As communities across the United States grapple with the rising costs to protect residents and infrastructure from the worsening impacts of climate change, some state legislators are targeting a potential new source of resilience funding: fossil fuel companies.

Sometimes called “polluter pays” bills or “climate superfund” bills, a new wave of state legislation aims to make oil companies bear a portion of the expenses necessary to adapt to climate impacts and recover from climate disasters fueled by those companies’ greenhouse gas emissions. The bills are quickly gaining momentum in statehouses: Vermont passed one into law in May, another in New York awaits Governor Kathy Hochul’s signature, and similar proposals are under consideration in California, Massachusetts, and Maryland.

Oil and gas companies have generated the majority of the world’s climate pollution, the bill sponsors argue, and therefore they should help pay for the damage that pollution is inflicting on communities. While each state’s legislation has unique features and different mechanisms to determine how much oil and gas companies would pay, they all draw inspiration from the federal Superfund program, first enacted in 1980 and administered by the Environmental Protection Agency, which makes polluters pay to clean up hazardous waste they’ve dumped into the environment.

State climate superfunds established by these bills would function similarly by making fossil fuel companies pay for a portion of the damages caused by their greenhouse gas emissions.

“States and municipalities are suffering enormous costs from the damage associated with climate change and the money they have to spend now to prepare for the consequences they’re going to face in the future, at the same time as fossil fuel industry actors are posting record profits from creating these harms,” said Martin Lockman, climate law fellow at the Sabin Center for Climate Change Law and associate research scholar at Columbia Law School. While the superfund bills would not cover the full amount states will spend on climate adaptation, he said, communities “are looking for any tools that they have available to make sure that the people who are profiting from causing them harm pay for [that] harm.”

So how exactly do the bills work, how do they interact with the growing number of distinct state and local lawsuits seeking to hold Big Oil accountable for climate deception, and what challenges will they face? Here’s what you need to know.

HOW CLIMATE SUPERFUND BILLS WORK

All of the currently proposed climate superfund bills would assess a dollar figure that companies owe to the fund based on the amount of emissions attributed to the fossil fuels they sold over a set period of time: 2000 to 2018 in New York’s case, or 1995 to 2024 in Vermont’s for example. The costs of those emissions, or how they are proportioned among companies, are calculated using attribution science—a growing field also tapped for climate accountability lawsuits. Those calculations rely on companies’ self-reported data to the SEC.

companies owe to the fund based on the amount of emissions attributed to the fossil fuels they sold over a set period of time: 2000 to 2018 in New York’s case, or 1995 to 2024 in Vermont’s

“It’s looking at something they already did, and saying ‘this had a negative effect and now you have to clean up the mess you made,’” said Maggie Coulter, senior attorney at the Center for Biological Diversity, a group that supports a climate superfund bill in California that was recently shelved by its author but could be reintroduced later in the year.

Some of the bills direct a state agency to conduct a cost assessment of the climate harms companies’ emissions caused during a set time frame. In Vermont’s case, the state’s Agency of Natural Resources will have until the start of 2027 to conduct that assessment and determine each company’s appropriate share of the costs.

Those costs could include some portion of the estimated $1 billion response and recovery costs incurred after major floods devastated Vermont last summer, or the price of fortifying roads, bridges, and floodplains to lessen the damage caused by rain storms intensified by climate change. The agency will also help determine which resiliency programs—programs that could help municipalities, businesses, and farms in Vermont adapt to climate impacts—will be covered.

The law “is a common sense manifestation of a very well-established principle of American environmental law, which is that the polluter pays,” said Christophe Courchesne, assistant professor of law and director of the Environmental Advocacy Clinic at Vermont Law School, which voiced its support for the bill before it passed. “It’s not new, even as the application of this policy to climate damages is new, and is an extremely important concept that we certainly hope will be a model to other states.”

well-established principle of American environmental law, which is that the polluter pays

Other bills have already set a total cost that would be divided up by companies—like New York’s, which would require the oil majors to pay into a $75 billion fund that could be used for projects such as air conditioning schools or upgrading roads, bridges, subways, and stormwater drainage systems to account for more extreme weather. Still, that $75 billion is nowhere near the total costs New York faces for climate adaptation; in 2021, the city estimated it would cost $100 billion just to “recalibrat[e] our sewers for storms like Ida.”

polling last year found that 70% of likely voters supported making fossil fuel companies pay for climate disasters including wildfires, droughts, and floods

Proponents of the bills say their popularity reflects growing public demand for polluters to pay; polling last year found that 70% of likely voters supported making fossil fuel companies pay for climate disasters including wildfires, droughts, and floods. “The science is more than clear on the outsized impact these companies have had on the climate crisis,” said Cassidy DiPaola, communication director for Fossil Free Media, one of the groups behind that poll. “​​It’s time for them to pay their fair share, and this is one step in the right direction, but still not nearly enough.”

