] $3 billion to reclaim hardrock mines,[266] and nearly $11.3 billion to reclaim abandoned coal mines.[267] States, too, have begun to supplement private environmental repair funds with public ones.[268] While few scholars argue that the public shouldbear the costs of environmental repair, those who do are increasingly vindicated by political reality.

III. A New Threat: The Energy Transition

As Part II describes, environmental repair law is already a fragile system, notable more for its failures than its successes. This Section identifies, for the first time, a new and systemic threat to many environmental repair laws: climate change and the global transition to renewable energy. Part III.A highlights the significance of fossil fuels to environmental repair law, describes the accelerating global transition to renewable energy, and outlines the economic threat that this energy transition poses to the fossil fuel industry. Parts III.B and III.C discuss ways in which the energy transition undermines the already-fragile liability-assigning and financial assurance rules, respectively, that are designed to guarantee environmental repair.

A. The Looming Energy Transition and the Threat to Environmental Repair

The future of the fossil fuel industry is threatened by climate change and the global transition to renewable energy. Since the Industrial Revolution, the world has released more than 1.5 trillion tons of carbon dioxide (CO2) into the atmosphere, primarily through burning fossil fuels.[269] These emissions have increased atmospheric CO2 levels by more than 50 percent.[270] This extra CO2 has trapped more heat in the atmosphere and raised the global average surface temperature by almost 1.2°C,[271] resulting in enormous damage to the environment and the economy.[272] If the fossil fuel infrastructure already built, planned, and paid for is allowed to operate unhindered, global temperatures could rise more than 2°C by the end of the century.[273]

To avert this catastrophe, 195 countries, including the United States, signed the 2015 Paris Agreement.[274] The Paris Agreement sets an ambitious goal: to limit global temperature increases “to well below 2°C above pre-industrial levels,” and to “pursu[e] efforts to limit the temperature increase to 1.5°C.”[275] To safely stay below this 1.5°C threshold, almost 60 percent of oil and gas reserves and 90 percent of coal reserves must remain unused.[276] This poses an enormous risk to the fossil fuel industry. If governments meet their commitments and the world moves toward “climate stabilization,” the value of fossil fuel reserves will plummet, and fossil fuel companies will forgo trillions in expected profits.[277]

Admittedly, the forceful climate commitments of the Paris Agreement have not been met with equally forceful action. Dramatic geopolitical changes have put up several stumbling blocks to an energy transition that, only a few years ago, seemed unstoppable.[278] Following a brief dip during the first year of the COVID-19 pandemic, energy demand has continued to rise, and future demand growth in “emerging market and developing economies” will likely push global energy demand to new heights in the coming decades.[279] In 2022, Russia’s invasion of Ukraine sparked a global energy crisis and pushed previously transition-focused European leaders to prioritize energy security over other energy goals.[280] In 2024, President Trump was elected to a second term, and upon his inauguration, he immediately withdrew the United States from the Paris Agreement and took a series of steps to prioritize fossil fuel use.[281] In November 2025, during the lead-up to the tenth anniversary of the Paris Agreement, a former Trump Administration energy staffer was quoted as saying, “It’s not enough to just withdraw from [the Paris Agreement] . . . . You have to degrade it. You have to deter it. You have to potentially destroy it.”[282]

Nevertheless, the energy transition continues, albeit unevenly spread across different countries and sectors.[283] As one commentator put it, these hurdles “do[] not mean the energy transition will cease moving forward, but it will likely do so in a bumpier, fractured and more self-interested fashion that idealists may have expected ten years ago.”[284] Globally, renewable energy options have quickly become the cheapest source for new utility-scale power generation,[285] and a combination of climate policy and economic self-interest has resulted in a dramatic increase in the deployment of renewable energy around the globe.[286] The International Energy Agency’s 2025 “Stated Policies Scenario,” which models current and anticipated energy policies,[287] shows demand for all categories of fossil fuels peaking in the coming decade as growing renewable and nuclear capacity meets rising energy demand.[288] These trends by themselves may imperil the long-term future of the fossil fuel industry; more aggressive climate action would threaten to “strand”—render worthless or unusable—an enormous amount of fossil fuel infrastructure.[289]

While few environmentalists would shed tears for the fossil fuel industry, a rapid decline in the value of fossil fuels presents hidden environmental dangers. The fossil fuel industry owes the public an enormous environmental repair debt. It will cost hundreds of billions of dollars to plug the millions of oil and gas wells scattered across the United States.[290] Removing oil platforms and plugging offshore wells in federal waters alone might add as much as $70 billion.[291] Toss in at least $10 billion to remediate coal mines,[292] and the total liability dwarfs the cost of putting a man on the moon.[293] This is without tackling the 132 oil refineries,[294] the 3,400 fossil fuel-fired power plants,[295] the more than 7,500 wells in state waters,[296] or the 2.6 million miles of oil and gas pipelines that cross the United States.[297] As the fossil fuel industry declines, these bills will begin to come due. If fossil fuel operators cannot pay, the public will either bear these environmental repair costs or suffer the ensuing environmental harm as abandoned wells, mines, and industrial facilities pollute the surrounding air, water, and land.[298]

As Part II discusses, the existing system of environmental repair law is fragile, and regulators struggle to enforce these laws even in the best of circumstances. The energy transition compounds this difficulty by placing pressure on environmental repair law from an unexpected direction. Environmental repair laws tie the right to profit today to an obligation to conduct environmental repair in the future. An enormous body of law and scholarship has focused on avoiding the temporal externality created by this delayed payment—preventing operators from grabbing the profits today and dodging the costs tomorrow.[299] To date, however, legal scholarship has ignored the challenge presented by the energy transition: How do environmental repair laws function when an industry’s profits disappear and obligations budgeted for tomorrow come due today?

B. The Energy Transition as a Threat to Liability-Assigning Rules

The energy transition threatens the effectiveness of liability-assigning rules for a simple reason: It may bankrupt a broad swath of the fossil fuel industry. Economic shocks often cause waves of precarious operators to collapse at once, taking their environmental repair promises with them.[300] Again and again, economic crises ranging from ordinary “boom-and-bust cycles” in commodity markets to the COVID-19 pandemic have caused “spike[s]” in abandoned infrastructure.[301] This trend has caused several recent scholars to assume, without elaboration, that climate change and the energy transition will increase the number of operators who default on their environmental repair obligations.[302]

The energy transition poses a much broader threat than previous cyclical downturns. Historically, regulators have responded to operator bankruptcies by expanding the scope of liability for environmental repair.[303] For example, once an offshore oil and gas operator becomes liable for environmental repair, it remains liable even after it has sold its interest in the underlying project.[304] BSEE, the federal regulator responsible for enforcing offshore environmental repair, has used these rules to respond to operator bankruptcies. In 2013, ATP Oil and Gas Corporation filed for bankruptcy and attempted to abandon a set of offshore leases that it could no longer operate profitably, which carried $100 million in environmental repair costs.[305] BSEE took over the property, planning to conduct the environmental repair itself and “protect taxpayers by pursuing ATP’s predecessors-in-interest . . . for some or all of the decommissioning costs.”[306] All previous owners remained jointly and severally liable for these expenses, and BSEE ultimately recovered all environmental repair costs from Anadarko, the oil company that sold the lease to ATP.[307] This ability to look back through the chain of title has historically allowed BSEE to protect the public by targeting parties with deep pockets.[308]

However, the energy transition threatens a secular decline in the fossil fuel industry, and it is not clear that any deep pockets will remain. Energy transition models suggest that “[e]ven modest decreases in demand can begin to erode the wealth and power of the fossil fuel industry” and that large producers are no more shielded from these effects than small ones.[309] Some courts, faced with adjudicating repeated fossil fuel bankruptcies, are already beginning to express similar concerns. In a 2023 bankruptcy appeal assigning environmental repair costs between two precarious coal companies, a federal district judge in West Virginia gave his own pessimistic prediction: “The coal industry continues to decline. In its wake, coal companies increasingly use bankruptcy to evade reclamation obligations—raising the prospect the environment may never fully recover.”[310]

C. The Energy Transition as a Threat to Financial Assurance Rules

Environmental repair laws use financial assurance rules to protect the public against operator defaults.[311] However, the energy transition may undermine financial assurance instruments even as it forces fossil fuel companies toward bankruptcy. In the financial literature, phenomena that increase the risk of a creditor’s bankruptcy while decreasing the quality of a creditor’s collateral are referred to as “wrong-way risks.”[312] Wrong-way risk is a form of credit risk that arises when a borrower’s likelihood of defaulting on its debts increases at the same time that the value of the collateral securing those debts decreases.[313] This technical definition may be a little abstract for those unfamiliar with finance, but wrong-way risk is easy to grasp conceptually. Imagine a fire extinguisher that becomes less effective when it gets hot, or a brake pad that is more likely to slip while your car is swerving, and you understand wrong-way risk. Wrong-way risks are bad for obvious reasons: They mean that tools built to avoid risks fail when they are most likely to be needed. The energy transition poses three distinct wrong-way risks to environmental repair laws: under-assurance, guarantee risk, and asset risk. These risks, which are summarized in table 2, are explained in more detail below.

Table 2: Energy Transition Risks to Financial Assurance

Category	Explanation	Affected Forms of Financial Assurance
Under-Assurance Risk	The energy transition will force fossil fuel projects to end their operations and conduct environmental repair ahead of schedule, driving up costs and shortchanging designated funds designed to be accumulated over the life of a project.	Self-Assurance, Third-Party Guarantees, Designated Funds
Guarantee Risk	The energy transition will put pressure on the fossil fuel industry, threatening the value of guarantees issued by companies heavily exposed to the sector.	Third-Party Guarantees
Asset Risk	The energy transition will reduce the value of many forms of formal and informal collateral, including fossil fuel reserves and permits.	Self-Assurance

1.   Under-Assurance

All forms of financial assurance face an obvious risk: under-assurance. Under-assurance simply means that financial assurance does not cover the full costs of environmental repair.[314] Political pressure or regulatory mistakes can result in under-assurance even in ordinary conditions.[315] However, the energy transition poses two threats that may significantly increase under-assurance risk: (1) It may shorten the expected life of fossil fuel projects, and (2) it may cause environmental repair costs to increase dramatically.

To keep the rise in global temperature below the Paris Agreement’s 1.5°C threshold, many fossil fuel projects will need to be decommissioned early.[316] This threatens environmental repair funds that are gradually accumulated over the entire lifespan of a project, since the energy transition may shutter projects before they have set aside enough money to conduct environmental repair.[317] Early, industry-wide decommissioning may also drive up the cost of environmental repair, imperiling all forms of financial assurance. Environmental repair often requires special skills or equipment, and industry-wide downturns can cause demand to surge. These changes in demand can strain these limited resources and dramatically increase costs.[318] In short, the energy transition may drive up the costs of environmental repair at the same time as it cripples the ability of fossil fuel companies to pay those costs.

2.   Guarantee Risk

If the energy transition reduces the profitability of the fossil fuel industry, this could introduce wrong-way risk by threatening the value of the third-party guarantees that make up a large portion of financial assurance.[319] This represents the same problem that undermines liability-assigning rules: When guarantors are heavily invested in the same industry as the operators whose risks they are guaranteeing, their fortunes rise and fall together.[320] This risk is well-recognized in financial literature,[321] but until recently it has been largely ignored in the context of environmental repair.[322]

In recent years, the slow decline of the coal industry has dramatically demonstrated the wrong-way risk embedded in environmental repair guarantees. Most coal operators governed by SMCRA use third-party surety bonds to secure their environmental repair obligations.[323] Following a string of coal company bankruptcies, a 2022 investigation by Bloomberg and NPR revealed that almost one-fifth of the industry’s environmental repair obligations were underwritten by Indemnity National Insurance Co., a small and poorly diversified insurer.[324] Regulators and industry researchers worry that “[m]ultiple mine bankruptcies at the same time could overwhelm Indemnity,” pushing unfunded reclamation costs onto the public.[325] This “Sword of Damocles” hanging over the coal industry suggests that, across the broader landscape of fossil fuel companies, third-party guarantees may be more precarious than they appear.

3.   Asset Risk

The energy transition also threatens the value of the assets of self-bonded operators. Where self-bonding relies on broad measurements of an operator’s financial status, the wrong-way risk is almost tautological—a broad decline in the fossil fuel industry will obviously reduce the income and net worth of fossil fuel operators. However, the energy transition also creates wrong-way risk when financial tests assess specific assets like production permits or mineral rights, because the value of these assets can be highly correlated with the overall profitability of the fossil fuel sector.

This is particularly troubling because asset risk threatens some of the tools regulators have recently used to improve self-bonding rules. For example, BOEM historically exempted many offshore oil and gas operators from financial assurance requirements based on their credit ratings, operating histories, or financial statements.[326] This nearly caused a catastrophe for BOEM when the price of U.S. crude oil fell from a high of nearly $100 per barrel in February 2014 to a low of just over $25 per barrel in February 2016.[327] As the price of oil plummeted, BOEM found that many self-bonded operators no longer met these net worth requirements.[328] However, BOEM also realized that demanding additional financial assurance would push many operators into bankruptcy.[329] It decided to do nothing.[330]

In 2023, when the price of oil recovered, BOEM increased financial assurance requirements.[331] However, BOEM’s new regulation exempts operators if their fossil fuel reserves are worth more than three times their estimated environmental repair costs.[332] BOEM justified this exemption with the following explanation:

BOEM believes that a property with a sufficient “reserves-to-decommissioning cost” ratio would likely be purchased by another company if a current lessee defaults on its obligations, thereby reducing the risk that decommissioning costs for that property would be borne by the government, and consequently reducing the need for supplemental financial assurance.[333]

This logic ignores the obvious wrong-way risk posed by the energy transition: Operators may default on their lease obligations precisely because the values of oil and gas reserves decline and face no prospect of recovery. BOEM rejected several public comments highlighting this possibility and argued instead that the agency’s experience and “common sense” suggest that financially healthy oil and gas operators will always be standing by to acquire offshore reserves.[334] The phrase “climate change” was nowhere to be found in BOEM’s fifty-six-page rulemaking.[335]

IV. Rebuilding Environmental Repair for the Energy Transition

The energy transition demands a new model of environmental repair oriented toward guaranteeing environmental restoration rather than focused on expanding environmental liability. The law of environmental repair, as it exists today, strikes a grand bargain between regulators and operators. Part I of this Article provided the first comprehensive account of this bargain: Operators are allowed to make profitable but damaging use of land today in exchange for the promise of expensive remediation tomorrow.[336] Part II outlined how operators break this bargain by delaying, divesting, and abandoning environmental repair obligations.[337] In response, policymakers and academics have largely offered tactical, not structural, reforms. Dozens of proposals across a wide range of activities and industries have focused on expanding liability-assigning rules, strengthening financial assurance requirements, or providing a public backstop to operator liability.[338] The result has been a legal arms race, as regulators struggle to enforce a complex system of laws while operators delay, transfer, or abandon their obligations.[339]

Part III explained how the global energy transition threatens this fragile entente by undermining the liability-assigning rules and financial assurance instruments that appear most secure. As renewable energy sources supplant fossil fuels, industry-wide declines may bankrupt swaths of the industry and frustrate the expansive liability rules that guarantee environmental repair.[340] These same pressures also threaten the financial assurance rules that protect environmental repair obligations from operator bankruptcies.[341] It is too early to estimate the size and speed of these approaching risks, but their direction is clear: Many environmental repair laws face failure.

In response to the shortcomings of liability-oriented environmental repair laws, and the looming systemic threat of the energy transition, this Section proposes a new model of environmental repair, grounded in transactional law principles: the environmental earnout. An environmental earnout would withhold a portion of the revenue from an environmentally damaging activity until environmental remediation is completed. Part IV.A first argues that past reforms have failed for a simple reason: Regulators have failed to recognize environmental repair laws as a distinct system of law, and so they have treated the temporal externalities that undermine environmental repair laws as inevitable. By reframing environmental repair as a transactional regime rather than a liability-oriented one, this Section lays the groundwork for structural, rather than tactical, reforms.

Building on this conceptual framework, Part IV.B situates earnouts in environmental and transactional theory and outlines the structure of an environmental earnout. Environmental earnouts are simple: They discourage and insure against operator default by withholding some of the benefits of environmentally damaging activities until operators fulfill their environmental repair obligations. Finally, Part IV.C briefly discusses opportunities and barriers to implementation of environmental earnouts and lays a path for future research.

A. Framing Environmental Repair as a Transactional Regime

For the past century, American law has treated the core externality of environmental repair—the gap between benefit and burden—as inevitable.[342] This resignation flows from a broader oversight: Prior scholarship has elided the distinction between environmental liability regimes and environmental repair laws.[343] This neglect has hobbled attempts to reform environmental repair. Environmental liability rules, like natural resource damage laws, threaten liability in the future to encourage harm reduction today and only impose costs after some duty of care has been breached.[344] In environmental regimes where liability is merely a possibility, precautionary proposals must overcome a strong presumption of “innocence” in favor of potential polluters.[345]

As a result of using environmental liability norms to structure and analyze environmental repair law, the few scholars who suggest that potential polluters prepay their possible repair obligations do so cautiously. Economists Robert Costanza and Charles Perrings argue that potential polluters should post collateral bonds to cover their potential environmental liability but describe such prepayment as reflecting a “presumption of guilt.”[346] Professor Lee Anne Fennell argues that precautionary environmental bonds could be used to resolve property conflicts between neighbors but emphasizes that she sees nothing “morally blameworthy or suspect” about such conflicts.[347]

However, environmental repair laws are more clearly understood as transactional exchanges, not liability regimes. Environmental repair laws do not penalize accidental leaks or allocate environmental damages—they require identified operators to provide defined environmental services[348] tied to an exchange of valuable rights.[349] Moreover, environmental repair obligations can be fulfilled. Unlike general duties to avoid pollution, operators can satisfy, and ultimately discharge, environmental repair obligations.[350]

This distinction matters because transactions can be reshaped in ways that would be unthinkable for liability regimes, and transactional law contains a wide range of tools designed to align benefits and burdens. Currently, environmental repair laws create a temporal externality because operators receive a thing of value—a permit, operating license, or lease—immediately, in exchange for a promise to pay for environmental repair decades in the future. This promise is enforced, imperfectly, with complex liability-assigning rules[351] and is secured, imperfectly, with a mix of financial instruments ranging from credit checks to collateral accounts.[352] If environmental repair was a typical liability regime, this complex and fragile structure would serve a purpose because the threat of potential future liability would encourage safe behavior today. However, if environmental repair laws are correctly viewed as exchanges that offer benefits today in exchange for predictable (if distant) obligations, a simple question presents itself: Why not delay some of those benefits until operators fulfill their obligations? By framing environmental repair as a transactional regime, the temporal externality at the heart of environmental repair law is revealed as a simple policy decision—one that can be reversed.

