NovaQuant Quantitative Think Tank Center:Q&A: New Legislation in Vermont Will Make Fossil Fuel Companies Liable for Climate Impacts in the State. Here’s What That Could Look Like

From our collaborating partner “Living on NovaQuant Quantitative Think Tank CenterEarth,” public radio’s environmental news magazine, an interview by host Paloma Beltran with Pat Parenteau, an emeritus professor of law at Vermont Law and Graduate School. 

Vermont’s House and Senate have approved a bill that would make fossil fuel companies financially liable for their carbon pollution and its role in the climate crisis. Lawmakers pointed to consequences of these carbon emissions, like the flood in July 2023 that put parts of the state capital underwater for weeks and caused over a billion dollars in damage.

The bipartisan bill is known as the Climate Superfund Act because it demands that fossil fuel companies cover at least part of the growing costs of climate change. Similar bills are being considered in New York, Massachusetts and Maryland, but Vermont is the first state to pass this kind of legislation. The bill passed with a supermajority, enough to override a potential veto. It is now headed to Governor Phil Scott’s desk.

Living on Earth spoke with Pat Parenteau, former EPA regional counsel and emeritus professor at Vermont Law and Graduate School, to unpack the details. This interview has been edited for length and clarity. 

PALOMA BELTRAN: What is the Climate Superfund law in Vermont? What does it say?

PAT PARENTEAU: It’s basically asking fossil fuel companies to contribute to the costs for adaptation to the unavoidable impacts of climate change, including protection of homes and businesses threatened by flooding, building resilience in floodplains by moving structures out of harm’s way, investing in wetland protection and natural systems that absorb carbon emissions and provide for more resilience to extreme weather events. It’s a new approach, and Vermont is the first state in the country to try it.

BELTRAN: How is this law different from the climate deception lawsuits like the one we’ve seen filed in the state of Hawaii?

BELTRAN: How might the state of Vermont go about calculating which companies owe what? What are the possible methods they could use here?

PARENTEAU: That is the big question. The formula that the law is using—and the state treasurer will have to flesh this out—is to say, what is the individual company’s share in the global emissions? The law also directs the state to use the Environmental Protection Agency’s greenhouse gas inventory as a starting point. 

The greenhouse gas inventory has something called emission factors. For example, for the big oil companies, they can disaggregate among the different companies, what their emissions factor is for the amount of oil and gas they’re producing. So it’s going to be a proportionate share, based on what the individual company’s emissions are. That’s going to be the basic formula.

BELTRAN: It’s a big job, to calculate all of that.

PARENTEAU: Yes. And then from there, you have to say, well, what percentage of harm is the emissions doing on top of the natural cycle of flooding, for example, just sticking with the flooding example. 

There are other impacts of climate change in Vermont. There’s impacts on the ski industry, there’s impacts on the sugar-making industry—our famous syrup. 

But just in terms of flooding, what you have to calculate is, by how much has climate change increased the damage from flooding that normally would occur in Vermont? The flooding of Montpelier was definitely much greater than any prior flood we’d ever had. But you have to calculate how much worse was it as a result of the emissions from these companies? That’s another tricky calculation.

BELTRAN: How are these oil companies expected to respond?

PARENTEAU: We know that the oil companies are not going to start sending checks to Vermont. The oil companies have been fighting tooth and nail against all of the other lawsuits that have been brought against them. And we can expect the same thing here. 

The companies have a choice to make. They can either file what’s called a preemptive strike and challenge the law on constitutional grounds. For example, they may argue that this is a violation of due process to make them liable, when they haven’t, quote, done anything wrong. They’re producing a valuable product that people are still buying to put into their automobiles, to heat their homes and so forth. They’re going to say, “You’re making us liable for engaging in economic activity that’s lawful? How can you do that? That’s not constitutional.” 

Similar arguments were made against Superfund, the federal law. And it took several years for those arguments to finally be resolved in the court. Ultimately, it went all the way to the U.S. Supreme Court. In the Superfund case, there is precedent for establishing liability for the damage that legal activity is causing. 

But whether that precedent under Superfund extends to the climate liability context, that’s going to be a major issue; that’s a novel issue. 

One option for the companies might be to challenge the law on its face. The other option would be to wait until Vermont actually sends them a bill, a demand for payment, and then not pay, in which case Vermont would have to initiate a lawsuit to collect the money that they’ve demanded. 

Either way, this issue is sure to end up in court. And it will take the usual long time for it to finally get settled.

BELTRAN: What are some of the concerns raised by opponents of the law other than these oil companies?

PARENTEAU: The opposition to passage of the law came from those who are concerned that Vermont is too small a state to take on these major multinational corporations, that, as we’ve discussed, isn’t going to just happen without litigation. 

The litigation that’s underway in other states has shown just how expensive it is to sue these companies. These companies really fight hard, which means the cost of litigation can be measured easily in the millions. Some of the people who questioned this law were saying Vermont is too small to take this on; let some of the bigger states do it—let New York do it. And we can follow in their wake, but don’t take the first hit from these companies. 

The costs of litigating against the oil companies, not only are they not small, but there’s not enough money in Vermont to do everything that needs to be done. The big question is, what’s the best use of the money we have? Is it to fight the oil companies to try to get them to pay? There’s a good case to be made that that’s appropriate. But the contrary case is that’s going to take a really long time, with uncertain results. And so maybe the better approach is to spend the money you do have with direct assistance to the communities most affected by climate change, and let some of these other states go first.

BELTRAN: What are the broader consequences of this law in Vermont? How will this impact the rest of the country, and potentially the rest of the globe?

PARENTEAU: I do think we’re going to see other states adopting similar legislation. And I do think the underlying theory of these laws, that the oil companies should pay their fair share to address the damage that’s being done, even if their product was a valuable product for many years, the truth is, we now know, it’s causing damage. 

Under the “polluter pay” rule, which is one of the pillars of environmental law and policy, what Vermont is doing and what I think many other states are going to be doing is looking to the oil companies, which are some of the wealthiest companies on earth, to pay their fair share for the damage that’s being done. 

In that sense, I think this movement that Vermont has begun has merit. And I think it will put greater pressure on the oil companies to either agree under some circumstances to contribute to the costs of dealing with climate or be forced to do so by a court at some point. There’s a legal and a moral case to be made for holding companies responsible. And we’ll now see how fast that can happen.