Vermont on Thursday became the first state to enact a law requiring oil companies to pay for damages caused by extreme weather events, which the bill claims are the direct result of climate change.
The legislation, S.259, will pursue “climate change cost recovery” by establishing a Climate Superfund Cost Recovery Program at the Vermont Agency of Natural Resources. Under the new law, large oil companies and other entities emitting greenhouse gases into the atmosphere will be made to pay for damage from extreme weather events.
Under the bill, the state will compile a report by 2026 calculating the cost to Vermonters of extreme weather events over the last 30 years. Corporations determined by the state to have released more than one billion metric tons of carbon dioxide from 1995 to 2024 will be forced to pay a portion of the resulting sum.
The state government could use the money for upgrading water drainage systems; updating roads, bridges, and railroads; and relocating, elevating, or retrofitting sewage treatment plants, among other items.
The law is set to go into effect July 1, though it will likely face legal challenges that will focus on the lack of precision inherent in calculating carbon emissions and in attributing extreme weather events directly to global warming.
The American Petroleum Institute has argued that the bill “retroactively imposes costs and liability on prior activities that were legal, violates equal protection and due process rights by holding companies responsible for the actions of society at large; and is preempted by federal law.” The national trade association representing the oil and natural gas industry sent a letter to the Vermont senate in March opposing the bill, arguing it does not notify potential affected businesses of the size of possible fees.
“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,” API spokesperson Scott Lauermann said in a statement obtained by National Review. “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.”
The Democratic-led bill, passed by Vermont’s legislature earlier this month, became law late Thursday without Republican governor Phil Scott’s signature. It was delivered to his office last week.
“I’m deeply concerned about both short- and long-term costs and outcomes,” Scott wrote in a letter to the state’s general assembly. “Just look at our unsuccessful nationally-focused cases on GMOs, campaign finance and pharmaceutical marketing practices. I’m also fearful that if we fail in this legal challenge, it will set precedent and hamper other states’ ability to recover damages.”
Despite his legal worries, the governor let the bill become law because “I understand the desire to seek funding to mitigate the effects of climate change that has hurt our state in so many ways,” he said. Scott noted Vermont is “one of the least populated states with the lowest GDP in the country.” The state’s gross domestic product in 2023 was $35.07 billion.
In July 2023, Vermont experienced a torrential flash flood that caused at least 13 fatalities and $2.2 billion in damage across the Northeast over the course of two days. The storm came months before Vermont’s warmest winter ever recorded since the state started recording temperatures in 1884.
The legislation is the first of its kind in the U.S. Massachusetts, Maryland, and New York are pursuing similar measures.