B. The Environmental Earnout: A Transactional Model of Environmental Repair

If environmental repair laws are transactions, the public is getting a bad bargain. By giving operators profitable permits, licenses, and leases today in exchange for distant unfunded promises of environmental repair, the public extends a line of environmental credit to strip mine owners and fossil fuel companies.[353] For the past century, regulators have attempted to collect these debts by expanding liability rules and tweaking financial assurance mechanisms, while deadbeat operators dodge, delay, or transfer their environmental debts.[354] However, the looming threats of climate change and the energy transition jeopardize these piecemeal reforms. The energy transition erodes the creditworthiness of fossil fuel operators, while simultaneously undermining the liability-assigning rules and financial assurance mechanisms designed to protect the public against operator defaults.[355] In response, academics have increasingly proposed that operators should prepay their environmental repair bills into designated environmental repair funds.[356]

These proposals are a step in the right direction, but they fail to fully protect the public. First, and most obviously, future cost projections often fall short.[357] The energy transition will only magnify this problem by shortening the lives of fossil fuel facilities and increasing the demand for (and price of) scarce decommissioning resources.[358] A second, more structural flaw is that, by focusing on the cost to the public, these prefunding models underestimate the full cost of environmental repair to the operator. Even inactive facilities like idled oil rigs and shuttered power plants are valuable to operators who can reopen, repurpose, or sell them.[359] This potential future value makes even free environmental repair expensive for operators.[360] To fully protect the public, complete financial assurance must exceed the costs of environmental repair, so that operators are incentivized to fulfill their end of the environmental repair bargain.

In response to the failures of existing environmental repair laws and the looming threat of the energy transition, this Section proposes a fundamentally new type of environmental repair law: the environmental earnout. Environmental earnouts are simply described. Under an environmental earnout regime, a regulator would hold back some of the profits from environmentally damaging activities in an environmental trust fund and return those profits to operators when they complete environmental repair.[361] These environmental trust funds would not just cover, but substantially exceed, environmental repair costs, so that operators would receive a significant net payment when they fulfilled their end-of-life obligations. At the same time, environmental earnouts would eliminate liability-assigning rules entirely because over-collateralized environmental trust funds would ensure that there were never excess environmental repair costs for which an operator might be liable. Instead of carefully monitoring an ever-changing constellation of potentially liable operators, regulators would simply monitor, and have first claim over, a stable and identifiable environmental trust fund.

At first glance, environmental earnouts may seem like a trivial change to designated funds. However, as this Section explores, simple payment-timing rules can completely realign the incentives and behavior of transacting parties. Part IV.B.1 situates earnouts and “over-assurance” in environmental scholarship. Part IV.B.2 applies private law theory to argue that environmental earnouts can align the interests of environmental regulators and operators and ensure that environmental repair obligations are paid. Finally, Part IV.B.3 outlines the structure of an environmental earnout and discusses how this structure eliminates the temporal externality that has driven a century of conflict between operators and regulators.

1.   Situating Earnouts in Environmental Theory

Environmental earnouts can be viewed as a form of financial assurance that dramatically over-assures the cost of environmental repair. Over-assurance is rare, but not unprecedented, in environmental law. One common tool of environmental law, “deposit-refund” rules, uses over-assurance to force potential polluters to underwrite their own subsidies.[362] Under a deposit-refund regime, people undertaking an environmentally risky activity, like selling a hazardous product, are charged a “deposit” representing the “worst case” social cost of their activities; this deposit is returned when the threatened harm does not materialize.[363] These schemes are a hybrid instrument combining two policies: (1) a tax on potential pollution and (2) a subsidy for avoiding pollution.[364]

Deposit-refund rules have been proposed in many contexts,[365] but the most familiar may be “bottle bills.” Bottle bills charge a modest deposit (generally a few cents) when people purchase a drink in a recyclable container and then refund that deposit when the bottle is delivered to a recycling facility.[366] Like environmental repair laws, bottle bills address pollution risk by imposing cleanup costs on the potential polluter. However, bottle bills do not create complex liability-assigning regimes to track each bottle as it passes from owner to owner and pursue cleanup costs if the bottle ends up in a river instead of a recycling plant. Instead, bottle bills adopt a simple financial assurance structure. They impose costs up front and then use those funds to subsidize rewards for customers who eliminate the pollution risk by returning their bottles.[367]

Modern environmental repair law contains nothing approaching a “deposit-refund” mechanism.[368] However, several scholars have proposed deposit-refund schemes to address negative-value property. Writing about land value taxes, Professor Nicolaus Tideman suggests that parties who propose destructive land uses could be required to “post an interest-bearing bond that would run with the land.”[369] Such bonds would ensure property retains a positive value and could be released to reward landowners when they repair any conditions that threaten their property values.[370] Fennell builds on this suggestion and argues that such bonds could be applied “whenever society stands to suffer from the spillovers of abandonment.”[371] Like earnouts, Fennell argues that bonding provides a credible way for potential polluters to link their “own payoffs to future states of the world, and thereby bear[] risk and accept[] responsibility.”[372] Environmental earnouts are similar to the models articulated by Tideman, Fennell, and others. This scholarship recognizes that, when financial assurance requirements exceed environmental liabilities, they shift risk to potential polluters rather than the public.[373]

An environmental earnout differs from these previous proposals, however, in the magnitude of assurance it demands. Previous scholars who have recommended increased environmental bonds generally demand only enough collateral to cover worst-case scenario costs.[374] Boyd argues that financial assurance requirements higher than anticipated cleanup costs “are wasteful, because they tie up capital (which always has an opportunity cost) but yield no additional social benefit.”[375] This argument is intuitive but wrong. In the context of transactional regimes, over-assurance serves several essential governance functions: It simplifies enforcement and disincentivizes the delay, transfer, and abandonment of environmental repair obligations. These functions directly address the weaknesses in modern environmental repair law.

2.   Earnouts as a Model for Environmental Repair

Environmental scholars frequently assume that over-assurance is “wasteful” because it increases the capital cost of projects without a clear public benefit.[376] This perspective is common, and operators are quick to cite it in opposition to anyfinancial assurance requirement.[377] In liability-oriented regimes like natural resource damage laws, this argument makes sense: If assurance incentivizes adherence to an ongoing duty of care, over-assurance simply increases costs without producing a better public outcome.[378] However, in a transactional regime, like environmental repair that exchanges defined burdens and benefits, over-assurance promises a future payout that aligns regulators’ and operators’ interests.

Environmental earnouts take their name from “earnouts,” contractual clauses that address uncertainty in mergers and acquisitions.[379] Traditional earnouts are straightforward: They tie the final purchase price of an asset or company to pre-agreed benchmarks and delay part of the payment until those milestones have been met or missed.[380] Despite this apparent simplicity, earnouts serve a wide range of sophisticated ends.[381] Three of those roles make earnouts promising models for financial assurance: (1) They bridge disagreements about the future, (2) they reward sellers for managing a buyer’s new assets carefully, and (3) they help buyers enforce contractual promises against judgment-proof sellers.

At their most basic, earnouts test claims about the future. Buyers and sellers may agree in principle about how to set a price but disagree about the likelihood of some relevant future event.[382] Earnouts help parties negotiate around these disputes because time turns predictions “into historical fact.”[383] If parties disagree about some easily measured event—a company’s annual sales, for example—earnouts let them set aside part of the purchase price and wait. This also helps buyers distinguish predictions from puffery. Sellers who exaggerate about the future will rarely stake money on that prediction, while sellers who trust their predictions will readily do so.[384] This means that honest sellers can use earnouts to “credibly convey hidden information” about their own beliefs.[385]

Earnouts can also align parties’ interests when the seller retains temporary control over an asset after the price has been set. Complex assets, like operating companies, may take quite some time to transfer and require experienced management during an ownership transition.[386] Earnouts can incentivize a controlling seller’s careful management during this period so that the asset meets its earnout benchmarks.[387]

Finally, some buyers use earnouts to prevent sellers from dodging their contractual obligations. Sellers often disclose information or make promises about their assets during a sale, and buyers can usually sue if this information is false. However, in some transactions, like acquisitions from public companies, the seller dissolves or is left penniless after the sale. In such cases, buyers may use earnouts to delay payment until they can discover any misrepresentations, rather than attempt to claw back their money from a defunct seller’s individual investors.[388]

These three functions of earnouts—testing claims about the future, incentivizing careful management, and protecting against judgment-proof debtors—match the enforcement challenges that plague environmental repair law. Operators are often able to delay or transfer environmental repair obligations precisely because regulators struggle to evaluate operators’ claims that idled infrastructure may be reused or environmental repair costs may decrease.[389] Environmental earnouts would test the credibility of these claims because operators who delay environmental repair would also delay the environmental trust fund’s payout.[390] Operators who accept this delay would “credibly convey” to regulators their intent to use idled infrastructure in the future.[391] At the same time, environmental earnouts would encourage operators to manage their damaging activities carefully to reduce the eventual burden of environmental repair and maximize their future payout.[392] Finally, environmental earnouts would offer regulators, and potentially other creditors, easy recovery from judgment-proof operators without relying on ongoing profits from the underlying activity.[393] This could be particularly valuable in the energy transition, during which fossil fuel operator bankruptcies could force regulators to choose between recovering environmental repair costs and causing global environmental harm.

3.   Structuring an Environmental Earnout

Environmental and private law theory suggests that earnouts could revitalize environmental repair law, but what would an environmental earnout look like in practice? This Section outlines how a hypothetical environmental earnout might be implemented, identifies where earnouts depart from other models of environmental repair, and highlights important elements of any environmental earnout law.

Table 3 below compares the stages of a proposed environmental earnout to environmental repair under a prefunded designated fund regime. These stages are, from the regulators’ perspective, quite simple. Under an environmental earnout, regulators would (1) estimate environmental repair costs, (2) require operators to pay significantly more than those costs into a controlled environmental trust fund, and (3) release these surplus funds to subsidize environmental repair costs and reward operators for fulfilling their obligations. As shown in table 3, this structure ensures that the operators who control environmental repair processes always stand to gain from fulfilling their obligations. This safeguard, in turn, protects the public from operator defaults even in the face of systemic industry-wide risks like climate change and the energy transition.

Table 3: Environmental Earnouts in Practice

Stage	Prefunded Designated Fund	Environmental Earnout (proposed)
(1) Proposed Land Use	An operator proposes a valuable but environmentally damaging activity.
(2) Evaluation Process	Regulators and operators develop an environmental repair plan and assess the anticipated cost of environmental repair.
(3) Permitting Process	The operator surrenders: · 100% of the anticipated environmental repair cost to the designated fund. · A promise to conduct environmental repair. The operator receives: · A valuable land use right.	The operator surrenders: · [150]%[1] of the anticipated environmental repair cost to an environmental trust fund. The operator receives: · A valuable land use right. · A residual claim to the environmental trust fund.
(4) During Operation	The operator holds: · Profits from the land use. · A valuable land use right and related promise to conduct environmental repair, each transferrable subject to liability-assigning rules.	The operator holds: · Profits from the land use. · A valuable land use right and related residual claim to the environmental trust fund, each freely transferrable.
(5) During Environmental Repair	The Designated Fund pays: · Up to the anticipated cost of environmental repair. The operator pays: · Expenses above the anticipated cost of environmental repair.	The Environmental Trust Fund pays: · The full cost of environmental repair. The operator pays: · Nothing.
(6) After Environmental Repair	The operator receives: · Any remainder from the designated fund (est. 0%). The operator surrenders: · Any remaining interest in the facility.	The operator receives: · The remainder of the environmental trust fund as an environmental earnout (est. [50]% of environmental repair costs). The operator surrenders: · Any remaining interest in the facility.

a. Financial Assurance Mechanisms

At their core, environmental earnouts are simply a form of financial assurance. As Part I.B.2 of this Article discusses, financial assurance fulfills two functions under environmental repair laws: It ensures that environmental repair costs will be paid, and it forces operators to internalize those costs.[395] An environmental earnout achieves both goals by adopting a third function: It ensures that environmental repair obligations never create negative-value property.[396] As table 3 shows, environmental earnouts accomplish this goal by creating an environmental trust fund worth significantly more than the cost of environmental repair and tying this valuable asset to the underlying damaging land use.

This simple outline leaves much unsaid, and regulators implementing an environmental earnout would still face important policy decisions. For example, regulators could require operators to prepay the full amount of any earnout before receiving a permit. Alternately, they could allow operators to provide different assurance at first and then gradually fund an environmental trust fund from their profits.[397] Regulators could also structure environmental trust funds to shield those funds from financial risks, including operator bankruptcy.[398] However, this general structure would provide a flexible financial assurance tool that could be applied across environmental repair regimes.

b. Liability-Assigning Rules

The most important benefit of environmental earnouts is that they eliminate the need for liability-assigning rules, because over-assurance “shifts the burden of proof from the regulator to the firm.”[399] So long as a facility’s environmental trust fund contains significantly more than the cost of environmental repair, the residual claim on the trust fund will bea valuable asset for operators, and any “liability-assigning rules” will be vestigial.

Regulators may instead need to determine who is entitled to conduct environmental repair and receive the environmental trust fund’s resulting payout. Regulators may need to develop “priority-assigning rules” if they are faced with competing claimants, some seeking to operate a facility and some seeking to decommission it. However, over-assurance means these new disputes will have relatively low stakes for the public: No matter the outcome, environmental repair costs will be paid.

c. Other Rules: Quality Standards, Enforcement Provisions, and Pollution Control Provisions

While environmental earnouts address the century-old failings of the liability rules and financial assurance mechanisms used by environmental repair law, they do not render other environmental repair rules obsolete. Notably, environmental earnouts do not guarantee that operators will conduct environmental repair well, and operators will still be incentivized to cut corners in the environmental repair process.[400] Environmental earnout regimes will still require technical standards and oversight requirements to ensure that environmental repair is conducted safely and thoroughly.[401]

In addition, while environmental earnouts make complex liability-assigning rules unnecessary, they cannot replace traditional pollution control laws. Many facilities that carry environmental repair obligations, like coal mines and offshore oil rigs, can release enormous amounts of pollution if they are poorly managed. When a single oil rig, the Deepwater Horizon, exploded in 2010, it killed eleven people, injured seventeen more, and dumped more than three million barrels of oil into the Gulf of Mexico.[402] The resulting claims cost the rig’s owner, the oil supermajor BP, more than $61 billion to resolve—damage that dwarfs even the largest environmental repair bills.[403] Like all environmental repair laws, environmental earnouts complement, but do not replace, liability regimes that hold polluters responsible for the harm they cause.

C. Implementing Environmental Earnouts: Challenges and Opportunities

This Article sets out the theoretical structure of environmental earnouts and argues that they can resolve many of the challenges facing environmental repair law. However, environmental repair obligations arise under thousands of laws, regulations, and contracts. Necessarily, the process of implementing an environmental earnout will be highly context specific. While a detailed discussion of implementation is beyond this Article’s scope, this Section briefly discusses challenges and opportunities that may arise in implementing individual environmental earnouts.

Economic feasibility represents the most obvious challenge to implementing environmental earnouts. For new or currently profitable infrastructure projects, economic feasibility may be less of a barrier than it seems. Environmental repair costs are high in the aggregate, but they often represent a fairly small percentage of an infrastructure project’s total capital costs. For example, in 2025 the average cost of drilling an onshore well in the United States “typically range[d] from $8 million to $9 million.”[404] Environmental repair estimates for onshore wells vary widely but cluster between $60,000 and $120,000 per onshore well—less than 2 percent of their drilling cost.[405] An environmental earnout that reserved 200 percent of the highest estimate in an interest-bearing account would increase the upfront cost of drilling a well by less than 3 percent and would return half of that to the operator once it had fulfilled its environmental repair obligations. For comparison, the Trump Administration’s 2025 tariffs on steel and aluminum increased drilling costs by approximately 3.25 percent overnight, with no promise of a direct return.[406] Environmental earnouts may make investment in environmentally destructive industries slightly less efficient, but they would be far from ruinous.

While environmental earnouts make economic sense for new or profitable infrastructure, a significant portion of operating infrastructure in the United States is already negative-value property. A 2024 study of Colorado’s forty-eight thousand unplugged wells found that more than half “have no reasonable prospect of providing for their own decommissioning,” because the total amount of unproduced oil and gas they have access to is worth less than their current environmental repair debts.[407] For this negative-value infrastructure, regulators must either spend public resources or seek repayment by enforcing and expanding liability rules.[408] Environmental earnouts are a prophylactic reform designed to make environmental repair laws sustainable; they do not and cannot repay the environmental debts of past regimes.

