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No. 122. An act relating to climate change cost recovery.
(S.259)
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. SHORT TITLE
This act may be cited as the “Climate Superfund Act.”
Sec. 2. 10 V.S.A. chapter 24A is added to read:
CHAPTER 24A. CLIMATE SUPERFUND COST RECOVERY PROGRAM
§ 596. DEFINITIONS
As used in this chapter:
(1) “Agency” means the Agency of Natural Resources.
(2) “Climate change adaptation project” means a project designed to
respond to, avoid, moderate, repair, or adapt to negative impacts caused by
climate change and to assist human and natural communities, households, and businesses in preparing for future climate-change-driven disruptions. Climate change adaptation projects include implementing nature-based solutions and flood protections; home buyouts; upgrading stormwater drainage systems;
making defensive upgrades to roads, bridges, railroads, and transit systems;
preparing for and recovering from extreme weather events; undertaking preventive health care programs and providing medical care to treat illness or
injury caused by the effects of climate change; relocating, elevating, or retrofitting sewage treatment plants and other infrastructure vulnerable to
flooding; installing energy efficient cooling systems and other weatherization VT LEG #377631 v.1
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and energy efficiency upgrades and retrofits in public and private buildings,
including schools and public housing, designed to reduce the public health effects of more frequent heat waves and forest fire smoke; upgrading parts of
the electrical grid to increase stability and resilience, including supporting the creation of self-sufficient microgrids; and responding to toxic algae blooms,
loss of agricultural topsoil, crop loss, and other climate-driven ecosystem threats to forests, farms, fisheries, and food systems.
(3) “Climate Superfund Cost Recovery Program” means the program established by this chapter.
(4) “Coal” means bituminous coal, anthracite coal, and lignite.
(5)(A) “Controlled group” means two or more entities treated as a single employer under:
(i) 26 U.S.C. § 52(a) or (b), without regard to 26 U.S.C.
§ 1563(b)(2)(C); or
(ii) 26 U.S.C. § 414(m) or (o).
(B) For purposes of this chapter, entities in a controlled group are treated as a single entity for purposes of meeting the definition of responsible party and are jointly and severally liable for payment of any cost recovery demand owed by any entity in the controlled group.
(6) “Cost recovery demand” means a charge asserted against a responsible party for cost recovery payments under the Program for payment to
the Fund.
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(7) “Covered greenhouse gas emissions” means the total quantity of
greenhouse gases released into the atmosphere during the covered period,
expressed in metric tons of carbon dioxide equivalent, resulting from the use of
fossil fuels extracted or refined by an entity.
(8) “Covered period” means the period that began on January 1, 1995
and ended on December 31, 2024.
(9) “Crude oil” means oil or petroleum of any kind and in any form,
including bitumen, oil sands, heavy oil, conventional and unconventional oil,
shale oil, natural gas liquids, condensates, and related fossil fuels.
(10) “Entity” means any individual, trustee, agent, partnership,
association, corporation, company, municipality, political subdivision, or other legal organization, including a foreign nation, that holds or held an ownership interest in a fossil fuel business during the covered period.
(11) “Environmental justice focus population” has the same meaning as
in 3 V.S.A. § 6002.
(12) “Fossil fuel” means coal, petroleum products, and fuel gases.
(13) “Fossil fuel business” means a business engaging in the extraction of fossil fuels or the refining of petroleum products.
(14) “Fuel gases” or “fuel gas” means:
(A) methane;
(B) natural gas;
(C) liquified natural gas; and VT LEG #377631 v.1
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(D) manufactured fuel gases.
(15) “Fund” means the Climate Superfund Cost Recovery Program Fund established pursuant to section 599 of this title.
(16) “Greenhouse gas” has the same meaning as in section 552 of this title.
(17) “Nature-based solutions” means projects that utilize or mimic nature or natural processes and functions and that may also offer environmental, economic, and social benefits while increasing resilience.
Nature-based solutions include both green and natural infrastructure.
(18) “Notice of cost recovery demand” means the written communication from the Agency informing a responsible party of the amount of the cost recovery demand payable to the Fund.
(19) “Petroleum product” means any product refined or re-refined from:
(A) synthetic or crude oil; or
(B) crude oil extracted from natural gas liquids or other sources.
(20) “Program” means the Climate Superfund Cost Recovery Program established under this chapter.
(21) “Qualifying expenditure” means an authorized payment from the Fund to pay reasonable expenses associated with the administration of the Fund and the Program and to pay for a climate change adaptation project,
including its operation, monitoring, and maintenance.
