Vermont becomes the first U.S. state to pass a law requiring Big Oil to pay for climate damage

In a historic move, Vermont became the first U.S. state to pass a law that holds major fossil fuel companies financially liable for damages caused by climate change.

What the Climate Superfund Act does

S.259, the Climate Change Cost Recovery Act, or the Climate Superfund Act, aims to create a new financial mechanism to cover the costs of adapting and mitigating climate change, ensuring that polluters most responsible for greenhouse gas emissions pay their fair share. division.

Governor Phil Scott (R-VT) allowed the Climate Superfund Act to become law without his signature. He explained to legislators the reason why he did not sign the contract (via The audience in Vermont):

“I am deeply concerned about both short- and long-term costs and outcomes…” he said. “I am also concerned that if we fail to meet this legal challenge, it will set a precedent and make it more difficult for other countries to seek compensation.”

But he said: “I understand the desire to seek funding to mitigate the effects of climate change, which has harmed our state in many ways.”

The Climate Superfund Act allows Vermont to seek financial compensation from oil, gas and coal companies for damages caused by climate change. This includes repairing infrastructure damaged by extreme weather events, investing in renewable energy and supporting communities affected by climate disasters.

The concept of the new law is similar to the federal Superfund law, which requires companies responsible for hazardous waste sites to finance cleanup. Vermont has extended this rule to the broader issue of climate change, marking a significant shift in environmental policy.

Lauren Hierl, executive director of Vermont Conservation Voters and a Montpelier city councilor, said: “Without the Climate Superfund, the costs of climate change fall entirely on taxpayers – which is unfair. There is now a law requiring payment also from the corporations that caused the damage.”

During the state Legislature’s session, Dartmouth College scientists told lawmakers that it is scientifically possible to determine the degree to which climate change has contributed to the increased frequency and severity of extreme weather events, especially flooding.

Floods hit Vermont last summer, with losses estimated at more than $1 billion.

Big Oil Opposition to This Landmark Act

However, the Climate Superfund bill is expected to face significant legal challenges. The American Petroleum Institute (API), a leading lobbying group for Big Oil, has already indicated plans to challenge the law in court. Last week, API said in a letter of opposition to the Vermont Senate that the law…

…retroactively imposes costs and liability on prior actions that were lawful, violates equal protection and due process rights by holding companies accountable for the actions of the general public; and is regulated by federal law.

Despite the expected legal battles, the consequences of Vermont’s climate law could be far-reaching. If it withstands judicial scrutiny, it could inspire other states to adopt similar measures, creating a patchwork of climate liability laws at the state level. This could increase financial risks for fossil fuel companies and accelerate the transition to renewable energy as countries seek to more aggressively mitigate the effects of climate change.

Vermont’s Climate Superfund Act also sheds light on the critical role state governments can play in addressing climate change, especially if federal action is blocked. This bold move by Vermont demonstrates the potential of state-level initiatives to drive progress in the fight against climate change.

Beginning in 2031, the state auditor will be responsible for assessing the program’s financial impact on Vermonters every five years.

The treasurer’s office must complete estimates of the costs of climate change in Vermont by January 2026, and the Natural Resources Agency must submit an adaptation plan by July 2025.

Read more: Vermont just passed a 100% renewable energy mandate

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