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Vermont just became the first state to try to make big oil pay for climate damages

A muddy fridge sits outside of a building
Abagael Giles
Vermont Public
A fridge removed from a basement apartment in Cambridge, photographed flood during cleanup on Wednesday, July 12.

Vermont has become the first state in the country to create a “Climate Superfund” after Republican Gov. Phil Scott allowed the major climate bill to become law without his signature.

Lawmakers hope the landmark policy will force the biggest fossil fuel companies in the world to compensate Vermont for damage wrought by climate change.

The policy earned tripartisan support in the Legislature this session, but Scott had previously raised concerns about Vermont being the first state to adopt this type of law, largely because big oil is expected to fight the policy in court. He was widely expected to veto the bill.

More from Vermont Public: Climate Superfund Act would make oil companies pay for climate damages in Vermont

Modeled after the federal superfund program, the law will empower Vermont’s Attorney General to pursue payment from companies like ExxonMobil Corporation and Shell for a share of what climate change has cost the state since 1995, based on how much their products contributed to the problem globally.

Importantly, the policy does not target businesses that distribute fossil fuels, like fuel dealers or gas stations. Instead, it goes after the biggest corporations that extract and refine fossil fuels.

Vermont will then use those funds to create a new program to finance recovery from climate change fueled disasters and adapt to the already changed climate.

California, New York, Massachusetts and Maryland are all considering similar bills, as is Congress, though it’s not clear if and when those policies will be successful.

Scott had previously signaled he would veto the Vermont bill because Superfund cases can be so complex and costly to litigate. It could be some time before Vermont successfully collects those damages.

In his message to lawmakers, Scott said he still holds those concerns.

“I’m deeply concerned about both the short- and long-term costs and outcomes…” he said. “I’m also fearful that if we fail in this legal challenge, it will set precedent and hamper other states’ ability to recover damages.”

However, he said, “I understand the desire to seek funding to mitigate the effects of climate change that has hurt our state in so many ways.”

Vermont Attorney General Charity Clark and Treasurer Michael Pieciak have endorsed the policy. Both offices will play major roles in pursuing damages in court and in compiling the tab for damages — something legal advocates have warned will need to be airtight to withstand scrutiny from legal teams at some of the biggest and most powerful corporate entities in the world.

Environmental advocates in the state applauded the passage of the law, as did Democratic and Progressive lawmakers.

“Without the Climate Superfund, the costs of climate change falls entirely on taxpayers — and that’s not fair,” said Lauren Hierl, of Vermont Conservation Voters, and also a Montpelier city councilor.

Rep. Martin Lalonde, a Democrat from South Burlington who chairs the House Judiciary Committee and is an attorney, said he believes lawmakers have written a policy that will stand up to legal scrutiny.

“I believe we have a solid legal case. Most importantly, the stakes are too high — and the costs too steep for Vermonters — to release corporations that caused the mess from their obligation to help clean it up,” he said.

More from Vermont Public: Vermont House passes Climate Superfund Act with tripartisan support

While many Republican lawmakers echoed Scott’s concerns during the session, several Republicans from districts heavily impacted by last summer’s historic floods, including those from Cambridge and Northfield, voted to support the bill.

Best estimates suggest that flooding cost Vermont north of $1 billion in property damages. Many communities and individuals are still recovering.

Climate scientists warn that this is precisely the sort of event Vermont will see more of as the climate warms.

During the legislative session, scientists at Dartmouth College testified to lawmakers that it’s scientifically feasible to attribute what role climate change played in making extreme weather events more frequent and intense, particularly for flooding.

Research from the University of Vermont has found that low-income households already disproportionately bear the brunt of the impact.

Meanwhile, extensive reporting has shown that fossil fuel companies knew about the role their products played in global warming decades ago. And some of the largest of those companies have reported record profits in recent years as they continue to expand their fossil fuel production.

In a statement Friday afternoon, the American Petroleum Institute, a trade group for the fossil fuel industry in the United States, condemned Vermont's passage of the law.

"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," said Scott Lauerman, an API spokesperson.

The state treasurer’s office and Agency of Natural Resources are due to report back to lawmakers next session about the process of establishing the fund and compiling Vermont’s receipt of climate damages.

More from Vermont Public: UVM study finds people impacted by extreme weather may be more willing to invest in climate policy

Starting in 2031, the state auditor will be tasked with evaluating the cost of the program to Vermonters every five years — a provision Scott and other Republicans say is essential.

The treasurer’s office has until January 2026 to finalize its estimate of what climate change has cost Vermont, and the Agency of Natural Resources will have until July 2025 to submit a plan for how Vermont ought to adapt to climate change.

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Updated: May 31, 2024 at 3:10 PM EDT
This story has been updated to include a statement from the American Petroleum Institute regarding the Climate Superfund Act.
Abagael is Vermont Public's climate and environment reporter, focusing on the energy transition and how the climate crisis is impacting Vermonters — and Vermont’s landscape.

Abagael joined Vermont Public in 2020. Previously, she was the assistant editor at Vermont Sports and Vermont Ski + Ride magazines. She covered dairy and agriculture for The Addison Independent and got her start covering land use, water and the Los Angeles Aqueduct for The Sheet: News, Views & Culture of the Eastern Sierra in Mammoth Lakes, Ca.