Where project-specific environmental earnouts are economically feasible, regulators may face jurisdiction-specific legal barriers to implementation. Environmental repair laws often allow regulators to increase financial assurance requirements for ongoing projects, either by right or during permit review, renewal, or transfer.[409] It may be even simpler to implement an environmental earnout for a new project, for which regulators and land managers might offer permits and leases on a “take-it-or-leave-it” basis rather than amending existing requirements. However, in either case, regulators will need to assess whether they can implement earnouts through their existing authority or whether new legislation will be needed.

A brief glance at just one regime, SMCRA, gives some sense of possible implementation challenges. The statutory text of SMCRA itself, which sets minimum federal standards for remediating coal strip mines, requires that financial assurance be “sufficient to assure the completion of the reclamation plan if the work had to be performed by the regulatory authority in the event of forfeiture.”[410] Facially, this presents no barrier to an over-assurance regime like an environmental earnout, which exceeds this minimum standard.

However, states take a variety of approaches to SMCRA, and these varied regimes present a diverse range of implementation challenges. In implementing SMCRA, several states set strict limits on financial assurance. For example, Alabama and Colorado require bonds to reflect the actual cost of environmental repair.[411] Alaska and Georgia, in contrast, set caps on the total amount of financial assurance that a regulator can demand from a coal operator.[412] Where environmental repair regimes prescribe highly detailed financial assurance requirements, further research is needed to identify specific statutory and regulatory barriers to implementation.

Other states give their coal regulators substantial leeway to set financial assurance requirements. Texas law provides that coal reclamation bonds should “be based on, but not limited to, the estimated cost” of repair and gives its coal regulator significant discretion to shape financial assurance requirements.[413] California laws authorize similar flexibility, so long as financial assurance is “reasonably available and adequate to ensure reclamation.”[414] Regulators operating under these adaptable regimes might easily implement environmental earnouts on a case-by-case basis. However, implementation could raise doctrinal questions beyond the scope of this Article. For example, any action by federal regulators to implement environmental earnouts could spark litigation under the emerging “Major Questions Doctrine,” a complex doctrine of review that limits novel uses of regulatory power.[415]

More promisingly, environmental repair obligations also arise under a range of private law agreements. The parties to any one of these agreements could modify them to implement environmental earnouts. Like the first environmental repair obligations, environmental earnouts might be driven by landowners seeking the best possible protections for their property.[416] In this respect, the fragmented nature of environmental repair law is a strength. The process of rebuilding a century of failed environmental repair laws—and preparing this system of law for the global energy transition—could begin tomorrow, anywhere.

Conclusion

We are surrounded by infrastructure that, one day, will reach the end of its life. For nearly a century, a staggering range of legal instruments, from international treaties to state regulations to private contracts, have attempted to protect the public from the environmental risks and enormous financial costs posed by abandoned infrastructure.[417] These legal regimes, which this Article names environmental repair laws, are unified by a common purpose: They create a prospective duty for risky but permitted industries to restore land they degrade to a safe, stable, and usable condition when they are done with it.[418]

However, we are also surrounded by environmental repair law’s failures. In the Gulf of Mexico, a hundred oil rigs and thousands of underwater wells sit abandoned and unplugged, exposed to hurricanes and corrosion.[419] Onshore, half of all lakes and 40 percent of all rivers are contaminated by runoff from abandoned mines.[420] This Article opened with the story of the Simmons family, who struggled for seven years to plug the leaking methane well behind their family’s barn.[421] Their story is not unique, or even unusual—fourteen million Americans live within a mile of an abandoned, ownerless, and uncapped oil or gas well and are exposed to the toxic chemicals that these wells release into the air and groundwater.[422]

This Article offers the first comprehensive account of environmental repair law. In doing so, it documents a legal regime in crisis. Operators dodge, delay, and abandon their environmental obligations, while regulators tweak liability rules and financial assurance mechanisms to bind operators to decades-old promises of environmental repair. Regulators often fail. When they do, the public bears the costs of environmental repair or the burdens of untreated environmental catastrophes. This Article also documents a new threat to this fragile regime: climate change and the transition to renewable energy. These global forces threaten to upset the delicate balance of environmental repair law and to impose either shocking costs or catastrophic environmental harm.[423]

At the same time, this Article identifies a new path forward for environmental repair law. This path is based on a simple insight: Environmental repair laws are structurally distinct from environmental liability rules. They are transactions, not punishments. Environmental repair laws represent an exchange between operators, who receive valuable land use rights today, and regulators, who receive future promises of environmental repair. Viewed through this lens, the century-long conflict between operators and regulators flows from the decision to deliver the benefits of environmental repair up front and defer payment for environmental repair to an indefinite date decades in the future. This conflict is a policy choice—and it can be reversed.

This Article proposes a new bargain, and a fundamentally new model of environmental repair law: the environmental earnout. Environmental earnouts hold back a portion of the profits from operators’ activities and release those profits to operators when environmental repair is complete. This simple mechanism realigns the benefits and burdens of environmental repair. In doing so, it offers a new path forward for environmental regulators grappling with the failures of environmental repair and the looming threat of the energy transition.

If we are to reform environmental repair laws, now is the time to act. The foreseeable but still distant energy transition gives lawmakers a narrow window in which to prepare environmental repair laws for the end of fossil fuel. Operators accept the burdens of environmental repair because those burdens secure their right to undertake profitable but risky activities. This means that environmental repair laws are most easily expanded when environmentally damaging activities still offer financial rewards. That is undeniably the case today. While the industry’s future is limited, fossil fuel companies are still incredibly profitable.[424] America’s coal mines still contain more than eleven billion tons of unproduced coal.[425] Fossil fuel companies are pumping vast amounts of capital into new offshore oil and gas wells and expect correspondingly vast returns to flow out.[426] Onshore, many newly drilled wells are more productive and profitable than ever.[427] This new investment offers environmental regulators a chance to fundamentally reform environmental repair—to renegotiate the bad bargain struck by a century of environmental repair laws, to align the interests of fossil fuel operators and the public, and to protect families like the Simmonses from the failures of the fossil fuel industry.

Copyright © 2026 Martin Lockman, Assistant Professor of Law, William & Mary Law School. I am deeply grateful to Martin Dietrich Brauch, Michael Burger, John Dernbach, Michael Gerrard, Alison Gocke, Laura Heymann, Tracy Hester, Joshua Macey, Lisa Sachs, and Romany M. Webb for their detailed comments and conversations that inspired, shaped, and reshaped this Article. I am also grateful for the comments provided at the 2023 Yale Law and Industrial Policy Workshop, the 12th Sabin Colloquium on Innovative Environmental Law Scholarship, and the 15th Vermont Colloquium on Environmental Scholarship, and for invaluable discussions with the faculties of Columbia Law School, William & Mary Law School, the Sabin Center for Climate Change Law, Florida State University College of Law, University of Nebraska College of Law, Florida International University College of Law, Southwestern Law School, and Widener University Commonwealth Law School.

       [1]. Delger Erdenesanaa, These Teens Adopted an Orphaned Oil Well. Their Goal: Shut It Down., N.Y. Times (May 24, 2024), https://www.nytimes.com/2024/05/24/climate/orphan-wells-capping-methane-leaks.html [https://perma.cc/2HZS-X5KH].

[2]. Id.

[3]. The 1969 Cuyahoga River Fire, Nat’l Park Serv. (May 23, 2022), https://www.nps.gov/articles/story-of-the-fire.htm [https://perma.cc/39MP-XFK9].

       [4]. Erdenesanaa, supra note 1; see Cary Coglianese, Social Movements, Law, and Society: The Institutionalization of the Environmental Movement, 150 U. Pa. L. Rev. 85, 99–108 (2001) (discussing the formalization and institutionalization of American environmental law since 1970); Jedediah Purdy, The Long Environmental Justice Movement, 44 Ecology L.Q. 809, 810 (2018) (outlining the history of environmental justice as a governance lens).

[5]. See Methane, Climate & Clean Air Coal., https://www.ccacoalition.org/short-lived-climate-pollutants/methane [https://perma.cc/CH5X-XGXS].

[6]. See Samuel W. Shaheen, Max K. Lloyd, Eric E. Roden & Susan L. Brantley, Anaerobic Oxidation of Methane from Abandoned Oil and Gas Wells Leaking into Aquifers, 408 Geochim. Cosmochim. Acta 269, 278 (2025) (discussing the effect of discharges from “abandoned wellbores” on groundwater).

       [7]. Dominic C. DiGiulio, Robert J. Rossi, Eric D. Lebel, Kelsey R. Bilsback, Drew R. Michanowicz & Seth B.C. Shonkoff, Chemical Characterization of Natural Gas Leaking from Abandoned Oil and Gas Wells in Western Pennsylvania, 8 ACS Omega 19443, 19448 (2023).

       [8]. Amelia Arvesen, Firestone House Explosion Tragedy Painful, and Personal, for Carbon Valley Community, Longmont Times-Call (Apr. 22, 2017), https://www.timescall.com/2017/04/22/firestone-house-explosion-tragedy-painful-and-personal-for-carbon-valley-community/ [https://perma.cc/H3A9-DMCZ].

       [9]. Nat’l Transp. Safety Bd., Natural Gas Explosion at Family Residence Firestone, Colorado, April 17, 2017, at 1 (2019), https://www.ntsb.gov/investigations/AccidentReports/Reports/PAB1902.pdf [https://perma.cc/U4Y9-GH7D].

[10]. Id.

[11]. See McCleary Unit #001,Well Done Found., https://welldonefoundation.org/projects/mccleary-unit-001/ [https://perma.cc/8KHN-CC4W] (noting that the process of formally “adopting” the well “required the landowners [to take] legal action against the estate of the insolvent Pine Top, Inc.”).

     [12]. Keith Faber, Ohio Dep’t Nat. Res., Orphan Well Program: Performance Audit 9 (2022), https://ohioauditor.gov/auditsearch/Reports/2022/Ohio_Department_of_-Natural_Resources_22_Performance-Franklin_FINAL.pdf [https://perma.cc/34SU-7CKG]. While the program increased its activities by an order of magnitude during the period in which the Simmonses were searching for help, this did little to clear the backlog; Ohio’s Orphaned Well Program plugged just 181 wells in fiscal year 2021. See id.

     [13]. Erdenesanaa, supra note 1.

[14]. Id.

[15]. Id.

     [16]. U.S. Env’t Prot. Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2021, 3-111–3-113 (2023), https://www.epa.gov/system/files/documents/2023-04/US-GHG-Inventory-2023-Main-Text.pdf [https://perma.cc/E4KN-ASBH] [hereinafter 2024 EPA Inventory]. EPA identifies 3.7 million “abandoned oil and gas wells” but defines “abandoned wells” broadly to include all nonproducing wells. As of 2021, this number included approximately 1.5 million oil and gas wells that were “plugged to prevent migration of gas or fluids.” Id. at 3-111, 3-113. Plugged and abandoned wells remain sources of pollution, albeit at a significantly smaller scale. See id. at 3-113 (estimating annual methane emissions from plugged and abandoned oil and gas wells).

[17]. See infra notes 62–78 and accompanying text (discussing the origin of the first environmental repair laws).

     [18]. 15A N.C. Admin. Code 5H.1618.

     [19]. W. Va. Code § 22-3-10.

     [20]. 30 C.F.R. § 250.1721 (2025).

     [21]. Ky. Rev. Stat. § 353.595.

[22]. See infra notes 62–68 and accompanying text (discussing the contractual origins of environmental repair law).

[23]. See, e.g., Okla. Stat. tit. 52, § 308 (creating an environmental repair duty for owners and managers of oil and gas wells).

[24]. See, e.g., 10 C.F.R. § 50.82 (2025) (setting out end-of-life decommissioning obligations for nuclear power plants).

[25]. See James Bruggers, Congressional Office Agrees to Investigate ‘Zombie’ Coal Mines, Inside Climate News (Jan. 12, 2024), https://insideclimatenews.org/news/12012024/kentucky-zombie-coal-mines/ [https://perma.cc/9BHS-JTWK].

     [26]. Carlos Nogueras Ramos & Martha Pskowski, “Nobody really knows what you’re supposed to do”: Leaking, exploding abandoned wells wreak havoc in West Texas, Tex. Trib. (Feb. 29, 2024), https://www.texastribune.org/2024/02/28/abandoned-oil-wells-west-texas-railroad-commission/ [https://perma.cc/UN64-UXPG].

[27]. See infra notes 207–212 and accompanying text (highlighting the breadth of environmental repair scholarship, and the relative silos in which it has developed).

     [28]. The work of Dr. James Boyd is a notable early outlier. See James Boyd, Financial Assurance Rules and Natural Resource Damage Liability: A Working Marriage? 5 (Res. for the Future, Discussion Paper No. 01-11, 2001) [hereinafter Boyd, A Working Marriage] (distinguishing between “land reclamation and restoration regulations” and “liability law”); James Boyd, Financial Responsibility for Environmental Obligations: Are Bonding and Assurance Rules Fulfilling Their Promise? 19–20 (Res. For the Future, Discussion Paper No. 01-42, 2001) [hereinafter Boyd, Bonding and Assurance Rules] (distinguishing between environmental laws that create a “known, future obligation” and those that incentivize potential polluters to reduce the uncertain future risks of their activities).

[29]. See generally Bruce R. Huber, Negative-Value Property, 98 Wash. U. L. Rev. 1461 (2021) (describing environmental repair obligations through the lens of property theory); Colin Mackie & Laurel Besco, Rethinking the Function of Financial Assurance for End-of-Life Obligations, 50 Env’t L. Rep. 10573 (2020) (establishing a theoretical framework to understand “financial assurance for end-of-life obligations”); Joshua Macey & Jackson Salovaara, Bankruptcy as Bailout: Coal Company Insolvency and the Erosion of Federal Law, 71 Stan. L. Rev. 879 (2019) (detailing the evasion of environmental repair laws by major coal companies, and, in doing so, outlining the function, and flaws, of liability and financial assurance rules). See also Jason Malone & Tim Winslow, Financial Assurance: Environmental Protection as a Cost of Doing Business, 93 N.D. L. Rev. 1, 11 (2018) (referring to such obligations as “environmental reclamation or rehabilitation”).

[30]. See infra Part III.B–C (discussing the novel risks posed by the energy transition).

[31]. See Shelley Ross Saxer, The Aftermath of Takings, 70 Am. U. L. Rev. 589, 605–44 (2020) (discussing the scope and nature of infrastructure abandonment in the United States).

[32]. U.S. Oil and Natural Gas Wells by Production Rate, U.S. Energy Info. Admin. (Dec. 27, 2023), https://www.eia.gov/petroleum/wells/ [https://perma.cc/M7BF-AY38].

[33]. Annual Report Mileage for Natural Gas Transmission & Gathering Systems, U.S. Dep’t Transp., Pipeline & Hazardous Materials Safety Admin., https://www.phmsa.dot.gov/data-and-statistics/pipeline/annual-report-mileage-natural-gas-transmission-gathering-systems [https://perma.cc/V8RN-P4KJ] (documenting 411,181 miles of natural gas transmission and gathering lines as of 2024); Annual Report Mileage for Gas Distribution Systems, U.S. Dep’t Transp., Pipeline & Hazardous Materials Safety Admin., https://www.phmsa.dot.gov/data-and-statistics/pipeline/annual-report-mileage-gas-distribution-systems [https://perma.cc/XKL4-D32F] (documenting 2,370,228 miles of natural gas distribution pipelines as of 2024); Annual Report Mileage for Hazardous Liquid or Carbon Dioxide Systems, U.S. Dep’t Transp., Pipeline & Hazardous Materials Safety Admin., https://www.phmsa.dot.gov/data-and-statistics/pipeline/annual-report-mileage-hazardous-liquid-or-carbon-dioxide-systems [https://perma.cc/ATE9-B3EZ] (documenting 228,479 miles of petroleum and crude oil pipelines as of 2024).

[34]. See U.S. Energy Info. Admin., Annual Coal Report 2023 viii (2024), https://www.eia.gov/coal/annual/pdf/acr.pdf [https://perma.cc/33E9-YL7G] (documenting 577.9 million short tons of coal produced annually from 560 mines).

[35]. See Martin Lockman, Martin Dietrich Brauch, Esteban F. Fresno Rodríguez & José Luis Gallardo Torres, Decommissioning Liability at the End of Offshore Oil and Gas: A Review of International Obligations, National Laws, and Contractual Approaches in Ten Jurisdictions, Sabin Ctr. for Climate Change 5–12, 18–19, 33 (2023) (discussing the role of international treaties in governing offshore oil and gas cleanup).

[36]. See infra notes 62–68 and accompanying text (discussing early contracts containing environmental repair obligations).

[37]. See Huber, supra note 29, at 1471–73.

[38]. See infra notes 87–90 and accompanying text (discussing natural resource damage laws).

     [39]. Throughout this Article, the term “operator” is used generically to refer to the party or parties liable for environmental repair. See Mackie & Besco, supra note 29, at 10573 n.1 (adopting the same approach).

     [40]. Kris Wernstedt & Robert Hersh, Abandoned Hardrock Mines in the United States: Escape from a Regulatory Impasse?, 1 Wm. & Mary Pol’y Rev. 25, 29 (2010).

[41]. See infra note54 and accompanying text (describing environmental harm that persisted because it did not affect an identified landowner).

     [42]. Wernstedt & Hersh, supra note 40, at 26.

[43]. Abandoned Mineral Lands: Environmental Factors, Nat’l Park Serv. (Dec. 2, 2020), https://www.nps.gov/subjects/abandonedminerallands/environmental-factors.htm [https://perma.cc/WX97-V6RN].

     [44]. This Article refers to this set of obligations as “environmental repair.” But see Mackie & Besco, supra note 29, at 10602(using the term “restorative responsibilities” to refer to similar “end-of-life obligations”).

