Vermont becomes first state to make fossil fuel companies pay for climate change

Vermont has just passed a groundbreaking new law to deal with the effects of climate change — by going after the organizations it holds responsible. Legislators in the Green Mountain State recently passed a climate action bill that will seek financial compensation from oil companies that emit large quantities of fossil fuels. 

The bill, Vermont S.259, is commonly being called the "Climate Superfund Act," and was enacted by both chambers of the state legislature. Gov. Phil Scott (R) allowed it to pass by his desk without a signature nor a veto, meaning that the bill will automatically take effect. Scott did not seem too keen on the idea of the bill, seemingly brushing it off as too difficult a task. However, in a note to Vermont's Senate secretary, he wrote that he "[understands] the desire to seek funding to mitigate the effects of climate change that has hurt our state in so many ways," especially given that Vermont dealt with deadly, climate-caused flooding last year.

What are the details of the law?  

S.259 will allow Vermont to "bill fossil fuel companies retroactively for the costs of addressing, avoiding and adapting to the damages that the emissions from their products have caused" between 1995 and 2024, said Heatmap News. But this is a multistep process. First, the Vermont treasurer must assess the total cost of these emissions to determine how much the state is owed. 

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The state will identify responsible companies by "focusing only on the biggest emitters, companies whose products generated at least a billion tons of emissions during that time," Heatmap said. Once the money is in hand, Vermont will put it toward "implementing a state 'resilience and implementation strategy.'" The outlet reported that Vermont is hoping to have money flowing into the state by 2028, though the timeline remains unclear. 

Why is the bill controversial?

On the lawmaker side, some, including Gov. Scott, seem to think that while the law may be necessary, Vermont is going to war with an oil-company behemoth it cannot manage. "Taking on 'Big Oil' should not be taken lightly," said Scott in his note to the secretary. Vermont is "not positioning ourselves for success" because it only has $600,000 in funds appropriated toward fighting these companies, said Scott. 

There are "short- and long-term costs and outcomes," said Scott. The governor pointed to the "unsuccessful nationally focused cases on GMOs, campaign finance and pharmaceutical marketing practices," adding that if Vermont "[fails] in this legal challenge, it will set precedent and hamper other states' ability to recover damages."

Oil industry lobbyists were unsurprisingly also angered by the law. The bill "places an unfair burden on domestic companies," the American Petroleum Institute said in a letter to the Vermont House Judiciary and Environment and Energy Committees in April. The law is "bad public policy and may be unconstitutional" and "does not provide potentially impacted parties with notice as to the magnitude of potential fees."

But while some were concerned about the reach of the Superfund Act, environmental activists have hailed it as a victory. There is not a "city, state or nation on Earth that can hide from the effects of the climate crisis, so while we may be the first place to pass a law like this, we certainly shouldn't be the last," Ben Edgerly Walsh, the climate and energy program director of the Vermont Public Interest Research Group, said in a statement to The New York Times. Big Oil "has destroyed our planet for short-term profits," Sen. Bernie Sanders (I-Vt.) said on X. These companies "must pay for the damage they've wrought."

Could other states follow suit? 

Some are already trying to. The New York State Senate passed a similar bill in May that would "make the most prolific oil and gas producers that have business ties to New York pay $3 billion a year for the next 25 years," said City Limits. The bill had already passed in 2023 but was not included in the state's yearly budget; this time around, activists are hoping for a different outcome. 

Climate superfund bills have also been introduced in California, Massachusetts and Maryland. A federal climate superfund act was proposed by Sanders and other senators in 2021, but it did not come to fruition.