Vermont legislators enacted a new (and novel) law this spring that seeks to recoup costs the state faces from climate change–related damage. Known as the Climate Superfund Law, the Act employs a fundamental principle of environmental law—the “polluter pays” principle—in pursuing cost recovery from major fossil fuel companies. See Vt. Stat. Ann. tit. 10, § 596 et seq. Often one of the leading states in proffering solutions to societal issues, Vermont is the first to enact this type of law. With rapidly worsening climate change impacts, it is no wonder the state decided to act rather than await a federal solution.
Situated in the westernmost point of New England, Vermont’s geography—steep mountainous terrain with hollows and river valleys—makes it vulnerable to extreme weather events like heavy and sudden rainfall. Ethan Weinstein, How Vermont’s Physical and Human Geography Help Explain Recent Flooding, Vtdigger (July 31, 2023). This topography drove where Vermonters originally settled, leading city and town centers to be mostly located in river valleys and along floodplains. Id. Thus, with increasing and heavier precipitation events, Vermont communities are at great risk of flood damage. Last summer, the state faced the worst flooding in 100 years, leading to over $1 billion in property damage. Abagael Giles, A Law in Vermont Makes Fossil Fuel Company Pay for Damages from Climate Change, NPR (June 8, 2024).
Other climate change impacts in Vermont include extreme heat, drought, and seasonal shift, largely meaning longer summers and shorter winters, driven by changes in temperature and precipitation patterns. Scientists have documented rises in annual temperatures by around 2°F, increased warming rates in the winter months, and longer growing seasons. Gwen Dunnington, The Potential Impacts of Climate Change on Agriculture in Vermont, VT Agency of Nat’l Res. (Apr. 2010). These impacts threaten the continued vitality of the agriculture sector, which plays a key role in the state’s culture and economy. For example, the maple syrup industry faces production issues as traditional tapping timeframes become increasingly uncertain, sugaring seasons trend shorter, and sugar maple trees decrease in abundance. Id.
Confronted with these climate-related effects and increasing costs to the state and its citizens, Vermont’s new law requires fossil fuel–producing companies to foot the bill. Lawmakers modeled the new law on the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601–9628 (CERCLA or the Superfund Law), which requires companies to compensate the public for the contamination of natural resources they caused while doing business. CERCLA provides an avenue to fund the cleanup of hazardous waste sites and designates federal and state agencies as well as federally recognized tribes as trustees to seek damages on behalf of the public to restore natural resources and the services they provide. Similarly, the Climate Superfund Law authorizes Vermont state officials to bill major fossil fuel producers to pay for the costs the state is facing from climate change effects those producers have caused. Recovered costs would then fund climate change adaptation and resiliency projects throughout the state.
Like CERCLA, the Climate Superfund Law imposes strict liability on responsible parties. Vt. Stat. Ann. tit. 10, § 598(a)(1). Companies are considered responsible based on two criteria. First, they had to engage in trading or the business of extracting, producing, or refining oil, gas, or coal and the use of those products resulted in more than one billion metric tons of cumulative covered greenhouse gas (carbon dioxide equivalent) emissions. Id. § 596(22). Second, they must be sufficiently connected with the state of Vermont, for example, by conducting business in the state including supplying oil, gas, or coal to parties operating in the state. Id. Damages are determined based on how much these fossil fuel producers’ products have contributed to global emissions using climate attribution science, an evolving field of climate research that connects natural disasters to greenhouse gas emissions. See id. § 598(d) (specifying EPA’s Emissions Factors for Greenhouse Gas Inventories as a reference tool).
The law sets a deadline of January 15, 2026, for the Vermont State Treasurer to submit an assessment of the costs incurred to the state and its residents from January 1, 1995, to December 31, 2024, from climate change effects due to covered greenhouse gas emissions as well as any estimated future costs. Id. § 599c. The assessment also must detail the estimated cost to abate climate change effects for the same. Id. § 599c(3). Cost-driving effects include effects on public health, natural resources, biodiversity, agriculture, economic development, flood preparedness and safety, housing, and any other effect state officials determine is relevant. Id. § 599c(1). Once state officials determine the costs and proportion of liability attributable to responsible parties, the Vermont Agency of Natural Resources will issue cost recovery demands. Id. § 598(f).
With the introduction of the Climate Superfund, Vermont has taken a pivotal step toward holding fossil fuel companies accountable for their role in the climate crisis. Legislators in other states such as New York, Massachusetts, Maryland, California, and Minnesota are considering similar laws.
It is almost certain industry will challenge the Climate Superfund Law. The American Petroleum Institute already highlighted its concerns at the draft stage, including the law’s retroactive and punitive nature, possibility of unfairness, and preemption by federal law in relying on global emissions, to name a few. By mirroring the basics of CERCLA, which has well-established case law on related challenges, the law may have firm ground on which to stand.
For instance, federal courts have consistently rejected constitutional due process challenges to the retroactive application of CERCLA. See, e.g., United States v. Dico, Inc., 266 F.3d 864, 879–80 (8th Cir. 2001); United States v. Monsanto Co., 858 F.2d 160, 173–74 (4th Cir. 1988) (reasoning “it was certainly foreseeable at the time that improper disposal could cause enormous damage to the environment”). Due process is satisfied by a rather low bar: So long as the statute is justified by a “legitimate legislative purpose furthered by rational means,” the retroactive application of the law is justified. See Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 730 (1984). When reviewing the CERCLA program, courts have routinely determined cleaning up hazardous waste disposal sites and imposing liability for clean-up costs on “those parties who created and profited from the sites and upon the chemistry industry as a whole” meets this bar. United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726, 734 (8th Cir. 1986). Similar in purpose and means, the Climate Superfund Law may likewise survive challenges on retroactive application.
Another example is courts’ repeated dismissal of arguments that CERCLA, which imposes strict, joint, and several liability, operates punitively by exacting punishment on responsible parties. Monsanto, 858 F.2d at 174–75; United States v. Atlas Minerals & Chem., Inc., 797 F. Supp. 411, 419 (E.D. Pa. 1992). As explained by the Fourth Circuit, CERCLA obligates parties judicially determined responsible to pay the costs of remedying hazardous conditions at waste disposal sites. Monsanto, 858 F.2d at 174. This type of remedy intends to restore the injured environment through restitution, rather than issue criminal penalties. See id. (citing Tull v. United States, 481 U.S. 412, 422 (1987)). Arguably, the same case could be made for Vermont’s new law.
Questions of fairness and federal preemption issues are also at play. The Climate Superfund Law only applies to fossil fuel producers, excluding parties that ultimately used those fossil fuels as well as other major sources of greenhouse gas emissions like agriculture. Additionally, the law creates liability at the state level for a subset of fossil fuel–producing companies often operating on a national or global scale. Responsible parties may point to laws like the Clean Air Act as preempting this type of state legislation seeking to regulate greenhouse gas emissions. With millions (or perhaps billions) at stake and similar laws on the horizon, we may soon have answers.
