CSG Law Alert: Proposed Climate Superfund Bill Would Seek Climate-Related Damages from Fossil Fuel Companies
Written By:
Michael Spinello
Associate
Chiesa Shahinian & Giantomasi PC
As New Jersey’s legislative calendar winds down, there has been a new renewed push by environmental advocates to pass the Climate Superfund Act (S3545/A4696) (“Superfund Act”) during the upcoming lame duck session. The Superfund Act has gained some traction in both chambers of the New Jersey Legislature, earning support from more than two dozen lawmakers and approximately 50 municipalities. Modeled after similar laws in Vermont and New York, the proposed legislation would impose retroactive liability on certain fossil fuel companies for damages resulting from fossil fuel combustion and create a new program within the New Jersey Department of Environmental Protection (“DEP”) to collect compensatory payments from responsible parties and distribute them, in the form of grants, to fund climate change adaptation and resilience projects across the state.
Under the Superfund Act, a “responsible party” would be defined as any entity—or its successor—that extracted fossil fuels or refined crude oil and is determined by the DEP to be responsible for more than one billion metric tons of greenhouse gas emissions since January 1, 1995 (the year of the first United Nations Conference of Parties climate change conference). The bill would establish that each responsible party is strictly liable for the damages and would require each responsible party to pay compensatory damages to the State.
Within two years after the bill’s enactment, the State Treasurer will be required to submit a detailed report to the Senate Environment and Energy Committee and the Assembly Environment, Natural Resources and Solid Waste Committee, providing an assessment of damages to the State and its residents that have resulted from greenhouse gas emissions since 1995. The assessment will include: (1) a summary of the cost-driving effects of greenhouse gas emissions on the State; (2) a categorized calculation of the costs incurred by the state due to these effects; and (3) a categorized calculation of the costs incurred to abate or mitigate such effects.
The DEP will then be tasked with calculating damages and determining the financial liability attributable to each responsible party, based on the proportion of total greenhouse gas emissions for which the party is responsible. The DEP will be required to issue cost recovery demands to responsible parties and collect compensatory payments from each responsible party. Any payments by responsible parties to DEP will be deposited into a “Climate Superfund Cost Recovery Program Fund,” which will be used to support climate change adaptation and resilience projects, such as flood protection and infrastructure upgrades.
If the Superfund Act is enacted, it is almost certain to face legal challenges from fossil fuel companies and industry groups. Lawsuits have already been filed in New York and Vermont, where national trade associations have challenged those states’ authority to impose retroactive financial liability for greenhouse gas emissions and have argued the laws are preempted by federal law and violate the U.S. Constitution. CSG Law will continue to monitor the progress of the proposed legislation to determine how to best assist our clients.