     [45]. Carl J. Mayer, The 1872 Mining Law: Historical Origins of the Discovery Rule, 53 U. Chi. L. Rev. 624, 644 (1986).

[46]. Id. at 644–45; Gordon Morris Bakken, The Mining Law of 1872: Past, Politics, and Prospects 25 (2008).

     [47]. Mayer, supra note 45, at 641–49; Bakken, supra note 46, at 16–21.

     [48]. Mayer, supra note 45, at 641–47; Bakken, supra note 46, at 16–24.

     [49]. Bakken, supra note 46, at 94–100.

[50]. Id. at 96, 102–04.

[51]. Id. at 82–88; see also Otaheite Gold & Silver Mining & Mill. Co. v. Dean, 102 F. 929, 930 (C.C.D. Nev. 1900) (adjudicating an environmental dispute between two ore processing mills).

     [52]. Bakken, supra note 46, at 4–5, 32–34 (discussing the role of property law in early disputes around mining); see, e.g., Nat’l Copper Co. v. Minn. Mining Co., 23 N.W. 781 (Mich. 1885) (adjudicating a trespass action where the defendant’s method of abandoning its mining operations caused the plaintiff’s mine to flood).

     [53]. In Pennsylvania Coal Co. v. Sanderson, for example, the Pennsylvania Supreme Court held that “[m]ining in the ordinary and usual form is the natural user of coal lands,” and concluded that a downstream family had no remedy against an upstream coal mine that released poisoned water. 6 A. 453, 457 (Pa. 1886). However, Sanderson should not be overread; many contemporary courts were happy to grant environmental relief against mines. See Niagara Oil Co. v. Ogle, 98 N.E. 60, 62 (Ind. 1912) (collecting cases explicitly repudiating Sanderson).

[54]. See Bakken, supra note 46, at 98 (noting that one mine was protected from legal action for years because it discharged its pollution “through a gorge into the ocean,” rather than onto private land).

[55]. See id. at 89.

[56]. Id.

[57].Riborado v. Quang Pang Mining Co., 6 P. 125, 126 (Idaho 1885) (quoting the mining district’s 1866 regulation).

[58]. See, e.g.,1876 Ohio Laws 87–88 (creating liability for dumping coal debris); Columbus & Hocking Coal & Iron Co. v. Tucker, 26 N.E. 630, 635 (Ohio 1891) (upholding a jury verdict of damages under the 1876 Ohio law).

     [59]. George E. Reeves & Stephen D. Alfers, Dumps and Tailings, in Proceedings of the Rocky Mountain Mineral Law Twenty-Third Annual Institute 1, 4 (1977).

     [60]. Bakken, supra note 46, at 104.

[61]. Id.

[62]. See Karen L. Ellmore, Annotation, Duty of Oil or Gas Lessee to Restore Surface of Leased Premises upon Termination of Operations, 62 A.L.R.4th 1153 Art. II (1988) (collecting lease disputes around environmental repair and documenting no such cases prior to 1930); Judith L. Maute, Peevyhouse v. Garland Coal & Mining Co. Revisited: The Ballad of Willie and Lucille, 89 Nw. U. L. Rev. 1341, 1352 (1995) (noting that restoration clauses were rare in coal leases even by the mid-twentieth century); T. Craig Jones, Implied Covenant to Restore Surface - Judicial “Wildcatting” Yields Valuable Rights for Surface Owners: Bonds v. Sanchez-O’Brien Oil & Gas Co., 41 Ark. L. Rev. 173, 180 (1988) (observing that environmental repair clauses became “increasingly popular” in the mid-1980s).

[63].Oceana Oil Producers v. Portland Silo Co., 100 N.E.2d 895, 897 (Ind. 1951); see also Ballsun v. Star Petroleum Co., 288 P. 437, 439 (Cal. Ct. App. 1930) (requiring the lessee to “restore the premises . . . to as near their original condition as is reasonably possible so to do”); Washburn v. A.F. Gilmore Co., 2 P.2d 506, 507 (Cal. Ct. App. 1931) (requiring the lessee to “cover up all sump holes” at the end of an oil and gas lease); Berry v. Kelly, 203 P.2d 80, 82 (Cal. Ct. App. 1949) (requiring the lessee “to fill all sump holes and other excavations made and to clean up the property” at the end of the lease).

     [64]. Maute, supra note 62, at 1352.

[65].Peevyhouse v. Garland Coal & Mining Co., 382 P.2d 109, 111 (Okla. 1962); see Richard R. Carlson, Peevyhouse, 45 Fla. St. U. L. Rev. 969, 969 (2018) (“Half a century after the court’s decision, law professors still use Peevyhouse to dramatize the hazards of strip mining and ‘economic waste.’”).

[66]. SeePeevyhouse, 382 P.2d at 114 (Irwin, J., dissenting) (enumerating environmental repair requirements in the lease); id. at 111 (majority opinion) (discussing the jury’s damage award).

[67]. Id. at 112.

[68]. See Omri Ben-Shahar, David A. Hoffman & Cathy Hwang, Nonparty Interests in Contract Law, 171 U. Pa. L. Rev. 1095, 1131–32 (2023) (discussing the influence of public environmental law on the interpretation of environmental repair clauses).

     [69]. Interestingly, oil and gas “well-plugging” laws preceded mine reclamation laws by several decades. Plugging and Abandonment of Oil and Gas Wells 6–7 (Nat’l Petroleum Council, Working Paper No. 2-25, 2011) [hereinafter NPC Working Paper]. However, these were primarily designed to protect neighboring mineral owners, whose oil would be damaged if it mixed with water. See id.; see also Steelsmith v. Aiken, 14 Pa. Super. 226, 228–29 (Pa. Super. Ct. 1900) (discussing the purpose of Pennsylvania’s well-plugging statute). Well-plugging laws generally incorporated environmental protections in the mid-twentieth century. See NPC Working Paper, supra, at 6–7.

     [70]. Fred P. Bosselman, The Control of Surface Mining: An Exercise in Creative Federalism, 9 Nat. Res. J. 137, 138–39 (1969).

[71]. Id. at 140–41.

[72]. See id. at 143.

     [73]. Whayne C. Priest, Jr., Reclamation of Strip Mine Spoils, 50 Ky. L. J. 524, 533–36 (1962); see also Eduardo M. Peñalver, The Illusory Right to Abandon, 109 Mich. L. Rev. 191, 217 (2010) (discussing the community burden of unusable and untaxable land).

     [74]. Priest, supra note 73, at 532.

     [75]. Bosselman, supra note 70, at 153; see also John D. Edgcomb, Cooperative Federalism and Environmental Protection: The Surface Mining Control and Reclamation Act of 1977, 58 Tul. L. Rev. 299, 305 (1983) (noting the novelty of West Virginia’s 1939 environmental repair statute).

     [76]. 1939 W. Va. Acts 402, § 1 (repealed 1965).

[77]. Id.

[78]. See Edgcomb, supra note 75, at 305 n.35 (collecting statutes).

[79]. Id. at 305–311. One contemporary scholar claimed that these laws were an industry attempt to deter local governments from adopting stricter environmental standards. Bosselman, supra note 70, at 153.

     [80]. Edgcomb, supra note 75, at 306; see also Bosselman, supra note 70, at 153–54.

[81]. See Rock Island Improvement Co. v. Helmerich & Payne, Inc., 698 F.2d 1075, 1078 (10th Cir. 1983) (repudiating Peevyhouse in light of intervening environmental repair statutes and awarding restoration damages for breach of an environmental repair clause);Ben-Shahar, Hoffman & Hwang, supra note 68, at 1131 (discussing the impact of public policy changes on courts).

     [82]. 30 U.S.C. §§ 1201–1328; Edward M. Green, State and Federal Roles Under the Surface Mining Control and Reclamation Act of 1977, 21 S. Ill. U. L.J. 531, 535–37 (1997) (discussing the structure of SMCRA); see Edgcomb, supra note 75, at 327–31 (discussing state Commerce Clause challenges to SMCRA).

     [83]. Environmental repair requirements were enacted unevenly across industries and agencies. See John D. Leshy, Mining Law Reform Redux, Once More, 42 Nat. Res. J. 461, 475–76 (2002) (discussing the slow and incomplete integration of environmental repair obligations into public land management); William Barlow, Insult to Injury: How Government Requirements Should Protect the Public from Hardrock Mine Contamination and the Financial Liability of Its Reclamation, 26 J. Land Res. & Env’t L. 339, 342–45 (2006) (same).

     [84]. Oil and Gas and Sulphur Operations in the Outer Continental Shelf, 44 Fed. Reg. 61886, 61902 (Oct. 26, 1979) (to be codified at 30 C.F.R. pt. 250); see Sam Kalen, Cruise Control and Speed Bumps: Energy Policy and Limits for Outer Continental Shelf Leasing, 7 Env’t & Energy L. & Pol’y J. 155, 161–62 (2012) (describing the background of the 1978 OCSLA amendments).

[85]. See Huber, supra note 29, at 1472–73 (discussing the theoretical justification for such laws).

     [86]. In practice, operators can sometimes influence the magnitude of environmental repair costs—they just cannot avoid them altogether. See id. at 1473 (noting that “cleanup obligations, if well enforced, can in theory incentivize owners to make cost-effective improvements . . . to reduce the total cost of compliance”); David A. Dana & Hannah J. Wiseman, A Market Approach to Regulating the Energy Revolution: Assurance Bonds, Insurance, and the Certain and Uncertain Risks of Hydraulic Fracturing, 99 Iowa L. Rev. 1523, 1565 (2014) (making the same observation).

     [87]. John C. Cruden & Matthew R. Oakes, The Past, Present, and Future of Natural Resource Damages Claims, 28 Geo. Env’t L. Rev. 291, 294–95 (2016); see also Frank B. Cross, Natural Resource Damage Valuation, 42 Vand. L. Rev. 269, 273 (1989) (reviewing “the legal framework that authorizes recovery for [natural resource] damages”).

     [88]. This point is central to a vast body of literature focused on the incentives created by environmental liability rules. See generally Jeffrey Kehne, Encouraging Safety Through Insurance-Based Incentives: Financial Responsibility for Hazardous Wastes, 96 Yale L.J. 403 (1986); Jonathan R. Nash, Environmental Law: An Economic Approach to the Availability of Hazardous Waste Insurance, 1991 Ann. Surv. Am. L. 455 (1991). A related branch of scholarship observes that liability rules can reduce environmental harm ex ante but argues that bankruptcy undermines the effectiveness of liability-oriented governance regimes. See generally Dale A. Oesterle, Viewing CERCLA as Creating an Option on the Marginal Firm: Does It Encourage Irresponsible Environmental Behavior?, 26 Wake Forest L. Rev. 39 (1991); Sarah E. Light, The Law of the Corporation as Environmental Law, 71 Stan. L. Rev. 137, 190–99 (2019).

     [89]. 42 U.S.C. § 9607(a)(4). See generally Comprehensive Environmental Response, Compensation, and Liability Act of 1980, Pub. L. No. 96-510, 94 Stat. 2767 (1980) (codified at 42 U.S.C. §§ 9601–9657).

[90]. See Linda A. Malone, Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), in 1 Environmental Regulation of Land Use § 9:14 (2024) (“The purpose of [CERCLA] is not to prevent groundwater and soil contamination but to remedy contamination after it has occurred.”); see also James T. O’Reilly, Important Aspects of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, in Superfund and Brownfields Cleanup § 3:2 (2023) (describing CERCLA’s liability regime as responsive to hazardous pollution, not as a general environmental restoration scheme); Columbia Falls Aluminum Co. v. Atl. Richfield Co., No. CV 18-131-M-DWM, 2021 WL 3769886, at *38 (D. Mont. Aug. 25, 2021), aff’d, No. 21-36042, 2023 WL 1281669 (9th Cir. Jan. 31, 2023) (holding that costs associated with “enhancing the use” of the property by removing asbestos-contaminated buildings and filling wells were not recoverable under CERCLA).

[91]. See Boyd, Bonding and Assurance Rules, supra note 28, at 19–20 (distinguishing between laws that create “uncertain environmental liabilities” and “more defined environmental obligations” like environmental repair duties).

[92]. See, e.g., 10 C.F.R. § 50.82(a)(3) (2025) (requiring nuclear power plants to be decommissioned “within 60 years of permanent cessation of operations”).

     [93]. Huber, supra note 29, at 1466 n.26 and accompanying text.

[94]. See FracTracker Alliance, Assessment of Oil and Gas Well Ownership Transfers in CA 4–10 (2023), https://www.fractracker.org/a5ej20sjfwe/wp-content/uploads/2023/05/Transfer-of-Ownership.pdf [https://perma.cc/3SVV-2AD7] (documenting ownership of oil and gas wells in California).

[95]. See infra Part II.A.2 (describing the enforcement challenges created by asset sales).

[96]. See Heike Trischmann, Decommissioning Security Agreements, in The Regulation of Decommissioning, Abandonment and Reuse Initiatives in the Oil and Gas Industry: From Obligation to Opportunities 117, 117 (Eduardo G. Pereira, Alexandra Wawryk, Heike Trischmann, Catherine Banet & Keith B. Hall eds., 2020).

     [97]. Huber, supra note 29, at 1464.

[98]. Id. at 1465.

     [99]. Peñalver, supra note 73, at 217.

[100]. Id. at 200–02; see, e.g., 30 C.F.R. § 556.604(d) (2025) (attaching environmental repair obligations to “record title owners” of offshore oil and gas leases); 30 C.F.R. § 556.605(e) (2025) (creating environmental repair liability for offshore sublessees, or “operating rights owners”); see also Huber, supra note 29, at 1509 (noting that “fragmented rights can be more easily abandoned than full-fledged land ownership”).

   [101]. Huber, supra note 29, at 1472–73; see Lior Jacob Strahilevitz, The Right to Abandon, 158 U. Pa. L. Rev. 355, 363 (2010) (discussing how rules prohibiting the abandonment of real property support the imposition of clean-up costs); Lee Anne Fennell, Forcings, 114 Colum. L. Rev. 1297, 1314 (2014) (same); see also Peñalver, supra note 73, at 216–18 (noting that abandonment is “already so hemmed in on all sides by public law that the common law rule arguably becomes redundant”).

[102]. See, e.g., Okla. Stat. tit. 52, § 308 (assigning obligations to the owners and managers of oil and gas wells); Mont. Admin. R. 17.86.102(1)(a) (requiring the most recent owner of a wind turbine or solar farm to “decommission its facility” at the end of its life and “pay for all costs associated with decommissioning”); see also Douglas Hale Gross, Annotation, Duty and Liability as to Plugging Oil or Gas Well Abandoned or Taken Out of Production, 50 A.L.R.3d 240 § 3(a) (1973) (collecting statutes); Ky. Rev. Stat. § 353.180 (1) (placing environmental repair obligations on any person who “remove[s] casings from any oil and gas well, either dry or producing”).

   [103]. Kan. Stat. Ann. § 55-179(b).

[104]. See Strahilevitz, supra note 101, at 390–405 (establishing a taxonomy to describe rules around the abandonment of property); see, e.g., 2 Colo. Code Regs. § 404-1:218 (detailing how environmental repair obligations transfer between entities).

[105]. See Strahilevitz, supra note 101, at 402–03 (discussing “licensing regimes”); see, e.g., 10 C.F.R. § 50.80 (2025) (setting out conditions for the transfer of nuclear operating licenses).

[106]. See Strahilevitz, supra note 101, at 398 (discussing legal regimes that prohibit the abandonment of property). Other rules around abandonment are possible but are rarely found in the United States. Lockman et al., supra note 35, at 19–20 (discussing rules that allow operators to cede mineral interests, and any accompanying environmental repair obligations, to the state); see also Strahilevitz, supra note 101, at 394–98 (discussing “escheat” regimes and noting their prevalence in civil law jurisdictions).

   [107]. Lockman et al., supra note 35, at 18–19.

[108]. See, e.g.,30 C.F.R. § 556.710 (2025) (providing that assignors of offshore mineral leases remain liable for all obligations, including environmental repair, incurred during their ownership); see also Keith B. Hall, The United States of America, in The Regulation of Decommissioning, Abandonment and Reuse Initiatives in the Oil and Gas Industry: From Obligation to Opportunities, supra note 96, at 649, 659–60 (discussing trailing liability).

[109]. See Erdenesanaa, supra note 1 (noting that $11,000 in raised funds covered approximately 15 percent of the total decommissioning cost); Bureau Safety & Env’t Enf’t, Decommissioning Cost Update for Pacific Outer Continental Shelf Region (POCSR) Facilities ii (2020), https://www.bsee.gov/sites/bsee.gov/files/vol-1-a-study-for-the-bureau-of-safety-and-environmental-enforcement-bsee-final-9-10-2020.pdf [https://perma.cc/9QEW-8SZS] (estimating that it would cost approximately $1.63 billion to remove twenty-three oil and gas platforms off of the coast of California).

[110]. See Light, supra note 88, at 191 (discussing the impact of bankruptcy on “compliance with public environmental law obligations”);Strahilevitz, supra note 101, at 401 (noting that bankruptcy can be used opportunistically to shed negative-value property); Huber, supra note 29, at 1506 (same).

[111]. See Boyd, Bonding and Assurance Rules, supra note 28, at 1 (defining “financial assurance”).

[112]. Id. at 1; see also Mackie & Besco, supra note 29, at 10574 n.10 (adopting “financial assurance” as a categorical description).

   [113]. Boyd, A Working Marriage, supra note 28, at 5.

[114]. See generally id. (discussing the prevalence and effectiveness of financial assurance rules in natural resource damage regimes).

