The oil and gas industry could be on the hook for billions of dollars as a growing number of states consider making the sector pay for climate impacts such as floods and sea-level rise.
At least four states are debating legislation, modeled on the federal Superfund program for contaminated land, that would hold major fossil fuel companies liable for damage caused by the historical emissions of their products.
In Vermont, which saw record flooding last year, a majority of the House and a supermajority of the Senate have signed onto the proposal, all but ensuring it will pass. Similar bills have been introduced in New York — where it already has passed the Senate — as well as Massachusetts and Maryland. Advocates expect similar legislation soon in California and Minnesota.
The proposals represent a turning point in climate policy, observers say, as projections of future climate impacts give way to real disasters that threaten to swamp state budgets with recovery and adaptation costs. At the same time, advancements in attribution science — the pioneering field of linking extreme weather events to a climate signature — are emboldening policymakers to put a price tag on individual companies’ history of emissions.
“This is an issue that’s ripe in Vermont,” said Democratic state Sen. Anne Watson, the primary sponsor of the bill. She credited attribution science with reassuring lawmakers they have an empirical basis for seeking money from the largest fossil fuel companies.
The Great Vermont Flood of 2023, as the National Weather Service has named it, caused more than $1 billion in damage after July’s extreme rains overwhelmed the state’s infrastructure, including flood control measures built after 2011’s Tropical Storm Irene. Now, as the state rebuilds, Watson said policymakers are asking how the state could possibly afford such storms becoming routine.
“We’re just saying: You have sold this product, it has damaged us, and therefore you owe money to clean up this mess,” Watson said.
Details of the legislation vary by state, but each one targets only the largest fossil fuel firms and covers only their past actions — an effort to hinder those companies from passing the costs along to consumers, supporters say, unlike a carbon tax.
Maryland’s bill seeks $9 billion from about 40 of the largest fossil fuel companies. New York and Massachusetts are seeking $75 billion, while Vermont’s bill would leave that question to the state treasurer.
Backers say they’re gaining momentum because state lawmakers don’t want to cut other programs to pay for climate impacts, and attribution science has given them a foundation to link the biggest companies to specific disasters. Although no governors have yet put their weight behind the legislation, Maryland’s and Vermont’s attorneys general have told lawmakers they support the proposals and would defend them in court.
“This is the start of a conversation that’s only going to get bigger and bigger,” said Jamie DeMarco, Maryland director for the Chesapeake Climate Action Network.
The oil industry opposes the bills as a retroactive tax, and says courts would find them unconstitutional. Business groups have argued companies would pass the costs to consumers, which has raised concerns among Democrats worried about higher prices. Others have noted the Superfund program was financed by a tax on chemical manufacturers, whereas these proposals envision an after-the-fact levy that falls unevenly across the sector.
Some corners of the oil and gas sector have gone further — disputing the merits of attribution science and casting the legislation as a conspiracy of the Rockefeller Family Fund, which has helped fund state lawsuits against oil companies and unsuccessfully pushed for a federal version of a climate Superfund program, which was dropped from President Joe Biden’s signature climate legislation.
“These bills are a backdoor tax meant to imperil American energy companies and stuff the coffers of wealthy states while doing little to solve the real challenge of climate change and global warming — just like the failed climate litigation campaign,” FTI Consulting’s Mandi Risko wrote for Energy In Depth, a project of the Independent Petroleum Association of America.
Risko accused the Rockefeller Family Fund of financing both the researchers who developed attribution science as well as the advocacy groups trying to apply it, saying of the Rockefeller Family Fund’s director: “when Lee Wasserman telegraphs what’s coming next, he’s probably pulling the strings.”
In an interview, Wasserman said the Rockefeller Family Fund is “happily and proudly supporting some of the groups working on this.”
“Making polluters pay for the damage that they have caused is one of the more widely accepted and supported approaches to environmental policy,” Wasserman said, calling the effort an “extension of the more traditional Superfund approach where companies who made the mess help clean it up.”
“It’s a bit of a variation on that theme,” he said, “because instead of polluting bodies of water or certain areas of land or natural resources, this is just extending it to greenhouse gas pollution that the states are going to be facing billions of dollars to adapt to and remediate from.”
Lawmakers and advocates said the proposals are gaining momentum because climate impacts are finally making a dent in state budgets, and a Superfund-style program represents one of the only alternatives to shifting the financial burden onto taxpayers.
Vermont Attorney General Charity Clark (D) said her office supports the legislation, even though it’s certain to be challenged in court. She declined to preview what legal arguments her office could use to defend such legislation. She repeated many of the claims featured in states’ consumer protection lawsuits against oil companies, but noted this effort would be different.
“There’s no playbook for this kind of bill,” she said last week to a state Senate panel considering the legislation.
Indeed, the legislation’s novelty has been one of the biggest hurdles. But over the past two years, advocates have been able to answer lawmakers’ questions about whether costs will be passed along to the public, whether states have legal authority to pass such a law, and — with the help of attribution science — whether they can accurately estimate a company’s emissions as part of calculating liability for climate damage, said Blair Horner, executive director of the New York Public Interest Research Group.
Now that lawmakers are becoming satisfied with those answers, he said, advocates are moving onto the “basic blocking and tackling” that comes with more conventional legislation — and budgetary issues have proven especially potent.
“It’s not like when a bridge gets washed out you can just say, ‘OK, well, no more bridge’ — you have to replace it,” Horner said. Climate damage “is already costing the state billions of dollars, and it’s going to cost billions more.”
In Maryland, where Ellicott City has been recovering from two 1,000-year floods over three years, Howard County is building a drainage tunnel that costs more than a quarter-billion dollars.
“All of that money could have gone toward all sorts of other things, but instead it’s coming out of their capital expenditure budget to deal with record-breaking rainfall,” said DeMarco, pointing to flooding problems across the state, along with schools unequipped to handle extreme heat and farmland that’s being lost to saltwater intrusion.
“These are costs that we’re facing today, and they are just the tip of the iceberg,” he said. “The question of who’s going to pay for them is no longer theoretical.
“Right now Maryland taxpayers are paying for all of these costs that they did not cause,” he added. “And we don’t think that’s right. We think these big international companies that knew and lied about this crisis should be responsible for cleaning up the mess that they made.”
