Vermont passes the first of its kind Climate Superfund Cost Recovery Program – Polluters to be held Strict Liability

As of July 1, 2024, Vermont’s Climate Superfund Recovery Program (the “CSRP”) has now officially taken effect.  After the Legislature passed the CSRP, Governor Phil Scott (R) did NOT veto it, rather he allowed it to become law without his signature.

The new law, which can be found at  https://legislature.vermont.gov/bill/status/2024/S.259, and requires the State Treasurer along with the Agency of Natural Resources, to report, by January 2026, on the costs to residents and the State from greenhouse gas emissions that occurred between January 1, 1995 and December 31, 2024. This comprehensive assessment is intended to include impacts on public health, natural resources, agriculture, economic development, and housing, using federal data to attribute emissions to specific fossil fuel companies.

The law creates a polluter-pays model, targeting companies involved in fossil fuel extraction or crude oil refining linked to over 1 billion metric tons of greenhouse gas emissions during the 1995 to 2024 specified period. Companies that have exceeded the 1 billion metric ton mark are required to pay for their pro rata share of climate adaption measures needed by the State.  The funds collected will then be specifically allocated to infrastructure improvements such as roads and bridge upgrades, storm water management and drainage systems, sewer treatment plant upgrades and retrofits and energy-efficient building enhancements.
The CSRP takes the position, much like the Federal Superfund laws, that the polluter in this case is strictly liable for its applicable share of costs incurred for climate change adaptation projects. Entities that are part of a controlled group are jointly and severally liable for the applicable costs.

 

The theory behind the approach to the CSRP is that the companies whom have specifically contributed to greenhouse gas impacts are the ones required to fund necessary upgrades to existing or necessary resiliency infrastructure and other “climate change adaptation projects” as defined under the CSRP.  The State Treasurer’s report is required to measure and provide a summary of various costs that have been incurred due to the greenhouse gases that were emitted during the relevant time period and costs that are projected to be incurred in the future within the State to abate the effects of covered greenhouse gas emissions from 1-1-95 through 12-31-25.

Green Spouts: The CSRP is the first of its kind state law that attempts to hold a polluter strictly liable for past acts that have created a negative impact on the State’s infrastructure and climate adaptability. The CSRP makes any entity or successor company that engaged in the trade or business of fossil fuel extraction or refining crude oil between 1-1-95 and 12-31-24 strictly liable for its share of costs incurred by the State.  The emitters are being held responsible for their respective portion of green house gas emissions above the 1 billion metric tons noted above.  Interestingly, Vermont is NOT alone here, as New York, Maryland and Massachusetts are considering similar legislation as well. Whether this type of State Superfund  strict liability law gets traction and passage by other states remains to be seen but it is surely an interesting development and one which bears watching, especially in light of the upcoming election.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo or the attorney in the firm with whom you are regularly in contact.

Seattle – Not Just for Starbucks These Days – Mayor Proposes Greenhouse Gas Reduction Legislation

Seattle Mayor Bruce Harrell recently proposed legislation that would require the city’s large commercial and multifamily buildings to reduce greenhouse gas emissions (“GhG”) over the next several decades and achieve net-zero emissions by 2050.

Per the City’s press release, the standards were nearly 2 years in the making, are expected to reduce annual commercial building greenhouse gas emissions by 27% compared with 2008 levels,

According to the EPA and multiple studies, the built environment (i.e., buildings) are a large contributor to GhG emissions nationwide, and in Seattle, contributes more than 33% of the city’s total GhG emissions.

Seattle is one of a growing list of cities (including Boston who announced this policy 2 weeks ago) — and more recently, some states (e.g., Washington) — that require many new buildings to be all-electric. While these policies will likely reduce consumption of fossil fuels in many cases, they do not address existing buildings that use gas, oil and fossil fuels to provide heat, hot water and chiller water.

During 2023, more and more states and municipalities are developing building performance standards that aim to reduce buildings’ carbon footprint by requiring them to meet certain standards. These more recent standards focus on greenhouse gas emissions rather than just energy usage.

Seattle’s proposed new standard is, per Construction Dive, the product of nearly 2 years of meetings, open houses, webinars, advisory group and specialized task force sessions. Not surprisingly, not all constituents were happy with pushback during the development of these standards coming from environmental groups that want more and faster emission reductions and from real estate and business groups that believe that standards are far too reaching.

All told, according to the Seattle Office of Sustainability and Environment, the new standards will cover approximately 4,100 buildings in Seattle, including about 1,885 multifamily buildings and 1,650 nonresidential buildings that are mostly downtown and in dense neighborhoods. Like many of the other cities adopting these type of GhG emissions based standards (see, e.g., New York City with Local Law 97), the proposal offers several pathways for buildings to comply with the standards; owners who do not comply would be fined.

It is believe by the City Administration that the new standard will help Seattle secure federal funding and incentives. Seattle City Council is expected to review and likely implement the legislation in their fall session.

Parting Shot – Seattle is part of a growing list of cities and States that are looking to reduce energy consumption in its building stock by way of focusing on fossil fuel consumption and GhG emissions by requiring monitoring, measuring and reporting by larger buildings, and, if standards set by the applicable governing body have been exceeded, the owner of the building (and thereafter, likely the tenants under their leases) will be subject to a fine until they correct their exceedance.  Carrots have been offered in the past as incentives, these types of ordinances are much more of the stick approach.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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