[115]. See Michael Faure & Jing Liu, New Models for the Compensation of Natural Resources Damage, 4 Ky. J. Equine, Agric. & Nat. Res. L. 261, 278 (2012); Omri Ben-Shahar & Kyle D. Logue, Outsourcing Regulation: How Insurance Reduces Moral Hazard, 111 Mich. L. Rev. 197, 225–26 (2012); Kenneth S. Abraham, Environmental Liability and the Limits of Insurance, 88 Colum. L. Rev. 942, 945–55 (1988).

[116]. See Karen Bradshaw, Settling for Natural Resource Damages, 40 Harv. Env’t L. Rev. 211, 245 (2016).

   [117]. Boyd, Bonding and Assurance Rules, supra note 28, at 19.

[118]. Id. Regulators appear to agree with this perspective. See, e.g.,Risk Management and Financial Assurance for OCS Lease and Grant Obligations, 89 Fed. Reg. 31544, 31550 (Apr. 24, 2024) (to be codified at 30 C.F.R. pts. 550, 556, 590) Error! Hyperlink reference not valid.[hereinafter 2024 OCS Regulations] (noting that “[t]he purpose of financial assurance” for offshore decommissioning obligations “is not to prevent problems; it is to ensure there is money to fix them”).

[119]. See Macey & Salovaara, supra note 29, at 894 (identifying these two functions as the core goals of financial assurance mechanisms under SMCRA); L. Thomas Galloway & Thomas J. FitzGerald, The Bonding Program Under the 1977 Surface Mining Control and Reclamation Act: Chaos in the Coalfields, 89 W. Va. L. Rev. 675, 678 (1987) (discussing the role that SMCRA performance bonds were intended to play in directly funding reclamation); Boyd, Bonding and Assurance Rules, supra note 28, at 19–20 (same); Bill Brancard & Carol Leach, Structuring Financial Assurance for Reclamation: A Regulator’s Perspective, 52 Rocky Mtn. Min. L. Inst. § 19.06 (2006) (noting that financial assurance for environmental repair is designed to guarantee funding).

[120]. See Lockman et al., supra note 35, at 23–27 (providing a taxonomy of financial assurance); see also Macey & Salovaara, supra note 29, at 894–95 (categorizing SMCRA’s financial assurance as “surety bonds, collateral bonds, and self-bonds,” which align to third-party guarantees, designated funds, and self-insurance, respectively).

   [121]. Boyd, Bonding and Assurance Rules, supra note 28, at 9.

[122]. See, e.g., 30 C.F.R. 556.901(d)(1), (4) (2025) (exempting offshore oil and gas lessees from certain bonding requirements if they have “an investment grade credit rating” or if their lease contains “proved oil and gas reserves” worth more than three times the anticipated cost of environmental repair).

[123]. See Boyd, Bonding and Assurance Rules, supra note 28, at 26–27.

[124]. See, e.g., Ill. Admin. Code tit. 32, § 326.160 (allowing parent company guarantees for nuclear environmental repair obligations); 52 Pa. Stat. § 1396.19b (establishing a public program to guarantee the reclamation obligations of Pennsylvania coal mining companies).

   [125]. Mackie & Besco, supra note 29, at 10601 (describing designated fund models of financial assurance); see, e.g., 30 C.F.R. 556.900(f) (2025) (allowing offshore oil and gas lessees to satisfy bonding requirements by pledging U.S. Treasury Notes).

   [126]. Courtney W. Shea, Coal Mining and the Environment: Does SMCRA Give Regulators Appropriate Enforcement Tools?, 8 Nat. Res. & Env’t, 17, 17 (1994) (describing permits and financial assurance mechanisms as the “core” of SMCRA). See generally Lockman et al., supra note 35 (extensively discussing liability standards and financial assurance rules around offshore oil and gas).

[127]. See 1939 W. Va. Acts, 402, § 1 (repealed 1965) (requiring coal operators to replace removed “soil, subsoil or other strata” and refill “ditches, trenches, or excavation”); see also 58 Pa. Stat. and Cons. Stat. § 3220(a)(providing that environmental repair for oil and gas wells must be conducted “in the manner prescribed by regulation of [Pennsylvania’s Department of Environmental Resources]”); 25 Pa. Code §§ 78.91–.98 (prescribing requirements for well plugging in Pennsylvania); 62 Fla. Admin. Code r. 62C-16.0051 (setting “minimum criteria and standards” for phosphate mine reclamation in Florida, including surface contouring, site cleanup, and wetland and surface water restoration).

[128]. See 30 C.F.R. § 250.1721–.1754 (2025) (outlining decommissioning requirements for offshore oil and gas facilities).

[129]. See Shannon L. Ferrell, Rusty Rumley, Steve Stadler & Charles Cunningham, Wind Energy Leasing Handbook 47 (2017), https://www.agmanager.info/sites/default/files/pdf/E-1033%20Wind%20Energy%20Leasing%20Handbook%20Oklahoma.pdf [https://perma.cc/T5Y9-GXAS] (outlining basic environmental repair considerations for wind lessors).

[130]. See, e.g., Shea, supra note 126, at 18–19 (discussing SMCRA’s inspection and monitoring requirements).

[131]. See generally Huber, supra note 29 (focusing on liability rules and financial assurance rules and providing little discussion of technical standards); Macey & Salovaara, supra note 29 (same); Mackie & Besco, supra note 29 (focusing primarily on financial assurance rules).

[132]. See, e.g.,30 U.S.C. § 1268(e) (making violations of SMCRA’s permitting programs a criminal offense, punishable by a fine of up to $10,000 or imprisonment of up to a year);Kan. Stat. Ann. § 55-156 (West 2025) (making a violation of oil and gas well-plugging requirements a felony).

   [133]. Violations of West Virginia’s 1939 coal reclamation law were misdemeanors punishable up to a year in prison, and “[e]ach day’s failure to comply” was deemed a separately punishable act. 1939 W. Va. Acts 403, § 2 (repealed 1965); see also Gross, supra note 102 (discussing states that criminalize violations of oil and gas well-plugging requirements).

   [134]. For example, Macey and Salovaara provide a detailed account of coal company efforts to shirk environmental repair obligations, but at no point do concerns of criminal prosecution ever arise. See Macey & Salovaara, supra note 29, at 912–35. Some treatises on SMCRA provide no discussion of the Act’s criminal sanctions at all. See James L. Buchwalter, John Kimpflen, William Lindsley & Karl Oakes, Penalties for Violation of Federal Surface Mining Control and Reclamation Act, in 58 C.J.S. Mines and Minerals § 429 (2024).

   [135]. Shea, supra note 126, at 58–59. As the past century of environmental repair law scholarship and practice has been defined by liability rules and financial assurance rules, a deep examination of criminal sanctions lies outside of the scope of this Article. However, future research might benefit from a deeper study of the intersection of criminal law and environmental repair.

[136]. See supra notes 100, 102 and accompanying text (providing examples).

   [137]. Huber, supra note 29, at 1466 n.26 and accompanying text.

[138]. Id. at 1472–73; see also Barlow Burke, Reclaiming the Law of Suretyship, 21 S. Ill. U. L.J. 449, 496 (1997) (claiming that SMCRA requires financial assurance because “reclamation comes at the end of the mining process, and any cost avoided increases the profit margin from the operation”).

   [139]. See Josh Saul, Zachary R. Mider & Dave Mistich, The Coal Is Gone, But the Mess Remains, Bloomberg (Oct. 17, 2022), https://www.bloomberg.com/features/2022-west-virginia-coal-mining-alpha/ [https://perma.cc/UA74-3UTK].

   [140]. See Evan J. Atkinson, Growing Concerns over Decommissioning and Temporarily Plugging Offshore Rigs Off the Coast of the United States and the United Kingdom, 47 Tex. Env’t L.J. 179, 193 (2017).

   [141]. See Jade Boutot, Adam S. Peltz, Renee McVay & Mary Kang, Documented Orphaned Oil and Gas Wells Across the United States, 20 Env’t Sci. & Tech. 14228, 14234–35 (2022).

   [142]. See Huber, supra note 29, at 1473 (noting that environmental cleanup obligations spur “sophisticated efforts to abandon or alienate damaged land or, failing this, to postpone cleanup obligations as long as possible”); see also Macey & Salovaara, supra note 29, at 938–42 (detailing how environmental repair obligations are transferred or shed in bankruptcy).

   [143]. In the modern era, delay seems much more common than complete abandonment. For example, of the 3.7 million nonproducing oil and gas wells, only around 123,000 (approximately 3 percent) are “documented orphaned” wells without an identified operator or owner. See Boutot et al., supra note 141, at 14228.

   [144]. Huber, supra note 29, at 1507–08; Vincent Fournier, New Technologies in Decommissioning and Remediation, Int’l Atomic Energy Agency (May 26, 2016), https://www.iaea.org/newscenter/news/new-technologies-in-decommissioning-and-remediation [https://perma.cc/C3QY-NAR6] (discussing “[n]ew and emerging technologies [that] are making decommissioning and remediation more cost effective, faster and safer”).

   [145]. See Huber, supra note 29, at 1486.

[146]. See, e.g.,Press Release, Dep’t Energy, Biden-Harris Administration Announces $1.5 Billion Conditional Commitment to Holtec Palisades to Support Recommission of Mich. Nuclear Power Plant (Mar. 27, 2024), https://www.energy.gov/articles/biden-harris-administration-announces-15-billion-conditional-commitment-holtec-palisades [https://perma.cc/4SDR-5A5B] (announcing the planned reopening of a decommissioned nuclear power plant).

   [147]. William D. Nordhaus, Resources as a Constraint on Growth, 64 Am. Econ. Rev. 22, 24 (1974) (discussing how changing technology made lower-quality ores more accessible over time). See generally Jeffrey A. Krautkraemer, Nonrenewable Resource Scarcity, 36 J. Econ. Literature 2065 (1998) (same); Bakken, supra note 46, at 88 (discussing the same phenomenon among nineteenth-century miners); Martin Stuermer & Gregor Schwerhoff, Non-Renewable Resources, Extraction Technology, and Endogenous Growth 6 (Fed. Rsrv. Bank Dall. Working Paper, Paper No. 1506, 2015), https://www.dallasfed.org/careers/~/media/documents/research/papers/2015/wp1506.pdf [https://perma.cc/SQZ7-VVPE] (collecting similar observations in the oil and gas industry).

[148]. See Jime Braga, Thauan Santos, Milad Shadman, Corbiniano Silva, Luiz Filipe Assis Tavares & Segen Estefen, Converting Offshore Oil and Gas Infrastructures into Renewable Energy Generation Plants: An Economic and Technical Analysis of the Decommissioning Delay in the Brazilian Case, 14 Sustainability 13783, 13800–01(2022).

   [149]. Huber, supra note 29, at 1506.

[150]. Id. at 1507–08.

   [151]. Richard Lane White, Shameek Konar & James Barrett, Env’t L. Inst., L. Env’t Prot. § 6:2 (2025).

[152]. Id. § 6:13–14 (explaining the construction of discount rates and the significance of discount rates in assessing long-term environmental liabilities).

[153]. See Dwayne Purvis, Carbon Tracker Initiative, Rocky Mountain Highs and Lows: Decommissioning Colorado’s Two Oil Industries 45–46 (2024) (detailing how delayed environmental repair can affect oil operators’ financial reports).

[154]. See Katherine Schmidt, ‘Idle Iron’ Guidance Could Be Double-Edged Sword for Companies, Houma Today (Nov. 6, 2010), https://www.houmatoday.com/story/news/2010/11/07/idle-iron-guidance-could-be-double-edged-sword-for-companies/26946694007/ [https://perma.cc/KWH2-5RH2] (discussing the timing of offshore environmental repair obligations and quoting Professor Eric Smith’s observation that “[o]ver time, the practice has been if you come up with a reasonable excuse, and it has navigation lights on it, you can pretty much leave it out there”); Simon Flowers, Gavin Thompson, Luiz Hayum & Amanda Bandeira, Delaying Deepwater Decommissioning: Can Operators Keep Wells Running for Longer?, Wood Mackenzie (May 2, 2024), https://www.woodmac.com/blogs/the-edge/delaying-deepwater-decommissioning/ [https://perma.cc/8D28-PAJV] (claiming that “[i]t’s a given that most operators will do all they can to defer spend on decommissioning” and suggesting several future infrastructure uses, including “potential carbon capture and storage plays,” that could justify delays).

[155]. See Okla. Stat. tit. 45, § 725(H) (requiring one stage of environmental repair, surface grading, to be completed within one year of when “mining of the affected land has been completed”); Ohio Rev. Code § 1509.072(B) (setting environmental repair timelines for oil and gas wells); 10 C.F.R. § 50.82(a)(3) (2025) (setting a sixty-year environmental repair timeline for nuclear power plants following “permanent cessation of operations”).

   [156]. See Huber, supra note 29, at 1488.

   [157]. Gov’t Accountability Off., Offshore Oil and Gas: Interior Needs to Improve Decommissioning Enforcement and Mitigate Related Risks 1 (2024), https://www.gao.gov/assets/gao-24-106229.pdf [https://perma.cc/6TCA-VXYM] [hereinafter 2024 GAO Report].

[158]. See Lockman et al., supra note 35, at 112–13 (discussing the allocation of federal authority over offshore environmental repair).

[159]. See 30 C.F.R.§§ 250.1710, 250.1725(a) (2025); see also Atkinson, supra note 140, at 187 (providing an overview of these regulations).

   [160]. 30 C.F.R. § 250.1703 (2025).

   [161]. Id. § 250.1711(b) (2025).

   [162]. 2024 GAO Report, supra note 157, at “What GAO Found.” In the offshore context, this delay appears to be primarily a failure of enforcement, rather than loophole abuse. Of the more than eleven hundred delinquent facilities, only sixty wells and thirty platforms had received official extensions on their environmental repair obligations “due to their potential future use.” Id. at 19 n.41 and accompanying text.

   [163]. Id. at 19.

[164]. See Atkinson, supra note 140, at 193; Jeff Donn, Gulf Oil Wells Lingering with Temporary Seals, Associated Press (July 18, 2015), https://apnews.com/general-news-e68c094dbe7d4d1b91e3657c2314d364 [https://perma.cc/JKB5-BTNS].

   [165]. See 2024 GAO Report, supra note 157,at 2.

[166]. See generally Mace G. Barron, Deborah N. Vivian, Ron A. Heintz & Un Hyuk Yin, Long-Term Ecological Impacts from Oil Spills: Comparison of Exxon Valdez, Hebei Spirit and Deepwater Horizon, 54 Env’t Sci. Tech. 6456 (2020) (describing some of the ecological and human impacts of oceanic oil spills).

[167]. See 2024 GAO Report, supra note 157,at 8–11. (discussing the risks associated with idled infrastructure); Nathaniel Herz, This Oil Platform Stopped Pumping 30 Years Ago. Alaska Still Won’t Make the Owner Tear it Down, APM Reports (May 6, 2024), https://www.apmreports.org/story/2024/05/06/cook-inlet-alaska-oil-platforms [https://perma.cc/SQ4Z-WAQG] (same).

   [168]. Michael Carlowicz, Hurricane Ida Leaves a Trail of Oil, NASA Earth Observatory (Sept. 3, 2021), https://earthobservatory.nasa.gov/images/148820/hurricane-ida-leaves-a-trail-of-oil [https://perma.cc/4P43-BMSP].

[169]. See, e.g., Robert Schuwerk, Greg Rogers & Theron Horton, Carbon Tracker Initiative, Flip Side: How Stranded Assets Will Give Rise to Stranded Liabilities 3 (2020), https://carbontracker.org/wp-content/uploads/2020/02/Decommissioning-Analyst-Note_vwebsite-1.pdf [https://perma.cc/2D6S-7Q5K] (discussing oil companies’ “practice of spinning off or selling late-life assets to lesser producers”); Purvis, supra note 153, at 16 (same).

   [170]. Huber, supra note 29, at 1487.

[171]. See supra notes 143–149 and accompanying text (outlining reasons environmental repair might be delayed); see also Daniel Raimi, Alan J. Krupnick, Jhih-Shyang Shah & Alexandra Thompson, Decommissioning Orphaned and Abandoned Oil and Gas Wells: New Estimates and Cost Drivers, 55 Env’t Sci. & Tech. 10224, 10228 (2021) (finding that environmental repair costs for oil and gas wells decrease on a per-well basis when large numbers of wells are decommissioned together).

[172]. See Huber, supra note 29, at 1487; see also Jack Arnold, Martin Lockman, Perrine Toledano, Martin Dietrich Brauch, Shraman Sen & Michael Burger, Sabin Ctr. Climate Change L. & Columbia Ctr. Sustainable Inv., Transferred Emissions Are Still Emissions: Why Fossil Fuel Asset Sales Need Enhanced Transparency and Carbon Accounting 48–50 (2023) (documenting transfers of upstream fossil fuel assets to companies with worse safety records than their prior owners); Rachel Adams-Heard & Rachael Dottle, Tracking Carbon Emissions Becomes Harder When Big Oil Isn’t Involved:What Happens When an Oil Giant Walks Away, Bloomberg (Apr. 15, 2021), https://www.bloomberg.com/graphics/2021-tracking-carbon-emissions-BP-hilcorp [https://perma.cc/7SPU-D3RN] (exploring a specific asset sale in Alaska).

[173]. See Macey & Salovaara, supra note 29, at 940–42.

[174]. See supra Part I.B.1.

[175]. See, e.g., Ohio Rev. Code § 1509.071(H) (setting financial assurance requirements for new operators); Utah Code § 40-8-19 (same).

[176]. See, e.g., 405 Ky. Admin. Regs. 30:140(1) (providing that no oil shale permit may be transferred without approval of Kentucky’s regulator and that a predecessor will not be released from “reclamation responsibility” without such approval).

[177].McCormick v. HRM Res., LLC, Civ. No. 1:24-cv-00823-CNS-CYC, 2025 WL 90148, at *1 (D. Colo. Jan. 14, 2025).

