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I. BACKGROUND <br />Under SMCRA, before a company can mine coal, they are required to post bonds <br />covering the full cost of reclamation in case mining operations are abandoned prior to the <br />completion of reclamation. See 30 U.S.C. § 1259 and 30 C.F.R. § 800.11. Although normally, <br />companies post surety bonds or offer collateral to ensure the costs of reclamation can be covered, <br />SMCRA allows companies to post self -bonds, or corporate guarantees. See 30 U.S.C. § 1259(c) <br />and C.F.R. § 800.23. Self -bonds are essentially agreements between companies and regulatory <br />authorities where the mining companies guarantee to cover the costs of reclamation, but do not <br />actually provide direct funds, collateral, or third -party guarantees to cover such costs. See 30 <br />C.F.R. § 800.5(c) (defining a self -bond as an "indemnity agreement" between permit applicants, <br />any guarantor, and the regulatory authority). <br />Self -bonding is only allowed where a company has "a history of financial solvency." 30 <br />U.S.C. § 1259(c). Under SMCRA regulations, a company is only allowed to self -bond where it <br />meets all of certain criteria set forth at 30 C.F.R. §§ 800.23(b) -(e). Among other things, certain <br />financial conditions must all be met, including that the company seeking to be self -bonded must: <br />• Have an "A" rating or higher for its most recent bond issuance, as issued by <br />Moody's Investor Service or Standard and Poor's Corporation; <br />• Have a net worth of at least $10 million or fixed assets in the U.S. of at least $20 <br />million, a ratio of total liabilities to net worth of 2.5 times or less, and a ratio of <br />current assets to current liabilities of 1.2 times or greater; and <br />• Ensure that the total amount of self -bonds do not exceed 25% of the company's, <br />or guarantor's, net worth in the United States. <br />30 C.F.R. §§ 800.23(b)(3) and (d). If any one of these, or other self -bonding criteria for that <br />matter, is not met, a company is not allowed to self -bond its mining operations. <br />If a permittee is self -bonded, it has a mandatory duty to "immediately" notify regulatory <br />authorities if financial conditions change such that it no longer meets the financial criteria at 30 <br />C.F.R. §§ 800.23(b)(3) and (d). 30 C.F.R. § 800.23(g). Within 90 days of this notification, the <br />permittee must also post an alternate bond in the "same amount as the self -bond." Id. If the <br />company fails to do so, it must "cease coal extraction" and "shall immediately begin to conduct <br />reclamation operations[.]" 30 C.F.R. § 800.16(e)(2). <br />The States of Colorado, New Mexico, and Wyoming all regulate coal mining pursuant to <br />regulatory programs approved by the U.S. Office of Surface Mining Reclamation and <br />Enforcement. See 30 C.F.R. §§ 906, 931, and 950. Under these programs, the states have <br />adopted regulations related to self -bonding that effectively mirror the regulations implementing <br />SMCRA. See Colorado Mined Land Reclamation Board Regulations § 3.02.4; New Mexico <br />Administrative Code § 19.8.14.1410; and Wyoming Land Qualify Division Coal Rules and <br />Regulations, Chapter 11. Notably, all states require that self -bonded coal mine operators notify <br />respective state regulatory authorities when they no longer qualify for self -bonding and to post <br />2 <br />