Senate Bill 702, known as the "Climate Resiliency Fund Act," establishes a framework for climate change adaptation projects in Tennessee by creating a new chapter in the Tennessee Code Annotated, specifically Title 68. This chapter includes definitions for key terms such as "climate change adaptation project" and "climate resiliency fund program." The bill mandates the creation of a climate resiliency fund, administered by the Department of Environment and Conservation, which will collect compensatory payments from responsible parties—entities significantly contributing to greenhouse gas emissions. The fund will be utilized exclusively for climate adaptation projects and related administrative expenses, drawing from cost recovery payments, appropriations from the General Assembly, and donations.

The legislation imposes strict liability on responsible parties, requiring them to pay a cost recovery demand based on their emissions, with options for installment payments. The Department of Environment and Conservation is responsible for developing a strategy to identify and prioritize climate adaptation projects and must report on the program's feasibility and progress by January 15, 2026. Additionally, the bill outlines requirements for the Department to adopt rules for identifying responsible parties and developing a resilience implementation strategy. An audit of the climate resiliency fund program will be conducted by the comptroller of the treasury starting January 1, 2031, with assessments of costs associated with greenhouse gas emissions required by January 15, 2027.