[178]. Id.

[179]. See Macey & Salovaara, supra note 29, at 941 (explaining that environmental repair liabilities often “do not become due for many years, and so it may not be apparent that a spin-off defrauded regulatory beneficiaries out of the debts due them”).

[180]. See Colin Mackie & Valerie Fogleman, Self-Insuring Environmental Liabilities: A Residual Risk-Bearer’s Perspective, 16 J. Corp. L. Stud. 293, 308 (2016) (“Whilst [self-reported financial status] may not be fraudulent in the majority of cases, accounting fraud is relatively common amongst small operators and those in financial distress.”); supra notes 150–154 and accompanying text (discussing the balance-sheet impact of delayed environmental repair).

[181]. See generally Schuwerk, Rogers & Horton, supra note 169 (discussing this phenomenon); Purvis, supra note 153 (documenting the clustering of environmental repair obligations in smaller, less solvent firms as oil and gas fields in Colorado have matured).

[182]. See, e.g., Well Done Found., supra note 11 (noting that an oil and gas operator, “Pine Top, Inc.,” had become insolvent before any demand was made on it to fulfill its well-plugging obligations).

   [183]. Huber, supra note 29, at 1497; see id. at1481–82, 1500, 1502, 1506 (discussing examples in which bankruptcy has shifted environmental repair costs to the public).

[184]. See, e.g., Douglas P. DeMoss, The Bankruptcy Code and Hazardous Waste Cleanup: An Examination of the Policy Conflict, 27 Wm. & Mary L. Rev. 165 (1985) (examining conflicts between environmental cleanup law and bankruptcy law); Norman I. Silber, Cleaning Up in Bankruptcy: Curbing Abuse of the Federal Bankruptcy Code by Industrial Polluters, 85 Colum. L. Rev. 870 (1985) (same); Gretchen E. Klein, Hazardous Waste Liability and the Bankruptcy Code, 10 Harv. Env’t L. Rev. 533 (1986) (same); see also Robert Funsten & Alejandro Hernandez, The Toxic Waste Generator in Bankruptcy: Should Environmental Cleanup Costs Be Given a Priority?, 6 Stan. Env’t L.J. 108, 127–29 (1986-87) (noting these conflicts but arguing that they more directly arise from the state property laws undergirding bankruptcy processes, rather than bankruptcy law itself).

   [185]. Macey & Salovaara, supra note 29, at 901–02.

[186]. See, e.g., Nicole Layton & Ginger Sprong, Cut and Run: Bonding, Bankruptcies, and the Orphaned-Oil-Well Crisis, 10 LSU J. Energy L. & Res. 1, 15–17 (2022) (outlining different ways that environmental repair obligations for oil wells have been treated in bankruptcy).

   [187]. Light, supra note 88, at 200 (“Bankruptcy law . . . creates disincentives for firms to comply in full with environmental obligations.”); Mackie & Besco, supra note 29, at 10575 (identifying “[i]ndirect savings” operators receive by “abandon[ing] all or part of their end-of-life obligations upon bankruptcy”). But see Anne M. Lawton & Lynda J. Oswald, Scary Stories and the Limited Liability Polluter in Chapter 11, 65 Wash. & Lee L. Rev. 451, 452 (2008) (arguing that “the strategic use” of restructuring to avoid environmental liability “is an uncommon phenomenon”).

   [188]. Macey & Salovaara, supra note 29, at 883.

[189]. See Boyd, A Working Marriage, supra note 28, at 5 (“Without financial responsibility the polluter may cease to exist as a legal entity long before environmental damage is even discovered.”); supra Part I.B.2 (discussing the theory and structure of financial assurance requirements).

[190]. See supra note 119 and accompanying text.

[191]. See Galloway & FitzGerald, supra note 119, at 691 (discussing significant differences in the nonperformance risk created by different instruments); Mackie & Besco, supra note 29, at 10601 (“When evaluating particular financial assurance measures, we see a weak-to-strong form spectrum of likelihood that the tasks will be actually performed, with self-bonding at one end (weak) of the spectrum and full, upfront cash deposits with a regulator at the other (strong).”).

   [192]. See Malone & Winslow, supra note 29, at 12–17 (outlining the structure and costs of different forms of financial assurance).

[193]. See, e.g., Patrick C. McGinley, With A Wink and a Nod: How Politicians, Regulators, and Corrupt Coal Companies Exploited Appalachia, 57 U. Rich. L. Rev. 899, 918–41 (2023) (outlining decades of industry pushback against SMCRA’s financial assurance requirements).

   [194]. Boyd, Bonding and Assurance Rules, supra note 28, at 29–30.

[195]. Id.

   [196]. Mackie & Besco, supra note 29, at 10583–87 (explaining how some industries receive “indirect subsidization” and a “competitive advantage” from lax environmental repair laws).

   [197]. Gov’t Accountability Off., Coal Mine Reclamation: Federal and State Agencies Face Challenges in Managing Billions in Financial Assurances 13 (2018), https://www.gao.gov/assets/d18305.pdf [https://perma.cc/KJX3-5VPT] [hereinafter 2018 GAO Report].

   [198]. Purvis, supra note 153, at 31.

[199].2024 GAO Report, supra note 157,at 26. Regulations issued in 2024 were anticipated to increase this amount by approximately $6.9 billion, but on March 9, 2026, the Trump Administration proposed rescinding the bulk of these regulations. Risk Management and Financial Assurance for OCS Lease and Grant Obligations, 91 Fed. Reg. 11212, 11215 (Mar. 9, 2026) (to be codified at 30 C.F.R. pts. 550, 556, 590).

   [200]. Georgina Mccartney, States Sue US to Block Rule That Oil Firms Guarantee Payment to Dismantle Old Wells, Reuters (June 17, 2024), https://www.reuters.com/legal/states-sue-us-block-rule-requiring-oil-industry-pay-dismantling-old-wells-2024-06-17/ [https://perma.cc/5RJL-QDK6].

   [201]. See Macey & Salovaara, supra note 29, at 918–19.

[202]. Id. at 919.

[203]. See id. at 926.

[204]. See id. at 928–29.

   [205]. The title of one article, which discusses a much-assessed environmental repair law, expresses this frustration succinctly. See Craig B. Giffin, West Virginia’s Seemingly Eternal Struggle for a Fiscally and Environmentally Adequate Coal Mining Reclamation Bonding Program, 107 W. Va. L. Rev. 105 (2004).

[206]. See supra notes 28–29 and accompanying text (discussing literature bridging these siloed bodies of scholarship).

[207]. See, e.g.,Joseph D. McManus, Lights Out: Decommissioning the American Nuclear Plant, 36 J. Nat’l Ass’n Admin. L. Judges 518 (2016); Rebecca Lordan-Perret, Robert D. Sloan & Robert Rosner, Decommissioning the U.S. Nuclear Fleet: Financial Assurance, Corporate Structures, and Bankruptcy, 154 Energy Pol’y 1 (2021).

[208]. See, e.g.,A. Brooke Rubenstein & David Winkowski, A Mine Is a Terrible Thing to Waste: Past, Present and Future Reclamation Efforts to Correct the Environmentally Damaging Effects of Coal Mines, 13 Vill. Env’t L.J. 189 (2002); Lily Whiteman, Recent Efforts to Stop Abuse of SMCRA: Have They Gone Far Enough?, 20 Env’t L. 167 (1990); Shea, supra note 126; Burke, supra note 138, at 450.

   [209]. See, e.g., Paul Stokstad, Structuring A Reclamation Program for Abandoned Noncoal Mines, 25 Ecology L.Q. 121 (1998); Wernstedt & Hersh, supra note 40; Braden Murphy, Financial Assurance for Hardrock Mining: EPA and CERCLA, 94 Notre Dame L. Rev. 1855 (2019); Bart Lounsbury, Digging Out of the Holes We’ve Made: Hardrock Mining, Good Samaritans, and the Need for Comprehensive Action, 32 Harv. Env’t L. Rev. 149 (2008); Pleasant Garner, A Cautionary Tale Out of West Virginia: A Call for Robust Federal Financial Assurance Requirements for Hardrock Mining, 101 Tex. L. Rev. 1205 (2023); Kelly Roberts, A Legacy That No One Can Afford to Inherit: The Gold King Disaster and the Threat of Abandoned Hardrock Legacy Mines, 36 J. Nat’l Ass’n Admin. L. Judges 361, 362 (2016); John F. Seymour, Hardrock Mining and the Environment: Issues of Federal Enforcement and Liability, 31 Ecology L.Q. 795, 941 (2004).

   [210]. See, e.g., Cameron Rotblat, Caring for the Orphans: Approaches for Mitigating Fugitive Methane Emissions from Orphaned Oil and Gas Wells, 47 Env’t L. Rep. News & Analysis 10529 (2017); Layton & Sprong, supra note 186; Joseph A. Schremmer & Charles C. Steincamp, Imputing Regulatory Failures in Oil and Gas Licensing: A Discussion and Proposal, 57 Washburn L.J. 265 (2018); David W. Houston, IV & J. Patrick Warfield, A “Plug” for Priority Claims in Oil and Gas Cases, 2016 Am. Bankr. Inst. J., June 2016, at 1; Pete Morton, Joe Kerkvliet & Evan Hjerpe, Impact Fees, Bonding Reform, and Oil and Gas Development, 33 Colo. Env’t L.J. 103, 105 (2022); Atkinson, supra note 140.

   [211]. See, e.g., William S. Stripling, Wind Energy’s Dirty Word: Decommissioning, 95 Tex. L. Rev. 123 (2016); Joshua Conaway, Be Aggressive with Wind Energy: Blow Away the Decommissioning Fears, 2 Oil & Gas, Nat. Res. & Energy J. 621 (2017); Rod Wetsel, Experience Is a Dear Teacher—The Texas Wind Decommissioning Statute, 6 Tex. A&M J. Prop. L. 245 (2020).

   [212]. See, e.g., Erica L. Welsh, Solar Farms in Georgia: Why We Need to Start Thinking About the End, 39 Ga. St. U. L. Rev. 1131, 1160 (2023); Barbara J. Koonz, Negotiating Solar Renewable Energy Agreements: What You Should Know, 2022 N.J. Law. 34, 38 (2022).

[213]. See, e.g., Whiteman, supra note 208, at 206 (arguing that several exceptions to SMCRA should be closed); Atkinson, supra note 140, at 193–94 (suggesting a maximum limit on “temporary” offshore well plugs to prevent indefinite delay of environmental repair obligations); Stripling, supra note 211, at 149–50 (criticizing new environmental repair laws governing wind energy and arguing for standardized statewide rules for wind energy decommissioning).

[214]. See, e.g., Welsh, supra note 212, at 1160–61 (proposing an environmental repair regime for solar farms in Georgia); Lounsbury, supra note 209, at 209–10 (proposing a uniform federal standard for environmental repair in hardrock mining).

[215]. See Eric Thomas Larson, Why Environmental Liability Regimes in the United States, the European Community, and Japan Have Grown Synonymous with the Polluter Pays Principle, 38 Vand. J. Transnat’l L. 541, 550–54 (2005) (discussing the central role of the “polluter pays principle” in American environmental law).

[216]. See, e.g., Whiteman, supra note 208, at 197–200 (arguing that SMCRA’s penalty provisions should be extended to a broad range of parties, including owners and parent companies, operators, directors, and even related parties without formal control rights like significant contractual counterparties and the guardians of underaged “owners”).

[217]. See, e.g., Lordan-Perret, Sloan & Rosner, supra note 207, at 8 (arguing that environmental repair obligations for nuclear sites could be extended to the parent companies of certain limited liability entities); Macey & Salovaara, supra note 29, at 956 (arguing for a “longer look-back period” for fraudulent transfer claims to “reduce coal companies’ ability to evade their regulatory obligations through spin-offs or sales to undercapitalized corporations”).

[218]. See, e.g., Schremmer & Steincamp, supra note 210, at 308–12 (arguing that Kansas’s oil and gas regulator was too aggressive in imputing environmental repair obligations to operators with only minor connections to the primarily responsible party).

[219]. See, e.g.,Alexander Gouzoules, Going Concerns and Environmental Concerns: Mitigating Climate Change through Bankruptcy Reform, 63 B.C. L. Rev. 2169, 2175 (2022) (proposing “specific, novel legislative reforms that would require bankrupt fossil fuel firms to liquidate rather than reorganize” to mitigate the damage caused by “insolvent polluters”).

   [220]. See Macey & Salovaara, supra note 29, at 955–56 (discussing a range of “legislative solutions” available to reform bankruptcy rules); see also Light, supra note 88, at 209–10 (same); Brent Bolea, Bankruptcy Abandonment Power and Environmental Liability, 106 Com. L.J. 83, 102–04 (2001) (same).

   [221]. David L. Curry, Jr. & Ryan A. O’Connor, Unplugging the Fifth Circuit’s Abandonment Problem: A Reexamination of the Midlantic Exception in Offshore E&P Cases, 31 Tul. Env’t L.J. 79, 105 (2017). In place of “environmental repair,” Curry and O’Connor use the term “P&A,” or “plugging and abandonment”—a term of art in some jurisdictions that refers to environmental repair obligations governing oil and gas production. See id. at 80; see, e.g., supra note 18 and accompanying text (noting the use of “abandonment” as a term of art).

[222]. See supra note 119 and accompanying text.

[223]. See Huber, supra note 29, at 1479 (“In a critical examination of [a] bonding regime, a good first question is simply: are regulators setting bond amounts high enough to provide adequate funds . . . ?”).

[224]. See supra notes 197–204 and accompanying text (describing reports identifying under-assurance).

   [225]. Malone & Winslow, supra note 29, at 16–17.

[226]. See id. at 17 (noting that “[s]elf-bonding . . . allow[s] a lower barrier to entry for operators who already face significant upfront infrastructure spending or may not be able to find another means of assuring performance”); Boyd, Bonding and Assurance Rules, supra note 28, at 62 (“[S]elf-demonstration is the cheapest and thus most desirable form of compliance, since no coverage need be purchased or dedicated funds set aside.”); Mackie & Besco, supra note 29, at 10585 (“[T]here is the cost saving associated with the fact that these measures, unlike a bond or guarantee purchased from a third party, come at no direct cost to the operator or its parent.”).

   [227]. See generally Brancard & Leach, supra note 119, § 19.06(2)(c) (“Guarantees and self-bonding are perhaps the most controversial financial assurance mechanisms.”); Galloway & FitzGerald, supra note 119, at 691 (criticizing the prevalence of self-bonding under SMCRA); Taylor Mayhall, Note, Reclaiming Reclamation: Rule Changes Proposed to Ensure Coal Companies Fund Mandatory Clean-Ups, 102 Minn. L. Rev. 1451 (2018) (same).

   [228]. Lisa A. Kirschner & Edward B. Grandy, Mining and the Vanishing Surety Bond Market, 17 Nat. Res. & Env’t 152, 188–89 (2003) (arguing that self-bonding can be an efficient replacement for third-party surety bonds); Mackie & Besco, supra note 29, at 10586 (arguing that self-bonding subsidizes regulated industries and increases economic risk to the public).

[229]. See Mackie & Besco, supra note 29, at 10585.

   [230]. Claire Jarrell, Mine Reclamation’s Reliance on King Coal: Meeting Legacy Environmental Obligations with a Declining Industry, 90 U. Colo. L. Rev. 901, 932 (2019); see id. at931–34 (criticizing coal industry self-bonding and noting that self-bonds are vulnerable to market-wide declines).

[231]. See Macey & Salovaara, supra note 29, at 897 n.84 and accompanying text (discussing regulators’ authority to demand additional collateral from self-bonded companies and the difficulty of securing collateral from a company in financial distress).

   [232]. Boyd, Bonding and Assurance Rules, supra note 28, at 63–66.

   [233]. Huber, supra note 29, at 1481; see Boyd, Bonding and Assurance Rules, supra note 28, at 65.

[234]. See Malone & Winslow, supra note 29, at 56 (heavily criticizing self-bonding); Mackie & Besco, supra note 29, at 10601 (arguing that self-bonding “ought to be prohibited explicitly”); Macey & Salovaara, supra note 29, at 955 (arguing against “payment deferrals” like self-bonding).

[235]. See supra notes 123–124 and accompanying text. The structure of such payments, and the recourse that the guarantor may have against the operator, vary significantly. See Malone & Winslow, supra note 29, at 12–15 (reviewing third-party financial assurance instruments).

   [236]. Many environmental repair laws allow parent companies to guarantee their subsidiaries’ obligations. These guarantees expand the reach of liability-assigning rules but provide none of the pricing and monitoring functions that independent guarantees offer. See generally Mackie & Besco, supra note 29 (refusing to distinguish “parent company guarantees” from other forms of self-insurance).

[237]. See Faure & Liu, supra note 115, at 278 (discussing insurers’ monitoring role under natural resource damage laws); Boyd, Bonding and Assurance Rules, supra note 28, at 1, 21 (same).

[238]. See Malone & Winslow, supra note 29, at 8.

   [239]. Mackie & Besco, supra note 29, at 10601.

[240]. See Kirschner & Grandy, supra note 228, at 187 (describing the collapse of SMCRA’s surety bond market and increased regulatory scrutiny of surety providers).

   [241]. 30 C.F.R. § 556.905(a)(3) (repealed 2024).

[242]. See Risk Management and Financial Assurance for OCS Lease and Grant Obligations, 88 Fed. Reg. 42136, 42145 (June 29, 2023) (to be codified at 30 C.F.R. pts. 550, 556, 590) [hereinafter 2023 BOEM NOPR] (“Determining a company’s total outstanding and proposed guarantees depends on accurate information provided by the guarantor, and BOEM has no way to confirm whether the 25 percent threshold has been exceeded at the time . . . .”).

