Vermont becomes first state to require oil companies to pay for climate change damage

Vermont will become the first state in the nation to require oil companies to pay for the impacts of climate change after the state’s GOP governor, Phil Scott, allowed a new bill to become law without his signature.

The state’s Climate Superfund Act is modeled on federal Superfund law and seeks to assess financial penalties for emissions generated between 1995 and 2024, which could total billions of dollars.

The bill passed the state House in a 94-38 vote May 7, a margin just shy of a supermajority. In an earlier procedural vote, it received a veto-proof 100 votes, suggesting the Legislature had the votes to override a veto from Scott’s office.

The Climate Superfund Act is the first of several similar state bills to become law. The New York state Senate passed its own legislation earlier this month, but earlier this week New York Assembly Speaker Carl Heastie (D) was leery of the measure, telling reporters he believed it would hurt utility customers.

“I’ve never in my life seen corporations choose the ratepayer over the stockholder,” Heastie told reporters Thursday, according to WXXI. “Asking these companies to pay more, it’s going to be, of course, taken out on the ratepayer.”

In a statement accompanying his decision to allow the bill to become law, Scott expressed concerns about the logistics of proceeding with the law alone, noting Vermont’s low population and gross domestic product relative to states such as New York and California.

He also suggested that the law, which appropriates $600,000 to conduct an analysis of how the program will work and be defended in court, is “not positioning [us] for success.”

However, he wrote, “I understand the desire to seek funding to mitigate the effects of climate change that has hurt our state in so many ways. I also note Attorney General [Charity] Clark and Treasurer [Mike] Pieciak have endorsed this policy and committed to the work it will require. I’m also comforted by the fact that the Agency of Natural Resources is required to report back to the Legislature in January 2025 on the feasibility of this effort, so we can reassess our go-it-alone approach.”

Vermont saw catastrophic flooding last summer, with rainfall in excess of 9 inches in parts of the state. Climate change is associated with more intense weather events and phenomena and has been particularly impactful in regions ill-prepared for those effects, such as an extreme cold snap in Texas in 2021 or record heat in parts of the Pacific Northwest, where air conditioning is not commonplace.

A spokesperson for the American Petroleum Institute, the primary oil and gas trade group, blasted the decision in a statement.

“This punitive new fee represents yet another step in a coordinated campaign to undermine America’s energy advantage and the economic and national security benefits it provides,” the group wrote. “Rather than work collaboratively with the industry to further our shared goal for a lower carbon future, state lawmakers opted to pass a bill designed by activists to further their own interests.”