‘VERY COMPLEMENTARY, PARALLEL TRACKS’

The bills come at the same time that dozens of state and local lawsuits to hold Big Oil accountable for climate fraud and damages are steadily advancing through the courts. So how do the two mechanisms interact?

The two tracks have some fundamental differences and aim to accomplish different things. Unlike the bills, the lawsuits center on disinformation, not pollution. They accuse the companies of engaging in deceptive behavior, citing evidence that the fossil fuel industry has misled the public for decades about the harms their products cause. Through the courts, the cases aim to stop companies from lying to consumers and hold them accountable through a range of remedies, including paying for the damage their deception has caused.

lawsuits center on disinformation, not pollution

Lawsuits can also help address past disinformation by forcing defendants to set the record straight. A Minnesota lawsuit brought against Exxon, Koch Industries, and the American Petroleum Institute under the state’s consumer protection laws, for example, seeks to make the companies “disclose, disseminate, and publish all research previously conducted directly or indirectly . . . that relates to the issue of climate change,” and “fund a corrective public education campaign in Minnesota relating to the issue of climate change, administered and controlled by an independent third party.”

Similar remedies came out of lawsuits brought against the tobacco industry by U.S. states and territories for misleading consumers about the connection between smoking and cancer. Through the 1998 Master Settlement Agreement, major tobacco companies were made to fund the Truth Initiative, a public education campaign that has drastically reduced youth smoking rates.

Discovery, the process of obtaining evidence for trial, can also produce internal company documents that shed further light on the industry’s deception about its products for legislators and the public—and can help inform a response. Such documents were obtained through litigation against the tobacco and opioid industries and made publicly available.

The climate superfund legislation, on the other hand, “does nothing to prevent [companies] from continuing business as usual if they want to,” said Coulter. “It’s just saying that the business that you conducted has caused damage and you need to pay for that.” That’s why the bills and lawsuits, she emphasized, are “very complementary, parallel tracks,” which together can both make the fossil fuel industry pay for a share of its pollution and bring an end to continued deceptive acts.

A similar dual strategy was applied in California, where the California Childhood Lead Poisoning Prevention Act of 1991 taxed manufacturers of products containing lead to fund evaluations and medical services for children who were exposed. In 2019, 10 California cities and counties were still able to recover a court settlement from lead paint manufacturers after they sued the companies under public nuisance claims.

“This is how our democracy works,” California’s Attorney General Rob Bonta recently told Politico when asked about the relationship between California’s proposed superfund bill and the accountability lawsuit his office brought against Big Oil companies last year. “Different leaders elected to do their jobs think about the authority that they have, the jurisdiction that they own, and the action that they can take to solve a problem that affects their constituents.”

LEGAL BATTLES AHEAD

The bills will likely implicate many of the same major oil companies facing climate deception lawsuits in state courts, including Exxon, Chevron, Shell, and BP. The industry’s lead trade association, the American Petroleum Institute, has already expressed its strong opposition to the bills, calling them “a punitive new fee” that “represents yet another step in a coordinated campaign to undermine America’s energy advantage and the economic and national security benefits it provides.”

Legal experts expect API and others to challenge the laws in court.

In March, API sent a letter to Vermont lawmakers claiming that the state’s bill “retroactively imposes costs and liability on prior activities that were legal” and “violates equal protection and due process rights by holding companies responsible for the actions of society at large.”

But experts and advocates refute those claims. “This bill is premised on a well-established, reasonable approach to assigning liability for pollution harms,” said Courchesne, of Vermont Law. “These issues around due process and the retroactivity of liability have been litigated and those laws have been upheld.”

Big Oil’s public communications have sought to shift the blame for climate change to consumers for years, despite growing evidence that the companies intentionally mislead the public about the harms their fossil fuel products cause.

While the superfund bills don’t rely on that evidence of deception like the lawsuits do, there is still plenty of precedent for laws that hold producers liable for their pollution, Lockman explained. “If you buy a product, and the company that made that product was dumping toxic chemicals into a river and killing off species, is the consumer responsible for that?” he asked. “Generally, as a society and a legal system, we’ve decided that it’s OK to hold the most immediate actors responsible for the pollution they’re causing.”

Emily Sanders is a senior reporter for ExxonKnews. Follow her here.

This piece was originally published on ExxonKnews, a project with the Center for Climate Integrity.

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