By Jean M. Mosites, Gina Falaschi Buchman of Babst, Calland, Clements & Zomnir, P.C.
On May 30, 2024, Vermont Governor Philip Scott allowed S.259, An act relating to climate change cost recovery, to become law without his signature. S. 259, entitled the Climate Superfund Act, will require the development of claims to shift the cost of alleged climate-related impacts in Vermont onto the companies that produced fossil fuels responsible for greenhouse gas (GHG) emissions.
This bill is the first of its kind to become law in the United States, and similar legislation is pending in Massachusetts, New York, and Maryland. Borrowing some concepts from the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), or Superfund, which imposes strict liability for cleanup of contaminated sites on potentially responsible parties, this Act seeks to assign financial liability for climate-related impacts on the companies that extracted and refined petroleum products and other fossil fuels. Like CERCLA, the Act imposes retroactive liability on entities having conducted lawful business activities in the past.
Vermont’s Act establishes a Climate Superfund Cost Recovery Program to be administered by the Climate Action Office of the Agency of Natural Resources. The Vermont Treasurer will be required to assess the cost of GHG emissions to the state and its residents during the period January 1, 1995 through December 31, 2024. The Agency of Natural Resources will apportion liability and make cost recovery demands to “Responsible Parties,” those entities engaged in the trade or business of extracting fossil fuel or refining crude oil responsible for more than one billion metric tons of covered greenhouse gas emissions during the covered period.
Funds received from these companies will be deposited in the Climate Superfund Cost Recovery Program Fund and used for climate change adaptation projects. A Responsible Party’s first payment would be due six months after the cost recovery demand is made and should be at least 20% of the total demand. Subsequent payments of not less than 10% of the total demand would be due annually thereafter until the entire demand is received.
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