Facing natural disasters, more lawmakers look to make oil companies pay for the damage

Vermont is the first state trying a new approach to climate policy: charging fossil fuel companies money to cover the damages caused by natural disasters worsened by climate change.

Other states could be close behind. New York lawmakers passed their own measure in June, though it’s unclear if Democratic Gov. Kathy Hochul will sign the bill. And legislators in California, Maryland, Massachusetts and New Jersey have introduced similar bills, which environmental advocates in those states have identified as a top priority for upcoming sessions.

“We’re certainly hoping that Vermont will be in good company soon,” said Ben Edgerly Walsh, climate and energy program director with the Vermont Public Interest Research Group, an environmental nonprofit.

The so-called climate Superfund measures are based on the “polluter pays” concept of the 1980 federal Superfund law, which covers the cleanup of toxic waste sites. Under the proposals, states would determine how much to charge fossil fuel companies based on their historical role in producing the emissions responsible for climate change.

The proposals could bring in billions of dollars to deal with disasters such as the flooding that has ravaged Vermont in the past year. Other states could use the cash to address the damages caused by sea level rise, wildfires or droughts.

But such measures are likely to face stiff legal challenges from the oil and gas industry, making some state leaders wary of an expensive courtroom battle. And some lawmakers fear the bills will be linked to threats of higher gas prices, although advocates argue they won’t raise costs for consumers.

Legislators and advocates say the efforts in Vermont and New York are emboldening leaders in other states. But a veto from Hochul, they warn, could raise doubts elsewhere and slow that momentum.

Vermont goes first

The new law in Vermont, which took effect July 1, tasks the state treasurer with calculating the damages from climate change-caused disasters, as well as the expenses the state is incurring to adapt to changing conditions such as increasing precipitation.

The state will then collect money to cover those costs from any company responsible for more than 1 billion metric tons of greenhouse gas emissions over the past 30 years, proportional to its share of global emissions.

The law and similar measures are underpinned by an emerging field known as attribution science, which uses computer modeling to determine whether climate change caused or intensified a natural disaster.

“There’s a wealth of information out there dating back before 1995 indicating that the [oil] industry knew of the risks associated with its products,” said Elena Mihaly, vice president of Conservation Law Foundation Vermont. “It is wholly fair and reasonable to apply retroactive liability to those parties, given what they knew and when.”

The bill passed 93-39 in the Vermont House and 26-3 in the Senate, and Republican Gov. Phil Scott allowed it to become law without his signature. Scott said the state has been hit hard by climate change but expressed concern about the legal costs of taking on oil companies.

Oil industry groups have disputed the credibility of attribution science and claim states have no grounds to punish them for extracting, refining and selling a legal product. The American Petroleum Institute did not grant a Stateline interview request, nor did Energy In Depth, a research, education and public outreach campaign of the Independent Petroleum Association of America. Both instead issued statements decrying climate Superfund policies.

Mandi Risko, a spokesperson for Energy In Depth, wrote that the bills are “based on shoddy attribution science which arbitrarily picks winners and losers according to an ideological agenda.” Risko also claimed the bills would raise energy costs.

While no lawsuits have been filed against Vermont yet, advocates are preparing for a battle. They’re hoping they won’t have to fight alone.

Hochul’s hesitation

Soon after Vermont’s bill became law in May, New York legislators voted to pass their own measure. The New York bill would apply to roughly three dozen fossil fuel companies, collecting $3 billion per year over 25 years to help cover the costs of climate change. Advocates say climate change-caused damages are likely to far exceed that figure.

“Don’t you think the people who are responsible for a significant share of what’s happening ought to be on the hook for some amount of the costs we are facing?” said Democratic state Sen. Liz Krueger, who sponsored the bill. “This bill is an attempt to get polluters to at least pay part of it.”

Krueger said the biggest challenge that backers encountered was lawmakers’ fear of facing the oil industry in court. Hochul may be considering that factor as well, though her office would only say that she is “reviewing the legislation.”

The governor has until the end of the year to decide the bill’s fate, and climate advocates don’t expect her to act until after the November election. Krueger said a veto from Hochul would be “disturbing,” given New York’s potential to be a climate leader.

“Other states are waiting patiently in line, wanting to do the same thing, hoping we deal with the litigation before they jump in,” she said.

In a statement to New York lawmakers, the oil industry challenged the accuracy of greenhouse gas accounting.

“At best the state can only estimate emissions; and these estimates are imprecise and not accurate enough to base a prorated share of a $75 billion dollar penalty,” the American Petroleum Institute wrote in a 2023 statement to lawmakers as they debated climate Superfund legislation, according to media outlet City Limits.

Backers note that the program only charges companies that emitted 1 billion tons of greenhouse gases over a 19-year period. Many gas companies in New York won’t be affected, and some will pay a smaller amount based on their share of emissions.

Advocates say that the biggest polluters, such as Saudi Aramco, the company most liable for emissions under the bill, will still have to compete with companies that are not being penalized.

“If you’re Aramco and you’re on the hook for 20 cents a gallon and you raise your price 20 cents, nobody’s gonna fill up there,” said Blair Horner, executive director of the New York Public Interest Research Group, a nonprofit research and advocacy organization.

Waiting in the wings

New Yorkers aren’t the only ones hanging on Hochul’s decision.

“In the Massachusetts context, it’s really important that she move forward on this,” said Dan Zackin, legislative coordinator with 350 Mass, an environmental nonprofit that is pushing for a similar approach. “Our leaders in Massachusetts have been fairly risk-averse and hesitant to do things that would take on the fossil fuel industry, so we really need that precedent to be set so we know what’s going to come when we pass this.”

State Sen. Jamie Eldridge, a Democrat who sponsored the Massachusetts bill, said Hochul’s potential veto is a “real concern.”

“Sometimes in Massachusetts we look to see if something passes in a couple other states before we pass it ourselves,” he said.

But he said environmental advocates are increasingly supporting the proposal as the concept gains traction and backers are building momentum for the next legislative session, regardless of the outcome in New York.

Lawmakers in California, Maryland and New Jersey have drafted similar bills, and activists expect more states to follow suit — especially if Hochul signs the New York measure. California’s bill progressed through three committees this year, but did not receive a full Senate vote before the end of the legislation session.

“This is going to be our top-priority bill for the next session starting in September,” said Maggie Coulter, senior attorney with the Center for Biological Diversity, an environmental nonprofit. “We were blown away by the support. States like Vermont charging ahead and being willing to engage with a litigious industry group is inspiring and puts a little bit of pressure on states like California to step up to the plate.”

Stateline is part of States Newsroom, a national nonprofit news organization focused on state policy.