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(22) “Responsible party” means any entity or a successor in interest to
an entity that during any part of the covered period was engaged in the trade or
business of extracting fossil fuel or refining crude oil and is determined by the Agency attributable to for more than one billion metric tons of covered greenhouse gas emissions during the covered period. The term responsible party does not include any person who lacks sufficient connection with the State to satisfy the nexus requirements of the U.S. Constitution.
(23) “Strategy” means the Resilience Implementation Strategy adopted by the Agency.
§ 597. THE CLIMATE SUPERFUND COST RECOVERY PROGRAM
There is hereby established the Climate Superfund Cost Recovery Program administered by the Climate Action Office of the Agency of Natural Resources. The purposes of the Program shall be all of the following:
(1) to secure compensatory payments from responsible parties based on
a standard of strict liability to provide a source of revenue for climate change adaptation projects within the State;
(2) to determine proportional liability of responsible parties;
(3) to impose cost recovery demands on responsible parties and issue notices of cost recovery demands;
(4) to accept and collect payment from responsible parties;
(5) to develop, adopt, implement, and update the Strategy that will identify and prioritize climate change adaptation projects; and VT LEG #377631 v.1
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(6) to disperse funds to implement climate change adaptation projects identified in the Strategy.
§ 598. LIABILITY OF RESPONSIBLE PARTIES
(a)(1) A responsible party shall be strictly liable for a share of the costs of
climate change adaptation projects and all qualifying expenditures supported by the Fund.
(2) For purposes of this section, entities in a controlled group:
(A) shall be treated by the Agency as a single entity for the purposes of identifying responsible parties; and
(B) are jointly and severally liable for payment of any cost recovery demand owed by any entity in the controlled group.
(b) With respect to each responsible party, the cost recovery demand shall be equal to an amount that bears the same ratio to the cost to the State of
Vermont and its residents, as calculated by the State Treasurer pursuant to
section 599c of this title, from the emission of covered greenhouse gases during the covered period as the responsible party’s applicable share of
covered greenhouse gas emissions bears to the aggregate applicable shares of
covered greenhouse gas emissions resulting from the use of fossil fuels extracted or refined during the covered period.
(c) If a responsible party owns a minority interest of 10 percent or more in
another entity, the responsible party’s applicable share of covered greenhouse gas emissions shall be increased by the applicable share of covered greenhouse VT LEG #377631 v.1
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gas emissions for the entity in which the responsible party holds a minority interest multiplied by the percentage of the minority interest held by the responsible party.
(d) The Agency shall use the U.S. Environmental Protection Agency’s Emissions Factors for Greenhouse Gas Inventories as applied to the fossil fuel volume data for the purpose of determining the amount of covered greenhouse gas emissions attributable to any entity from the fossil fuels attributable to the entity.
(e) The Agency may adjust the cost recovery demand amount of a responsible party who refined petroleum products or who is a successor in
interest to an entity that refines petroleum products if the responsible party establishes to the satisfaction of the Agency that:
(1) a portion of the cost recovery demand amount was attributable to the refining of crude oil extracted by another responsible party; and
(2) the crude oil extracted by the other entity was accounted for when the Agency determined the cost recovery demand amount for the other entity or a successor in interest of the other entity.
(f) The Agency shall issue the cost recovery demands required under this section not later than six months following the adoption of the rules required under subdivision 599a(b)(2) of this title.
(g)(1) Except as provided in subdivision (2) of this subsection, a responsible party shall pay the cost recovery demand amount in full not later VT LEG #377631 v.1
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than six months following the Secretary’s issuance of the cost recovery demand.
(2)(A) A responsible party may elect to pay the cost recovery demand amount in nine annual installments in accordance with this subdivision (2).
(B) The first installment shall be paid not later than six months following the Secretary’s issuance of the cost recovery demand and shall be
equal to 20 percent of the total cost recovery demand amount.
(C) Each subsequent installment shall be paid one year from the initial payment each subsequent year and shall be equal to 10 percent of the total cost recovery demand amount. The Secretary may charge reasonable interest on each installment payment or a payment delayed for any other reason and, at the Secretary’s discretion, may adjust the amount of a subsequent installment payment or a payment delayed for any other reason to reflect increases or decreases in the Consumer Price Index.
(D)(i) The unpaid balance of all remaining installments shall become due immediately if:
(I) the responsible party fails to pay any installment in a timely manner, as specified in Agency rules;
(II) except as provided in subdivision (ii) of this subdivision
(g)(2)(D), there is a liquidation or sale of substantially all the assets of the responsible party; or
(III) the responsible party ceases to do business.
