Ending Fossil Fuel Bailouts Act of 2026
HB9035, the “Ending Fossil Fuel Bailouts Act of 2026,” would amend the federal Bankruptcy Code to make it harder for oil, gas, and coal companies to use bankruptcy to avoid environmental cleanup obligations. The bill defines “fossil fuel company” broadly to include entities involved in exploration, production, refining, or distribution of oil, gas, coal, or derivatives, and then creates special bankruptcy rules for those debtors.
The core of the bill is a set of priority and nondischargeability provisions. It requires bankruptcy trustees to treat reclamation and cleanup costs tied to fossil fuel operations as necessary expenses, gives those costs priority over most unsecured claims, and makes environmental bond obligations and cleanup liabilities non-dischargeable. It also bars abandonment of fossil-fuel-related property as burdensome, extends the look-back period for avoiding fraudulent transfers to 10 years for fossil fuel companies, and restricts transfer of certain federal oil, gas, and coal leases when the lessee has filed bankruptcy. If the estate cannot cover cleanup and bond claims, the bill authorizes recovery from executive compensation and imposes joint-and-several liability on private equity firms, parent companies, and hedge funds with ownership interests.
In practical terms, the bill would significantly alter how fossil fuel bankruptcies are handled under title 11 of the U.S. Code. It would elevate environmental reclamation and bond obligations above many other claims, potentially reducing recoveries for general unsecured creditors, shareholders, and some other claimants. It would also create new exposure for corporate affiliates and financial backers, and it would require the Interior Department to include anti-transfer provisions in future covered leases issued under the Mineral Leasing Act and Outer Continental Shelf Lands Act.
The overall sentiment reflected by the bill’s introduction is strongly supportive of environmental accountability and skeptical of allowing fossil fuel companies to shed cleanup costs through bankruptcy. The bill’s sponsors frame it as preventing “bailouts” for fossil fuel companies and ensuring polluters pay for reclamation. No committee debate or recorded votes are provided, so there is no direct evidence of broader legislative support or opposition in the available materials.
The main points of contention likely concern the bill’s breadth and its impact on bankruptcy priorities and contract rights. Potential critics may object to the expanded liability for private equity firms, parent companies, and hedge funds, the long fraudulent-transfer look-back period, and the prohibition on abandoning fossil-fuel-related assets. Supporters are likely to emphasize environmental remediation, enforcement of reclamation laws, and protection of communities from unpaid cleanup costs.
The bill would amend multiple provisions of title 11 of the U.S. Code to create a fossil-fuel-specific bankruptcy regime. It would change the treatment of claims, dischargeability, abandonment, fraudulent transfers, and lease transfers for debtors that are fossil fuel companies, while also directing future federal leases to include bankruptcy-transfer restrictions. The affected parties include fossil fuel operators, their executives, secured and unsecured creditors, shareholders, private equity sponsors, parent companies, hedge funds, and federal and state environmental regulators.
The bill’s tone and structure indicate a strongly pro-environment, anti-bankruptcy-abuse posture. Its sponsors appear to view fossil fuel bankruptcies as a mechanism for shifting cleanup costs away from companies and onto the public, and the bill is designed to force payment of reclamation obligations. Because there are no committee transcripts or votes included, the available record does not show any formal opposition or compromise, but the proposal itself suggests likely support from environmental advocates and likely resistance from industry, lenders, and bankruptcy stakeholders.
Likely points of contention include the bill’s broad definition of fossil fuel company, the elevation of reclamation claims above many other bankruptcy claims, and the ability to recover executive compensation and impose liability on private equity firms, parent companies, and hedge funds. Critics may argue that these provisions upset established bankruptcy priorities, increase financing risk, and create uncertainty for investors and leaseholders. Supporters are likely to argue that the bill is necessary to prevent companies from externalizing cleanup costs and to ensure compliance with federal, state, and local environmental laws.