A New York bill could force fossil fuel companies to pay for what lawmakers — and studies — say is their share of the mess they’ve made in the atmosphere.
A pair of Democratic New York state lawmakers, Assemblymember Jeffrey Dinowitz and state Sen. Liz Krueger, have drafted the Climate Change Superfund Act, a bill that, if enacted, would require oil and gas producers in the state to pay $30 billion over the next decade for their share of total greenhouse gas emissions since 2000. But ultimately, the bill aims to bring in a total of $75 billion over a 25-year period.
To put that into perspective, ExxonMobil, one of the largest U.S. oil companies, made nearly $20 billion between July and September – a record for any quarter, and 10% higher than its previous record set just a quarter before.
“This is a big lift, and the fossil fuel companies will fight like hell against it, but isn’t that the story of our lives right now?” said Krueger. “We’re trying to save the planet and some people are continuing to argue, ‘Just let us sell fossil fuels and leave us alone.’”
The Climate Change Superfund Act is designed to raise money for infrastructure projects across the state to protect against extreme weather events caused by climate change, costs that would otherwise be charged to state taxpayers.
This first-in-the-nation legislation uses the polluter-pays model, a commonly accepted practice that those who produce pollution should pay to clean it up, and applies it to greenhouse gas emissions.
Ecofriendly groups and the U.S. Environmental Protection Agency consider greenhouse gas emissions a form of pollution because of their potential harm to human health and the environment.
Earlier this month, when Gov. Kathy Hochul announced major climate initiatives in her State of the State address, she did not mention the Climate Change Superfund Act. But the bill, which was first introduced in the last legislative session, is expected to move forward this spring, according to Dinowitz.
“The basic premise of the bill is what our parents told us: If you break it, you gotta fix it; if you make a mess, you got to clean it up, and that’s what’s going on here,” Dinowitz said.
State agencies and EPA regional offices often declare Superfund sites. But unlike the existing federal Superfund program, this proposed state act would not have to prove polluters were negligent. The New York State Department of Environmental Conservation would use a formula for each fossil fuel company to calculate their emissions and the percentage they would have to pay.
Damage costs would vary from fossil fuel company to company and wouldn’t apply to companies operating outside of New York. Pete Howard, the economics director at NYU’s Institute for Public Integrity, co-authored a 2022 report that looked at the effect of the Climate Change Superfund Act on gas prices. He said the penalties would not be expected to impact the cost of gasoline at the pump in New York or the price of crude oil because companies would treat these payments as one-time fixed costs.
“The way this act is designed is it charges fossil fuel companies that are related to New York state for past emissions, and that has to do with past oil extraction, past oil transportation, past oil processing and past sales of oil,” said Howard. “So, it has nothing to do with their current decision-making.”
Rachel Rothschild, an assistant professor at the University of Michigan Law School who conducted legal research for the bill, said there are currently no federal laws that would prevent New York or another state from passing a Climate Change Superfund Act. But the fossil fuel companies could try to challenge the law in a couple of ways to avoid paying any money.
They could argue, like they’ve done in other cases, that carbon emissions aren’t a state issue, but a global one, of international scope.
Rothschild said the trickiest argument for New York state would be proving a company’s jurisdiction. So, to find that a fossil fuel company emitted greenhouse gases in the region, the state would have to prove that the company operated in the state.
Now, this gets tricky because many fossil fuel companies are multinational corporations that often don’t have their headquarters in New York. Their subsidiaries assist them in selling their products in the state.
Rothschild said New York can still make its case by showing that through sales, marketing and product transportation, fossil fuel companies still operated within the state.
If the bill’s successful, Dinowitz said the Climate Change Superfund Act could serve as a model for other states and countries on ways to help pay for the rising costs of climate change.
New York ranked fifth in petroleum consumption overall, but ranks relatively low in consumption per person because of public transportation and urban density, according to Howard’s report. And the Empire State produces virtually no petroleum.
Dozens of cities, counties and states are suing fossil fuel companies over climate change, alleging they knew for decades that emissions from their products contributed to global warming.
In October, New Jersey accused Exxon Mobil, Shell Oil, Chevron, BP, ConocoPhillips and the American Petroleum Institute trade group – of which all the companies are members — of violating the state’s Consumer Fraud Act.
Consumer protection cases have historically been tried in state courts, but fossil fuel companies have appealed in attempts to get their cases heard in federal court, where national regulations around drilling and air pollution could invalidate the legal claims against them.