Vermont may soon become the first state to force fossil fuel companies to pay their fair share to cover recovery efforts from climate change damages. This week, the state’s potentially groundbreaking law passed a preliminary vote in the Senate, where a final vote is expected soon that would likely send the law to the governor’s desk. And there’s reportedly broad enough support to override any attempt to veto the law.
By passing a law that mimics the Environmental Protection Agency’s Superfund program—which “forces the parties responsible for the contamination” of lands “to either perform cleanups or reimburse the government for EPA-led cleanup work”—Vermont hopes to create a Climate Superfund Cost Recovery Program.
If enacted, the law could end up costing fossil fuel companies billions for climate damages in Vermont alone and serve as a model for other states similarly seeking to combat their worst impacts.
Vermont Senator Dick Sears, who co-sponsored the bill, has said that the state’s climate-related costs have continued to spike while fossil fuel companies recorded more than $200 billion in profits in 2022, CNBC reported.
“The Climate Superfund Act is built on the long-standing principle that the polluter pays,” Sears said. “The damage that fossil fuels are causing in our communities continues to grow, with flooding in the last year alone resulting in massive costs to our state.”
Last summer, Vermont residents lost more than $1 billion in property damages from catastrophic flooding displacing many, Vermont Public reported, and the most recent winter was the “warmest ever recorded,” NBC News reported. Associated costs to do things like repair broken water mains or upgrade culverts are only expected to go up if urgent action is not taken.
Predictably, fossil fuel companies have tried to squash the bill, which could take effect as soon as July 1. Their argument seems to hold that Vermont residents who actually combusted the fuels should have to pay for the damages. In a letter to Vermont lawmakers, the American Petroleum Institute (API)—which represents all segments of America’s natural gas and oil industry—argued in March that the law is “bad public policy” and “may be unconstitutional.”
“API is extremely concerned that the bill: retroactively imposes costs and liability on prior activities that were legal; violates equal protection and due process rights by holding companies responsible for the actions of society at large; and is preempted by federal law,” the letter said.
Among API’s top concerns is that the law does not specify “the magnitude of potential fees that can result from its passage.”
“It could impose a considerable and significant financial burden for conduct that legally occurred decades earlier in a way that singles out the refining industry for others’ use of fossil fuels,” API argued. “It is patently unfair to charge a group of large companies that did not combust fossil fuels but simply extracted or refined them in order to meet the needs and demands of the people.”
It’s true that the bill does not yet assess just how much Big Oil owes for state damages. If passed, the state treasurer, Mike Pieciak, would consult the various databases, including the Carbon Majors database, to calculate how much businesses extracting fossil fuel or refining crude oil between 1995 and 2024 have contributed to state greenhouse gas-related costs between 2000 and 2019.
Once he knows how much each company contributed, Pieciak will be tasked with consulting scientists and estimating how much Vermont will need to invest to recover from those damages, including assessing impacts on impacts on public health, biodiversity, economic development, and other damages, The Guardian reported.
Within six months after he finishes these calculations, companies would be charged a one-time fee that could be paid in installments annually.
Ultimately, Vermont’s Agency of Natural Resources is tasked with establishing climate action priorities. But fossil fuel companies could be on the hook for “modernizing infrastructure, weatherproofing schools and public buildings, cleaning up from storms, and addressing the public health costs of climate change,” NBC News reported.
In January, Pieciak told Boston’s WGBH that he was “excited” to crunch the numbers.
While API claimed that “past emissions attributable to companies” cannot be determined “with great accuracy,” it’s likely that Pieciak will take a similar route as New York State, which estimated “that adapting to climate change could cost the state more than $150 billion by 2050,” WGBH reported. And he already has an initial figure from the Vermont Public Interest Research Group (VPIRG), which estimated that Vermont may need a recovery fund of approximately $2.5 billion, The Guardian reported.
