Vermont, where the Democrats control the state legislature by a supermajority, enacted a bill, S.259 (Act 122), the “Climate Superfund Act,” to hold fossil fuel companies accountable for producing energy in the name of “climate change.” The new law requires fossil fuel companies to foot the bill for mitigating the alleged harms of global warming after the state suffered summer flooding and other weather damage. Republican Governor Phil Scott, who allowed the bill to take effect without his signature, called it a “sad day for Vermonters who simply cannot afford further tax burdens and cost increases.” It is a polluter-pays model affecting companies engaged in the trade or business of extracting fossil fuel or refining crude oil attributable to more than 1 billion metric tons of greenhouse gas emissions during the time period. Maryland, Massachusetts, and New York are preparing to follow Vermont’s lead.
Governor Phil Scott has been at odds with the Democrat-controlled Legislature, which he has called out of balance. He was expected to veto the bill but then allowed it to be enacted. According to Scott, he was comforted that the Agency of Natural Resources is required to report back to the Legislature on the feasibility of the effort. Under the legislation, the Vermont state treasurer, in consultation with the Agency of Natural Resources, would provide a report by January 15, 2026, on the total cost to Vermonters and the state from the emission of greenhouse gases from January 1, 1995, to December 31, 2024. The assessment would look at the effects on public health, natural resources, agriculture, economic development, housing and other areas. The state would use federal data to determine the amount of covered greenhouse gas emissions attributed to a fossil fuel company.
Americans should be concerned about this type of legislation as it would retroactively impose costs and liability on prior activities that are legal and would violate equal protection and due process rights by holding companies responsible for the actions of society. According to the American Petroleum Institute, the new fee represents another step in a campaign to undermine America’s energy advantage and the economic and national security benefits it provides. The Institute also said that the legislation was preempted by federal law.
New York’s Proposed Bill
Fossil energy producers operating in New York State will be subject to retroactive taxes if the state assembly passes Senate Bill S2129A, known as the “Climate Change Superfund Act.” The legislation would impose a retroactive tax on fossil energy companies that have emitted greenhouse gases and operated within the state over the last seventy years. If passed, the new law will impose $75 billion in repayment fees for “historical polluters,” who lawmakers assert are primarily responsible for climate change “damages” within the state. New York will “assign liability to and require compensation from companies commensurate with their emissions” over the last “70 years or more.” The bill would establish a standard of strict liability, stating that “companies are required to pay into the fund because the use of their products caused the pollution. No finding of wrongdoing is required.”
As with the Vermont bill, under the New York proposed bill, fossil fuel‐producing companies would be taxed billions of dollars retroactively for producing energy that Americans needed and enjoyed that was legal and necessary for economic growth and improving the lifestyles of New Yorkers. As such, the seventy‐year retroactive tax would apply to any company—going back to 1954—that used fossil fuels to generate electricity or produced gasoline or diesel for New York drivers.
These superfund taxes will raise prices for consumers and reduce investment by companies to produce more energy as well as make fossil fuel companies leave the state for states that do not have such an arbitrary tax, resulting in potential shortages of energy as renewables cannot make up for the energy produced by fossil fuels despite being heavily subsidized. Residents in both New York and Vermont already pay over 30 percent more than the national average price for residential electricity.
Fossil fuels provide significant economic growth, mobility, and prosperity. Establishing a standard in which “no finding of wrongdoing is required” to levy fines against historical actions that were and are legally permitted sets a dangerous precedent for what governments can do, not only to businesses that produce fossil fuels but also to individuals who consume them.
Conclusion
Having failed in the courts to establish proof of damages, politicians are now passing laws alleging fault but requiring no finding of wrongdoing. Vermont has enacted a bill to retroactively charge fossil fuel producers for alleged damages caused by releasing greenhouse gas emissions over the past 30 years, despite that energy having improved the economic well-being and the lifestyles of the residents in the state. New York has similarly introduced a bill that imposes those costs retroactively for the past 70 years. Maryland and Massachusetts are also considering such legislation. The impact, however, will be higher energy prices within those states and companies fleeing them to states that respect the affordable and reliable energy that they provide.
