strict liability – Sustainability, Resiliency and Risk Mitigation

February 7, 2025February 7, 2025 by Brad A. Molotsky

New York “Polluter Pays” Law Under Attack

At the end of December 2024, we posted about New York’s second in the US “Polluter Pays” law (check the website for a copy of the post that outlines the law that was signed by Governor Hochul in 2024). Not surprisingly, earlier this week, 22 states and some private concerns sued New York claiming the law constitutes “an attack on US energy producers that will be felt by consumers.” An interested phrase given that one could argue that tariffs on energy do exactly the same thing but a turn of the phrase for a different day.

The states who filed the action (close your eyes and stop reading and see if you can guess who …) via their Attorneys General against New York include Alabama, Arkansas, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and Wyoming. Others joining in the lawsuit include Alpha Metallurgical Resources Inc. (a coal supplier), the West Virginia Coal Association, the Gas and Oil Association of West Virginia and America’s Coal Association.

In their 76 page complaint, the plaintiffs accuse New York of attempting to “seize control over the makeup of America’s energy industry” by imposing over $75 Billion Dollars of sanctions on large fossil fuel producers in an effort to hold those that New York views as being responsible for material climate change impact in New York to task, and to specifically require that the funds that are collected as damages be used to rebuilding New York’s negatively impacted infrastructure.

The plaintiffs have claimed that New York has violated the US Constitution and the Clean Air Act because the law has gone too far in its applicability and breadth. The plaintiffs also argue that the law violates the domestic and foreign commerce clauses against companies located outside of New York as well as the due process clause and the equal protection clause – invoking what some might call, a veritable kitchen sink of constitutional claims.

Green Spouts: The New York Climate Change Superfund Act (the “Act”) is the second 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 Act makes any entity or successor company that engaged in the trade or business of fossil fuel extraction or refining crude oil between 1-1-2000 and 12-31-2018 strictly liable for its share of costs incurred by the State. The emitters are being held responsible for their respective portion of greenhouse gas emissions above the 1 billion metric tons noted above.

So far, only New York and Vermont have passed these types of “Polluter Pays” laws, noting that Massachusetts, California, New Jersey and Maryland are considering them. Whether this type of State Superfund strict liability law gets traction and passage by other states and whether these 22 State Attorneys General follow up with other lawsuits in an effort to blunt the impact of these laws, remains to be seen but it is surely a further evolution/development and one which bears watching, especially in light of the new Administration federally which will likely see the Federal government take a step back from its climate initiatives and by default will leave the leadership role for climate change initiatives in the hands of state and local government.

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

December 27, 2024December 27, 2024 by Brad A. Molotsky

New York passes second in the nation “Polluter Pays” Superfund Type Law – $75B Fund to be Created for infrastructure projects by attempting to hold Fossil Fuel Companies Strictly Liable for past actions.

As of December 27, 2024, New York becomes the second state in the US, after Vermont, to pass a version of a polluter pays climate change bill entitled the “Climate Change Superfund Act” (the “CCSA”).

The new law, which can be found at Article 76 – Climate Change Adaption Cost Recovery Program and requires the State Comptroller along with the Department of Taxation, to report, by January 2026, on the costs to residents and the State from greenhouse gas emissions that occurred between January 1, 2000, and December 31, 2018. This comprehensive assessment is intended to include impacts on agriculture, biodiversity, ecosystem services, education, finance, healthcare, manufacturing, housing, real estate, retail, tourism, transportation, and municipal and local government, using federal data to attribute emissions to specific greenhouse gas emitting fossil fuel companies. The fund to be raised from the CCSA is $75 Billion Dollars. These funds, when collected from the responsible parties, will be thereafter used to help fund climate change adaptive infrastructure projects.

The law recognizes that the amount that will be charged to the companies who have emitted greenhouse gases over the State standard “represents a small percentage of the extraordinary cost for New York State for repairing from and preparing for climate change-driven extreme events over the next 25 years.” The State found that the “largest one hundred fossil fuel producing companies are responsible for more than 70% of global greenhouse gas emissions since 1998.”

The CCSA law follows Vermont’s polluter-pays model, targeting companies involved in fossil fuel extraction, storage, production, refinement, transport, manufacture, distribution, sale and the use of fossil fuels or petroleum products extracted, produced, refined or sold that are linked to greenhouse gas emissions during the 2000 to 2018 specified period. Companies that have exceeded the 1 billion metric ton emissions 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 “climate change adaptive infrastructure” improvements such as roads and bridge upgrades, storm water management and drainage systems, coastal wetlands projects, making defensive upgrades to subways and transit systems, preparing for, and recovering from hurricanes and other extreme weather events, sewer treatment plant upgrades and retrofits and energy-efficient building enhancements.

The CCSA 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 CCSA is that the companies who have specifically contributed to greenhouse gas impacts are the ones required to fund necessary upgrades to existing or necessary climate change adaptive infrastructure and other “climate change adaptation projects” as defined under the CCSA. A State report due within 1 year 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 1-1-2000 through 12-31-2018. The State provided specific guidance under the CCSA regarding the conversion of coal (i.e., 942.5 Metric Tons of Carbon Dioxide released/1 Million pounds of coal used by such company), crude oil (i.e., 432,180 Metric Tons of carbon dioxide/1 Million barrels of crude oil used by such company) and natural gas (e.g., 53,440 Metric Tons of carbon dioxide/1 Million cubic feet of natural gas used by such company) used by the applicable companies into greenhouse gas emission numerics for purposes of measuring impact and, if applicable, calculating the overage above the 1 Billion Metric Ton standard set by the CCSA.

The CCSA also set forth certain mandatory prevailing wage and apprenticeship requirements for public entities utilizing funds from the climate fund to pay for climate change adaption projects. The CCSA also includes certain “labor harmony” requirements, certain “made in the US” requirements for various components of public entity projects, and also requires that the Comptroller and the Commissioner of Taxation keep the climate fund comprised of responsible party payments in a separate dedicated account that is NOT comingled with other funds of the State.

Within 1 year, the department is required to promulgate regulations and adopt methodologies to determine responsible parties and their share of applicable costs of covered greenhouse gas emissions and thereafter to issue notices of cost recovery demand amounts against the responsible parties.

Within 2 years, the department is required to complete a statewide climate change adaption master plan for guiding the dispersal of funds in a timely, efficient, and equitable manner to all regions of the State. The dispersal of funds will also take into account a stated goal of at least 35% of the expenditures being made to climate change adaptive infrastructure projects that benefit “disadvantaged communities”.

Green Spouts: The CCSA is the second 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 CCSA makes any entity or successor company that engaged in the trade or business of fossil fuel extraction or refining crude oil between 1-1-2000 and 12-31-2018 strictly liable for its share of costs incurred by the State. The emitters are being held responsible for their respective portion of greenhouse gas emissions above the 1 billion metric tons noted above. Interestingly, New York in joining Vermont are NOT alone here, as 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 a further evolution/development and one which bears watching, especially in light of the upcoming change in Administration federally which will likely see the Federal government take a step back from its climate initiatives and by default will leave the leadership role for climate change initiatives in the hands of state and local government.

Duane Morris has an active Sustainability and Risk Mitigation 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, Jeff Hamera, Jolie-Anne Ansley, Robert Montejo, or the attorney in the firm with whom you are regularly in contact.

July 2, 2024 by Brad A. Molotsky

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.