   [243]. Surety bonds have unique legal and financial characteristics that are largely irrelevant to this Article. For a more detailed description, seeKirschner & Grandy, supra note 228, at 152.

[244]. Id. at 154.

[245]. Id. at 188–89.

[246]. See Galloway & FitzGerald, supra note 119, at 681–85 (discussing “bond pools” as a response to failing surety markets); Malone & Winslow, supra note 29, at 13–14 (describing bond pool structures).

   [247]. Malone & Winslow, supra note 29, at 14.

[248]. See, e.g., Jarrell, supra note 230, at 925–26 (noting that West Virginia’s surface mining bond pool has been “woefully underfunded from the beginning” and has covered fewer costs over time); Dana & Wiseman, supra note 86, at 1562 (arguing that bond pool contributions “are rarely adjusted over time to take account of changing circumstances”).

   [249]. Layton & Sprong, supra note 186, at 19; see also Macey & Salovaara, supra note 29, at 955 (describing how polluters have reacted to current financial assurance rules); Huber, supra note 29, at 1513 (same).

[250]. But see Boyd, Bonding and Assurance Rules, supra note 28, at 25, 60 (outlining structural precautions that “trust funds” should take and ways in which operators may claw back money from poorly guarded funds).

   [251]. Mackie & Besco, supra note 29, at 10602–03.

   [252]. This is true only to the extent that the party controlling the account is not the operator themselves and does not allow the operator to withdraw money before environmental repair is complete. See Boyd, Bonding and Assurance Rules, supra note 28, at 25.

   [253]. Mackie & Besco, supra note 29, at 10589, 10602–03.

[254]. Id. at 10585; see also Malone & Winslow, supra note 29, at 26 (2018) (noting that “trust[s]” for environmental repair require large initial payments, although these can be supplemented with gradual payments if the trust “initially accept[s] a bond”).

   [255]. Boyd, Bonding and Assurance Rules, supra note 28, at 44 (noting, somewhat tautologically, that “[i]f a trust fund is fully funded at its inception, then coverage will be adequate (if the required coverage amount is adequate)”).

   [256]. Lordan-Perret, Sloan & Rosner, supra note 207, at 2.

   [257]. Robert E. Sullivan, Handbook of Oil and Gas Law 355 (1955) (claiming that bonding requirements were designed “not to indemnify the state for actual damages sustained” but operated as “penalty provision[s]”); Dana & Wiseman, supra note 86, at 1562 (arguing that bonds “simply set a price on noncompliance—the cost of the defaulted bond”).

   [258]. See Dana & Wiseman, supra note 86, at 1565. For similar reasons, Boyd notes that “[a] bright line between assurance as insurance and assurance as a bond should not always be drawn.” Boyd, Bonding and Assurance Rules, supra note 28, at 20.

   [259]. Mackie & Besco, supra note 29, at 10601.

[260]. See, e.g., Elizabeth Sheldon, Practicing Preventative Medicine: Recommendations for Financing Mining Waste Sites in Perpetuity, 3 Wis. Env’t L.J. 181, 200–01 (1996) (suggesting that Wisconsin conduct public mine reclamation funded through permitting fees); Seymour, supra note 209, at 940–42 (proposing a “hardrock reclamation fund” financed by “royalties, rents, or taxes” on hardrock mines); see also George Coates Roberts, Restore Texas Land: A Proposal to Utilize Emission Reduction Credits to Fund the Railroad Commission of Texas’ Well Plugging Initiative, 55 St. Mary’s L.J. 575, 601–02 (2024) (proposing that state regulators could generate and sell GHG emission reduction credits by closing leaking oil and gas wells).

[261]. See Kiersten E. Holms, This Land Is Your Land, This Land Is Mined Land: Expanding Governmental Ownership Liability Under CERCLA, 76 Wash. & Lee L. Rev. 1013, 1069–70 (2019); see also Barbara Luppi, Francesco Parisi & Shruti Rajagopalan, The Rise and Fall of the Polluter-Pays Principle in Developing Countries, 32 Int’l Rev. L. & Econ. 135, 142 (2012) (discussing the benefits of making governments directly liable for pollution).

   [262]. Seymour, supra note 209, at 944–45 (calling for a federal trust fund to deal with abandoned hardrock mines, and noting that such a fund could “promote basic research into mining site reclamation and cleanup” and spur technological investments by third-party environmental repair contractors).

   [263]. Larson, supra note 215, at 550.

   [264]. Energy Policy Act, Pub. L. No. 109-58, § 349, 119 Stat. 594, 709 (2005).

   [265]. Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, § 40601, 135 Stat. 429, 1394 (2021) (amending sec. 349 of the Energy Policy Act of 2005).

[266]. Id. § 40704.

[267]. Id. § 40701(a).

[268]. See, e.g., 2 Colo. Code Regs. § 404-1:205 (establishing a fund to reclaim orphaned oil and gas wells, and levying an “Operator’s Annual Mitigation Fee” on oil and gas permit-holders to pay for it); Purvis, supra note 153, at 29–30 (discussing this fee).

[269].Bruno Venditti, Here’s How CO2 Emissions Have Changed Since 1900, World Econ. F. (Nov. 22, 2022), https://www.weforum.org/agenda/2022/11/visualizing-changes-carbon-dioxide-emissions-since-1900/ [https://perma.cc/KDK3-PKJT].

[270]. Carbon Dioxide Now More than 50% Higher than Pre-Industrial Levels, Nat’l Oceanic & Atmospheric Admin. (June 3, 2022), https://www.noaa.gov/news-release/carbon-dioxide-now-more-than-50-higher-than-pre-industrial-levels [https://perma.cc/TM9R-JX38].

[271]. See Rebecca Lindsey & Luann Dahlman, Climate Change: Global Temperature, Nat’l Oceanic & Atmospheric Admin. (May 29, 2025), https://www.climate.gov/news-features/understanding-climate/climate-change-global-temperature [https://perma.cc/AGU8-GFQT]. CO2 is the primary driver of these changes, but other gases like methane contribute to this effect. See Mengpin Ge, Johannes Friedrich & Leandro Vigna, Where Do Emissions Come From? 4 Charts Explain Greenhouse Gas Emissions by Sector, World Res. Inst. (Dec. 5, 2024), https://www.wri.org/insights/4-charts-explain-greenhouse-gas-emissions-countries-and-sectors [https://perma.cc/J6V8-4L8W] (charting global greenhouse gas emissions by gas and sector, weighted according to each gas’s hundred-year “global warming potential,” and reported in CO2-equivalent emissions).

[272]. See Intergovernmental Panel on Climate Change, Climate Change 2023 Synthesis Report: Summary for Policymakers 5–7 (2023), https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM.pdf [https://perma.cc/45GM-L6TH] [hereinafter 2023 IPCC Report] (summarizing the impacts of climate change).

   [273]. Id. at 10–11.

[274].Paris Agreement to the United Nations Framework Convention on Climate Change, Dec. 12, 2015, T.I.A.S. No. 16-1104.

   [275]. Id. art. 2, § 1(a).

[276]. See Dan Welsby, James Price, Steve Pye & Paul Ekins, Unextractable Fossil Fuels in a 1.5°C World, 597 Nature 230, 233 (2021).

   [277]. T.A. Hansen, Stranded Assets and Reduced Profits: Analyzing the Economic Underpinnings of the Fossil Fuel Industry’s Resistance to Climate Stabilization, 158 Renewable & Sustainable Energy Revs. 1, 2 (2022).

[278]. See Int’l Energy Agency, World Energy Outlook 2023 26–30 (2023), https://iea.blob.core.windows.net/assets/614bb748-dc5e-440b-966a-adae9ea022fe/WorldEnergyOutlook2023.pdf [https://perma.cc/3KMH-AAQR] [hereinafter IEA World Energy Outlook 2023] (projecting in 2023 that fossil fuel use would decline even without any change in nation-level energy policies).

   [279]. Int’l Energy Agency, World Energy Outlook 2025 30 (2025), https://iea.blob.core.windows.net/assets/9228d782-4207-4648-9c75-e6bb908cdb90/WorldEnergyOutlook2025.pdf [https://perma.cc/F7MZ-FG64] [hereinafter IEA World Energy Outlook 2025].

[280]. See IEA World Energy Outlook 2023, supra note 278, at 82 (noting that Russia’s invasion of Ukraine presented a long-term risk of disruption in the energy sector); Ron Bousso, The Future of the Energy Transition Will Be Fractured, Bumpy, and Long, Reuters (Nov. 17, 2025), https://www.reuters.com/markets/commodities/future-energy-transition-will-be-fractured-bumpy-long-2025-11-17/ [https://perma.cc/Y5LP-HUAX].

[281]. See Zack Colman & Karl Mathiesen, Trump’s Fossil Fuel Crusade Confronts the Climate Faithful, Politico (Nov. 6, 2025), https://www.politico.com/news/2025/11/06/trump-fossil-fuel-crusade-climate-faithful-00638202 [https://perma.cc/DS54-4BEW].

[282]. Id. (quoting Richard Goldberg, formerly “a top staffer on Trump’s White House National Energy Dominance Council”).

   [283]. See IEA World Energy Outlook 2025, supra note 279, at 315 (describing recent trends in the deployment of low-emission technologies and energy efficiency).

   [284]. Bousso, supra note 280.

   [285]. Int’l Renewable Energy Agency, Renewable Power Generation Costs in 2024 16 (2025), https://www.irena.org/Publications/2025/Jun/Renewable-Power-Generation-Costs-in-2024 [https://perma.cc/6ZA2-9L5Z].

   [286]. IEA World Energy Outlook 2025, supra note 279, at 88–89.

   [287]. The Stated Policies Scenario, or STEPS, “does not assume that aspirational goals, such as those included in some Nationally Determined Contributions [pledged under the Paris Agreement], are achieved.” Id. at 173. Instead, this scenario is intended to be “grounded in what policies are actually in place or planned across different sectors of the energy economy.” Id.

[288]. Id. at 174–75.

[289]. See Sini Matikainen & Eléonore Soubeyran, What Are Stranded Assets?, Grantham Rsch. Inst. on Climate Change & Env’t (July 27, 2022), https://www.lse.ac.uk/granthaminstitute/explainers/what-are-stranded-assets/ [https://perma.cc/K639-SMC5] (defining stranded assets).

[290]. See U.S. Energy Info. Admin., supra note 32 (identifying more than one million active oil and gas wells); 2024 EPA Inventory, supra note 16, at 3-111 (identifying 2.2 million abandoned and unplugged oil and gas wells); Raimi et al., supra note 171, at 10226 (calculating environmental repair costs at approximately $76,000 per well); Mark Olalde & Nick Bowlin, The Rising Cost of the Oil Industry’s Slow Death, ProPublica (Feb. 22, 2024), https://www.propublica.org/article/the-rising-cost-of-the-oil-industrys-slow-death [https://perma.cc/CC9L-E9ZL](assessing a highly conservative cost estimate of $151 billion to clean up more than two million abandoned oil wells in the fifteen highest-producing states).

[291]. See 2024 GAO Report, supra note 157,at 26. The number discussed above the line reflects BOEM’s upper estimate for offshore environmental repair liability in federal waters, which ranges from $40 to $70 billion. Id.

[292]. See 2018 GAO Report, supra note 197, at 10.

[293]. SeeHow Much Did the Apollo Program Cost?, Planetary Soc’y, https://www.planetary.org/space-policy/cost-of-apollo [https://perma.cc/4L93-RLCK] (calculating that the moon landing cost “approximately $257 billion” in inflation-adjusted 2020 dollars).

[294]. When Was the Last Refinery Built in the United States?, U.S. Energy Info. Admin. (June 18, 2024), https://www.eia.gov/tools/faqs/faq.php?id=29&t=6 [https://perma.cc/PZ35-JK2X].

[295]. Human Health & Environmental Impacts of the Electric Power Sector, Env’t Prot. Agency (Dec. 12, 2025), https://www.epa.gov/power-sector/human-health-environmental-impacts-electric-power-sector [https://perma.cc/7ZTK-5MUP].

   [296]. Mark Agerton, Siddartha Narra, Brian Snyder & Gregory B. Upton, Jr., Financial Liabilities and Environmental Implications of Unplugged Wells for the Gulf of Mexico and Coastal Waters, 8 Nature Energy 536, 541 (2023) (estimating unplugged inland wells in the Gulf of Mexico region).

[297]. See sources cited supra note 33.

[298]. See, e.g., Environmental Factors, Nat’l Park Serv., https://www.nps.gov/subjects/abandonedminerallands/environmental-factors.htm [https://perma.cc/DD9U-H5EU] (describing “common environmental consequences associated with abandoned mineral lands,” including damage to aquifers and aquatic habitats, toxic metal contamination of land and water, and harm to local wildlife); DiGiulio et al., supra note 7 (characterizing chemical releases from abandoned oil and gas wells).

[299]. See supra Part II.B.

[300]. See Rotblat, supra note 210, at 10531 (noting that the “1986 oil bust” bankrupted waves of operators, shifting environmental repair costs to the public).

   [301]. Layton & Sprong, supra note 186, at 5–7.

[302]. See id. at 22 (noting, in an aside, the potential for “many more” oil wells to become abandoned “due to the impending energy transition”); Lydia Heye, The Fossil Fuel Phase-Out’s Multi-Million Dollar Problem: An Environmental Justice Analysis of Idle Oil Well Management in California, 40 UCLA J. Env’t L. & Pol’y 61, 61 (2022) (suggesting, in a single introductory sentence, that California’s energy policies will cause “oil operators . . . to abandon thousands of their oil wells within the coming years”).

[303]. See Rotblat, supra note 210, at 10539 (advocating for a predecessor liability regime that could allow states “to reach back beyond bankrupt . . . firms and collect funds from original owners and operators”).

   [304]. 30 C.F.R. § 556.710 (2025).

[305]. In re ATP Oil & Gas Corp., No. 12-36187, 2013 WL 3157567, at *1–2 (Bankr. S.D. Tex. June 19, 2013).

[306]. Id. at *2.

[307]. See Mary Koks, All Good Things Must End: Decommissioning Oil and Gas Facilities and Bankruptcy Impacts 21–22, in Sixty-Eighth Annual Institute on Oil and Gas Law (2017), [https://perma.cc/4YWN-DHQ4].

   [308]. In 2023, BSEE considered adopting a regulation that would require it to pursue predecessors in “reverse chronological order.” However, BSEE decided that it could best protect the public by preserving the flexibility to “issue decommissioning orders to jointly and severally liable parties on a case-by-case basis.” Risk Management, Financial Assurance, and Loss Prevention—Decommissioning Activities and Obligations, 88 Fed. Reg. 23569, 23571–72 (Apr. 18, 2023) (to be codified at 30 C.F.R. pt. 250).

   [309]. Hansen, supra note 277, at 10.

[310].Blackjewel L.L.C. v. Blackjewel, L.L.C., No. 3:19-30289, 2023 WL 8853729, at *6 (S.D. W. Va. Dec. 21, 2023).

[311]. See supra Part I.B.2.

[312]. See Ignacio Ruiz, Piero Del Boca & Ricardo Pachón, Optimal Right- and Wrong-Way Risk from a Practitioner Standpoint, 71 Fin. Analysts J. 47, 47 (2015) (noting that, to analyze embedded credit risks, economists “need to measure exposure at default”).

   [313]. Vikram Jhawar, An Introduction to Wrong Way Risk, Investopedia (Jan. 27, 2022), https://www.investopedia.com/articles/investing/102015/introduction-wrong-way-risk.asp#toc-the-risks-of-counterparties [https://perma.cc/S75V-MEHR]; see also Paul Glasserman & Linan Yang, Bounding Wrong-Way Risk in Measuring Counterparty Risk 2 (Off. Fin. Rsch., Working Paper No. 15-16, 2015), https://www.financialresearch.gov/working-papers/files/OFRwp-2015-16_Wrong-Way-Risk-in-Measuring-Counterparty-Risk.pdf [https://perma.cc/A7SX-RJEA] (describing wrong-way risk).

[314]. See supra notes 255–257 and accompanying text (identifying under-assurance as a risk to environmental repair law).

[315]. See supra note 248 and accompanying text (discussing how lobbying can result in under-assurance).

[316]. See 2023 IPCC Report, supra note 272, at 10–12.

[317]. See Boyd, Bonding and Assurance Rules, supra note 28, at 44; Lockman et al., supra note 35, at 33 (describing the prevalence of such funds, and noting the threat posed by early decommissioning).

[318]. See, e.g.,ICF Int’l, Inc. & Bureau Safety & Env’t Enf’t, Decommissioning Methodology and Cost Evaluation 10-3 (2023), https://www.bsee.gov/sites/bsee.gov/files/tap-technical-assessment-program/738aa.pdf [https://perma.cc/V3X6-AK6L] (noting “demand impacts” on offshore decommissioning costs); see also Atkinson, supra note 140, at 195 (observing that a drop in oil prices could increase the scarcity of offshore oil and gas decommissioning resources); Ben Wilby, Decommissioning - Will Yards Become a Bottleneck?, Mar. Exec. (June 14, 2017), https://maritime-executive.com/editorials/decommissioning-will-yards-become-a-bottleneck [https://perma.cc/8TP8-26MK] (discussing the limited capacity of ship-breaking yards to receive decommissioned rigs).

[319]. See, e.g., 2018 GAO Report, supra note 197, at 10 (noting that 76 percent of SMCRA financial assurance took the form of third-party surety bonds).

   [320]. Richard Squire, Strategic Liability in the Corporate Group, 78 U. Chi. L. Rev. 605, 636 (2011).

[321]. See, e.g.,Daniel Schwarcz, The Risks of Shadow Insurance, 50 Ga. L. Rev. 163, 199 (2015); Squire, supra note 320, at 636; Richard Squire, Shareholder Opportunism in a World of Risky Debt, 123 Harv. L. Rev. 1151, 1158 (2010).

