Lawmakers reconsider climate superfund bill as wildfires and insurance crisis deepen

With fires raging across Los Angeles County and California's home insurance market potentially imploding in real time, some environmentalists are urging state lawmakers to bring back an idea that failed last year: a climate superfund law.

Modeled on the landmark 1980 federal law designed to fund hazardous waste clean-up, such a law would charge fossil fuel companies for damage for past emissions to fight future ones, pay for climate adaptation -- and potentially help homeowners who have lost their homes to fires.

"I can't get ahead of the lawmakers' announcement, but yes, we do expect a climate superfund bill to be coming soon this session," said Kassie Siegel, the director of the Climate Law Institute at the Center for Biological Diversity.

"Big Oil knew fossil fuels were contributing to climate change decades ago but engaged in a massive disinformation campaign to keep profiting from its pollution," said Food & Water Watch California Director Nicole Ghio in a news release on Monday. "Now, Los Angeles is paying in homes, communities and lives lost. Polluters, not taxpayers, should pay for the cost of these climate disasters and the rebuilding that will follow."

(Some of the fires have been started by arson, according to law enforcement officials and Los Angeles County District Attorney Nathan Hochman.)

Lawmakers in several other states have proposed similar laws. Two state legislatures, in New York and Vermont, signed climate superfund laws last year. Siegel said such a law would be distinct from pending lawsuits that seek to use public nuisance or other laws to hold fossil fuel companies liable for past emissions.

"It is simply requiring the payment of a fee to compensate the state for damage caused by fossil fuel products," Siegel said. "These companies sold massive amounts of oil, gas and coal, and that is what overwhelmingly has caused the climate crisis."

A climate superfund bill failed last year in the Legislature. SB 1497 by Sen. Caroline Menjivar, D-San Fernando Valley, would have empowered the California Environment Protection Agency to assess a fee against any "fossil fuel polluter" who did business in California between 2000 and 2020 and was determined to be responsible for more than a billion metric tons of "covered fossil fuel emissions."

Dubbed the Polluters Pay Climate Cost Recovery Act of 2024, it made it through two committees. But in May, SB 1497 stalled in the Senate Appropriations Committee, a fiscal committee where potentially costly legislation often goes to die. A spokeswoman for Menjivar, Celeste Jale, declined to comment on whether the office would bring back SB 1497.

"After these fires, we are looking at all options to address climate related catastrophic incidents," she said in an email.

The California Chamber of Commerce led the charge, adding the bill to its annual list of "job killer" legislation.

"Our primary issue is this would have ultimately led to sort of significant costs passed on to consumers," said Ben Golombek, executive vice president and chief of staff for policy at the chamber. "Particularly the point we were making last year was that people were struggling to pay their bills."

Golombek dismissed arguments that such a law could offset the rising insurance premiums and taxes Californians could see because of the recent fires. He added that there were massive difficulties with assessing how much particular companies emitted in the past, let alone establishing a "plausible connection" with recent disasters.

"I don't see 100-mile-an-hour winds coming off the coast necessarily has something to do with somebody operating a gas well in Los Angeles many years ago," Golombek.

He also said that many attorneys believe such a law would be unconstitutional, but that was "not the primary argument" against SB 1497.

Siegel countered that the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) -- the actual name of the superfund law -- has been repeatedly upheld by courts, including the retroactivity portions. This is one of the main reasons it has been held up as an example of how to fund climate change adaptation and emissions reductions, she said.

Rachel Rothschild is an assistant professor at the University of Michigan Law School who has provided testimony to lawmakers in California and other states about how to implement climate superfund laws. She said bills are written to withstand "inevitable" legal challenges alleging constitutional violations around preemption, due process and the dormant commerce clause.

She said it was important to remember that these laws are "not an attempt to regulate emissions from power plants or cars," which would require a federal waiver.

"The Clean Air Act also has several provisions that are very explicit about states pertaining to the authority to control pollution and impose liability schemes," Rothschild said.

Federal law also gives states leeway to impose "more stringent liability schemes" than the federal government. States also have a good deal of discretion about how to spend the money raised under such a law. This could include compensation for underinsured wildfire survivors, depending "on how California wants to write the laws," she said.

A preview of the legal challenges a California law could face is now playing out in a federal court in Vermont.

"Vermont's legislature has enacted an unprecedented law, becoming the first State in American history to attempt to impose strict liability on companies based in other States for their purported shares of global greenhouse gas emissions," wrote Matthew B. Byrne, a shareholder with Gravel & Shea PC in Burlington, Vermont, in the complaint. Chamber of Commerce of the United States of America et al v. Moore, 2:24-cv-01513-mkl (D. Vermont, filed Dec. 30, 2024).

The named defendant is Vermont Agency of Natural Resources Secretary Julie Moore. Vermont, which has suffered a series of devastating floods, also has a pending lawsuit against fossil fuel companies, claiming they contributed to the damage its residents have suffered. State of Vermont v. Exxon Mobile Corp., 21-CV-02778 (Vermont Super. Ct., filed Sept. 14, 2021).

"Structurally, California's SB 1497 as proposed was very similar to Vermont's recently passed legislation," Martin Lockman, a climate law fellow with the Sabin Center for Climate Change Law at the Columbia Law School, responded in an email.

He said Vermont's law took "a different approach than New York, Maryland and Massachusetts in calculating and attributing damage." The state focused on "cost recovery demands" for the actual damages suffered by the state and its residents, Lockman said.

"If the bill had passed, California's Environmental Protection Agency would be tasked with setting criteria for what kinds of projects, programs and costs would qualify," Lockman said. "It's not 100% clear what would have been included, but it's very likely that this bill would have paid for wildfire response, recovery and prevention efforts."