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(ii) In the case of a sale of substantially all the assets of a responsible party, the remaining installments shall not become due immediately if the buyer enters into an agreement with the Agency under which the buyer assumes liability for the remaining installments due under this subdivision (2) in the same manner as if the buyer were the responsible party.
(h) The Agency shall deposit cost recovery payments collected under this chapter to the Climate Superfund Cost Recovery Program Fund established under section 599 of this title.
(i) A responsible party aggrieved by the issuance of a notice of cost recovery demand shall exhaust administrative remedies by filing a request for reconsideration with the Secretary within 30 days following issuance of the notice of cost recovery demand. A request for reconsideration shall state the grounds for the request and include supporting documentation. The Secretary shall notify the responsible party of the final decision by issuing a subsequent notice of cost recovery demand. A responsible party aggrieved by the issuance of a final notice of cost recovery demand may bring an action pursuant to Rule
74 of the Vermont Rules of Civil Procedure in the Civil Division of the Superior Court of Washington County.
(j) Nothing in this section shall be construed to supersede or diminish in
any way any other remedies available to a person, as that term is defined in 1
V.S.A. § 128, at common law or under statute.
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§ 599. CLIMATE SUPERFUND COST RECOVERY PROGRAM FUND
(a) There is created the Climate Superfund Cost Recovery Program Fund to
be administered by the Secretary of Natural Resources to provide funding for climate change adaptation projects in the State. The Fund shall consist of:
(1) cost recovery payments distributed to the Fund under section 598 of this title;
(2) monies from time to time appropriated to the Fund by the General Assembly; and
(3) other gifts, donations, or other monies received from any source,
public or private, dedicated for deposit into the Fund and approved by the Secretary of Administration.
(b) The Fund may be used only:
(1) to pay:
(A) qualified expenditures for climate change adaptation projects identified by the Agency in the Strategy; and
(B) reasonable administrative expenses of the Program, including the cost to the State Auditor associated with hiring technical expertise necessary to
complete the audits required under section 599b of this title;
(2) to implement climate adaptation action identified in the State Hazard Mitigation Plan; and
(3) to implement the Community Resilience and Disaster Mitigation Grant Program established pursuant to 20 V.S.A. §§ 48 and 49.
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(c) Notwithstanding any contrary provisions of 32 V.S.A. chapter 7,
subchapter 5, unexpended balances and interest earned by the Fund shall be
retained in the Fund from year to year.
§ 599a. REPORTS; RULEMAKING
(a) On or before January 15, 2025, the Agency, in consultation with the State Treasurer, shall submit a report to the General Assembly detailing the feasibility and progress of carrying out the requirements of this chapter,
including any recommendations for improving the administration of the Program.
(b) The Agency shall adopt rules necessary to implement the requirements of this chapter, including:
(1) adopting methodologies using available science and publicly available data to identify responsible parties and determine their applicable share of covered greenhouse gas emissions;
(2) requirements for registering entities that are responsible parties and issuing notices of cost recovery demands under the Program; and
(3) the Resilience Implementation Strategy, which shall include:
(A) practices utilizing nature-based solutions intended to stabilize floodplains, riparian zones, lake shoreland, wetlands, and similar lands;
(B) practices to adapt infrastructure to the impacts of climate change;
(C) practices needed to build out early warning mechanisms and support fast, effective response to climate-related threats;
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(D) practices that support economic and environmental sustainability in the face of changing climate conditions; and
(E) criteria and procedures for prioritizing climate change adaptation projects eligible to receive monies from the Climate Superfund Cost Recovery Program.
(c) In adopting the Strategy, the Agency shall:
(1) consult with the Environmental Justice Advisory Council;
(2) in consultation with other State agencies and departments, including the Department of Public Safety’s Division of Vermont Emergency Management, assess the adaptation needs and vulnerabilities of various areas vital to the State’s economy, normal functioning, and the health and well-being of Vermonters;
(3) identify major potential, proposed, and ongoing climate change adaptation projects throughout the State;
(4) identify opportunities for alignment with existing federal, State,
and local funding streams;
(5) consult with stakeholders, including local governments, businesses,
environmental advocates, relevant subject area experts, and representatives of
environmental justice focus populations;
(6) consider components of the Vermont Climate Action Plan required under section 592 of this title that are related to adaptation or resilience, as defined in section 590 of this title; and VT LEG #377631 v.1
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(7) conduct public engagement in areas and communities that have the most significant exposure to the impacts of climate change, including disadvantaged, low-income, and rural communities and areas.
(d) Nothing in this section shall be construed to limit the existing authority of a State agency, department, or entity to regulate greenhouse gas emissions or establish strategies or adopt rules to mitigate climate risk a