[322]. See Malone & Winslow, supra note 29, at 13–14, 16–17 (noting the risk posed by related-party guarantees but noting no similar risk for unaffiliated third-party guarantors).

   [323]. See 2018 GAO Report, supra note 197, at 10.

   [324]. Leslie Kaufman & Will Wade, The Tiny Insurance Company Standing Between Taxpayers and a Costly Coal Industry Bailout, Fin. Post (Nov. 8, 2022), https://financialpost.com/pmn/business-pmn/the-tiny-insurance-company-standing-between-taxpayers-and-a-costly-coal-industry-bailout [https://perma.cc/VPJ6-XY5U].

[325]. Id.

   [326]. Robert James, Norman Carlin & Stella Pulman, Practitioner Insights: Decommissioning Offshore Oil Platforms, Bloomberg (Jan. 26, 2017), https://news.bloomberglaw.com/environment-and-energy/practitioner-insights-decommissioning-offshore-oil-platforms [https://perma.cc/Z3XR-46UE]; see also 30 C.F.R. § 556.901(d) (2025) (describing criteria evaluated by BOEM when determining whether to require an offshore company to post supplemental security).

[327]. U.S. Crude Oil First Purchase Price – Petroleum & Other Liquids, U.S. Energy Info. Admin., https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=f000000__3&f=m [https://perma.cc/ZY3J-SMBG] (this database is continually updated, my reference reflects the data as of Oct. 2, 2023).

   [328]. Risk Management, Financial Assurance and Loss Prevention, 85 Fed. Reg. 65904, 65906 (proposed Oct. 16, 2020) (to be codified at 30 C.F.R. pts. 550, 556).

[329]. Id.

[330]. See id.

   [331]. 2023 BOEM NOPR, supra note 242, at 42141.

   [332]. 2024 OCS Regulations, supra note 118, at 31559.

[333]. Id.

   [334]. Id.

[335]. See generally id.

[336]. See supra Part I.B.

[337]. See supra Part II.A.

[338]. See supra Part II.B.

[339]. See supra Part II.A.1–2.

[340]. See supra notes 300–309 and accompanying text.

[341]. See supra Part III.C (discussing risks that the energy transition poses to financial assurance mechanisms).

   [342]. Huber, for example, provides the most comprehensive account of environmental law to date but argues that “[t]he failures of [environmental repair] policies thus far have stemmed less from policy structure than from policy implementation.” Huber, supra note 29, at 1511–12.

[343]. See supra notes 87–88 and accompanying text (describing the purpose and characteristics of natural resource damage laws); see, e.g., supra notes 195–205 and accompanying text (describing how efforts to reform environmental repair law have largely focused on refining and expanding liability-assigning rules or financial assurance tools, or assigning repair obligations to the public).

[344]. See Cruden & Oakes, supra note 87, at 294–95; see also supra notes 87–88 and accompanying text (describing the characteristics of natural resource damage laws).

[345]. See Robert Costanza & Charles Perrings, A Flexible Assurance Bonding System for Improved Environmental Management, 2 Ecological Econ. 57, 59–60 (1990) (discussing the “presumption of innocence” in environmental regulation—that is, the presumption that an activity will not cause environmental damage—and arguing that this presumption “is simply inappropriate” for certain categories of activity that cause inter-temporal harm); Vanessa Klass, What’s the Big Fracking Deal?, 42 W. St. L. Rev. 159, 160 (2015) (complaining that public skepticism of fracking violates “the notion that a party is presumed innocent until proven guilty”). See generally James M. Olson, Shifting the Burden of Proof: How the Common Law Can Safeguard Nature and Promote an Earth Ethic, 20 Env’t L. 891 (1990) (arguing that courts should abandon this presumption when significant environmental values are at stake).

   [346]. Costanza & Perrings, supra note 345, at 59.

   [347]. Lee Anne Fennell, Property and Precaution, 4 J. Tort L. 1, 33 (2011).

[348]. See supra notes 62–68 and accompanying text (describing the contractual origin of environmental repair duties); Maute, supra note 62, at 1352 (describing landowner bargaining).

[349]. See, e.g., 10 C.F.R. § 50.82 (2025) (tying nuclear environmental repair obligations to nuclear power licenses); 43 C.F.R. § 3171.25 (2025) (making environmental repair a condition of onshore oil and gas leases).

[350]. See, e.g., S.C. Code Regs. 61-107.20.E.3 (providing that environmental repair obligations for solar facilities “shall be considered complete” after the removal of certain identified installations); see supra notes 87–92 and accompanying text (describing the characteristics of liability regimes that distinguish them from environmental repair regimes).

[351]. See supra Part I.B.1.

[352]. See supra Part I.B.2.

[353]. See Mackie & Besco, supra note 29, at 10574–75.

[354]. See supra Part II.A–B.

[355]. See supra Part III.B (discussing energy transition risks to liability rules); Part III.C (discussing energy transition risks to financial assurance mechanisms).

[356]. See Macey & Salovaara, supra note 29, at 955; Layton & Sprong, supra note 186, at 19; Mackie & Besco, supra note 29, at 10602–03.

[357]. See supra note 197 and accompanying text (discussing shortfalls in financial assurance projections for coal mines).

[358]. See supra notes 316–318 and accompanying text.

[359]. See supra notes 145–149 and accompanying text.

[360]. See Huber, supra note 29, at 1486.

   [361]. This description uses the phrase “profits” to reflect that part of the operators’ benefit from the bargain is being delayed. However, regulators may reasonably choose to require prefunding of environmental trust funds rather than literally reserve a portion of the operators’ revenue stream.

[362]. See generally Margaret Walls, Deposit-Refund Systems in Practice and Theory 1 (Res. for the Future, Discussion Paper No. 11-47, 2011) (describing the use of deposit-refund rules in environmental law and noting that “[d]eposit-refunds have been established for other kinds of containers, lead-acid batteries, motor oil, tires, various hazardous materials, electronics, and more”). Fennell credits Robert M. Solow and Edwin S. Mills with separately laying the theoretical foundations for deposit-refund mechanisms as a tool of environmental law. See Fennell, Property and Precaution, supra note 347, at 32 n.127 and accompanying text.

   [363]. Costanza & Perrings, supra note 345, at 58–59.

   [364]. Kenneth R. Richards, Framing Environmental Policy Instrument Choice, 10 Duke Env’t L. & Pol’y F. 221, 253 (2000).

[365]. See, e.g., Robert F. Blomquist, Models and Metaphors for Encouraging Responsible Private Management of Transboundary Toxic Substances Risk: Toward a Theory of International Incentive-Based Environmental Experimentation, 18 U. Pa. J. Int’l Econ. L. 507, 549–50 (1997) (discussing chemical waste management); Fennell, Property and Precaution, supra note 347, at 31–34 (proposing deposit-refund mechanisms to address land use conflicts between neighbors);Jacob D. Unger, Regulating the Arctic Gold Rush: Recommended Regulatory Reforms to Protect Alaska’s Arctic Environment from Offshore Oil Drilling Pollution, 31 Alaska L. Rev. 263, 287 (2014) (mentioning deposit-refund schemes in connection to an environmental repair law).

[366]. See Jeffrey B. Wagenbach, The Bottle Bill: Progress and Prospects, 36 Syracuse L. Rev. 759, 762–64 (1985) (outlining the structure of bottle bills). See generally Bottle Bill Resource Guide, Container Recycling Inst., https://www.bottlebill.org/index.php [https://perma.cc/XMS3-X4W2] (describing the modern landscape of bottle bills).

   [367]. Robert W. Hahn & Robert N. Stavins, Incentive-Based Environmental Regulation: A New Era from an Old Idea?, 18 Ecology L.Q. 1, 10 (1991).

[368]. See generally Mackie & Besco, supra note 29 (surveying financial assurance mechanisms in environmental repair laws); Boyd, Bonding and Assurance Rules, supra note 28, at 22–27 (same).

[369]. See T. Nicolaus Tideman, Integrating Land-Value Taxation with the Internalization of Spatial Externalities, 66 Land Econ. 341, 346 (1990).

[370]. Id.

   [371]. Fennell, Forcings, supra note 101, at 1349 n.221 and accompanying text.

[372]. Id. at 1350.

[373]. Id. at 1349; see Costanza & Perrings, supra note 345, at 64–67 (describing the incentives created by environmental assurance bonding).

   [374]. Tideman, supra note 369, at 346 (recommending bonding at “the present value of [environmental repair] costs . . . with some margin of safety”); Mackie & Besco, supra note 29, at 10601 (proposing prepayment of “the full estimated costs of performing restorative responsibilities”); Fennell, Forcings, supra note 101, at 1349 (arguing for bonds “sufficient to cover [the] costs” of repairing a potentially deleterious land use); Lordan-Berret, Sloan & Rosner, supra note 207, at 7 (arguing that nuclear regulators should implement a “sufficient standard” rather than a “minimum standard”); Costanza & Perrings, supra note 345, at 65 (recommending bonds tied to the “worst case” estimate of environmental harm).

   [375]. Boyd, Bonding and Assurance Rules, supra note 28, at 37. But see David Gerard, The Law and Economics of Reclamation Bonds, 26 Res. Pol’y 189, 191 (2000) (discussing the role of enforcement uncertainty in setting bond amounts and suggesting that increased bond amounts might offset such uncertainty).

[376]. See supra note 375 and accompanying text.

[377]. See, e.g., 2024 OCS Regulations, supra note 118, at 31557 (discussing public comments arguing that raising financial assurance requirements “would result in significant hardship to small businesses” and “increase [those businesses’] risks of defaulting”).

[378]. See supra notes 113–116 and accompanying text (discussing financial assurance under natural resource damage laws).

   [379]. For simplicity’s sake, this Article consolidates a range of “contingent consideration” mechanisms into the term “earnout.” See Jeffrey Manns & Robert Anderson IV, The Merger Agreement Myth, 98 Corn. L. Rev. 1143, 1182 (2013) (discussing forms of contingent consideration).

[380]. See Byron F. Egan & Zachary P. Ward, Earnouts in M&A Transactions 1–2 (2020).

[381]. See Brian JM Quinn, Putting Your Money Where Your Mouth Is: The Performance of Earnouts in Corporate Acquisitions, 81 U. Cin. L. Rev. 127, 136–37 (2012) (describing competing theoretical explanations of earnouts).

   [382]. Egan & Ward, supra note 380, at 1–2.

   [383]. Ronald J. Gilson, Value Creation by Business Lawyers: Legal Skills and Asset Pricing, 94 Yale L.J. 239, 263 (1984).

   [384]. Quinn, supra note 381, at 128–29.

[385]. Id. at 129.

[386]. See Gilson, supra note 383, at 265–67.

[387]. Id. This may result in new disputes, of course, around metric manipulation. See Gail Weinstein, Robert C. Schwenkel & David L. Shaw, The Enduring Allure and Perennial Pitfalls of Earnouts, Harv. L. Sch. F. on Corp. Governance, Feb. 10, 2018, https://corpgov.law.harvard.edu/2018/02/10/the-enduring-allure-and-perennial-pitfalls-of-earnouts/ [https://perma.cc/TY9V-KME7].

   [388]. Manns & Anderson IV, supra note 379, at 1183–85.

[389]. See supra notes 144–149 and accompanying text (discussing excuses to delay environmental repair).

[390]. See Fennell, Forcings, supra note 101, at 1351 (describing the value of forcing potential polluters to “take a stake” in their predictions).

[391]. See supra note 385 and accompanying text (discussing the role that earnouts play in sharing information about the beliefs of parties to a transaction).

   [392]. Dana & Wiseman, supra note 86, at 1565; Costanza & Perrings, supra note 345, at 71–72. Of course, operators would also be incentivized to increase their payouts by cutting corners on environmental repair, but identical incentives exist under any operator-pays system.Gerard, supra note 375, at 190.

   [393]. Macey & Salovaara, supra note 29, at 955; see id. at 945–51 (discussing the effect of bankruptcy’s “continuation bias” on environmental repair obligations).

   [394]. This figure is given as an example—the exact amount of an environmental earnout may represent an important industrial policy lever for lawmakers and regulators.

[395]. See supra note 119 and accompanying text.

[396]. See Huber, supra note 29, at 1464–65 (discussing negative-value property).

[397]. See Mackie & Besco, supra note 29, at 10601–02 (discussing these options and their associated risks); Lockman et al., supra note 35, at 33 (discussing the risks associated with such “gradual funding mechanism[s]”).

[398]. See generally Steven L. Schwarcz, Ring-Fencing, 87 S. Cal. L. Rev. 69 (2013) (providing an overview of “ring-fencing,” the practice of structuring certain firms, institutions, or investments to insulate them from outside risks such as the debts of affiliated entities or claims from competing creditors).

   [399]. Gerard, supra note 375, at 191; see Fennell, Forcings, supra note 101, at 1349 (similarly observing that “[b]ond posting shifts risk, along with the burden of proof, to the party posting the bond”).

[400]. See supra note 392 and accompanying text (discussing this incentive).

[401]. See supra notes 127–130 and accompanying text (discussing these standards).

[402]. See Deepwater Horizon Oil Spill Settlements: Where the Money Went, Nat’l Oceanic & Atmospheric Admin. (Apr. 20, 2017), https://www.noaa.gov/explainers/deepwater-horizon-oil-spill-settlements-where-money-went [https://perma.cc/Z3XC-S3F2].

   [403]. Jess Mitchell, BP Head Group Investor Relations, 2Q 2016 Results 16 (July 26, 2016), https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-second-quarter-2016-results-presentation-slides-and-script.pdf [https://perma.cc/8SZ2-HY2J].

   [404]. Vallari Srivastava, Trump’s Tariffs on Steel, Aluminum to Raise Costs for US Energy Firms, Experts Say, Reuters (Mar. 12, 2025), https://www.reuters.com/business/energy/trumps-tariffs-steel-aluminum-raise-costs-us-energy-firms-experts-say-2025-03-11/ [https://perma.cc/5R2C-HHGT].

[405]. See Purvis, supra note 153, at 43–44 (discussing per-well environmental repair costs incurred and estimated by Colorado’s Energy and Carbon Management Commission, which between 2021 and 2024 reported average environmental repair costs ranging from approximately $67,000 to $128,000 per site); Raimi et al., supra note 171, at 10226 (calculating environmental repair costs at approximately $76,000 per well in the United States).

[406]. See Srivastava, supra note 404.

   [407]. Purvis, supra note 153, at 34.

   [408]. Huber, supra note 29, at 1501–02 (describing this dynamic in the context of contaminated “brownfield” sites governed by CERCLA).

[409]. See, e.g., 30 C.F.R. § 556.901(g)–(h) (2025) (discussing circumstances under which BOEM may “adjust the amount of supplemental financial assurance” required from offshore oil and gas operators in federal waters and outlining the process through which operators may respond to “demand letter[s]” for such supplemental assurance); Cal. Pub. Res. Code § 3205.8 (requiring a reevaluation of financial assurance for oil and gas wells in California when low-producing wells are transferred from one operator to another).

   [410]. 30 U.S.C. § 1259(a).

   [411]. See 2 Colo. Code Regs. § 407-1:4, 4.2.1(1); Ala. Admin. Code r. 880-X-9B-.02(1).

   [412]. See Alaska Admin. Code tit. 11, § 97.420(a) (capping bonds at $750 per acre); Ga. Comp. R. & Regs. 391-3-3-.03(2) (requiring bonds of between $1,000 and $2,500 per acre).

   [413]. 16 Tex. Admin. Code § 12.304(d) (emphasis added).

   [414]. Cal. Pub. Res. Code § 2773.1(e); see also Cal. Code Regs. tit. 14, § 3504 (giving the “lead agency” authority to “ensure that the objectives of the reclamation plan will be attained”).

[415]. See generally Daniel T. Deacon & Leah M. Litman, The New Major Questions Doctrine, 109 Va. L. Rev. 1009, 1011 (2023) (discussing the Major Questions Doctrine). See Natasha Brunstein, Major Questions in Lower Courts, 75 Admin. L. Rev. 661, 662 (2023) (describing “the doctrine’s overall lack of clarity” and its impact on state law).

[416]. See supra notes 62–64.

[417]. See supra Part I.A (describing the history of environmental repair law).

[418]. See supra Part I.B (describing the structure of environmental repair law).

   [419]. 2024 GAO Report, supra note 157, at 1.

[420]. See Gov’t Accountability Off., Abandoned Hardrock Mines: Land Management Agencies Should Improve Reporting of Total Cleanup Costs 1 (2023), https://www.gao.gov/assets/gao-23-105408.pdf [https://perma.cc/8NV3-UCZ4].

[421]. See supra notes 1–15 and accompanying text.

[422]. See Plugging orphan wells across the United States, Env’t Def. Fund (Oct. 14, 2021), https://www.edf.org/orphanwellmap [https://perma.cc/N42L-6RT5].

[423]. See supra Part III.

   [424]. See Stanley Reed, Oil Giants Pump Their Way to Bumper Profits, N.Y. Times (Feb. 2, 2024), https://www.nytimes.com/2024/02/02/business/oil-gas-companies-profits.html [https://perma.cc/3JKM-PD8B].

[425]. See Annual Coal Report, supra note 34, at 22.

   [426]. Ivan Penn, Oil Companies Expand Offshore Drilling, Pointing to Energy Needs, N.Y. Times (May 3, 2024), https://www.nytimes.com/2024/05/03/business/energy-environment/shell-offshore-oil-gulf-of-mexico.html [https://perma.cc/TYK2-DXYQ].

   [427]. Purvis, supra note 153, at 10–12 (emphasizing the divergence between old, marginal wells and new, highly productive ones).