Introduction
On a summer day in July 2023, the skies over Vermont turned apocalyptic. A massive thunderstorm dumped two months of rainfall over the state in about twenty four hours, leading to flash floods that washed away roads, bridges, and homes.
The capital city’s water system failed,
thousands of people lost their homes and businesses,
hundreds of citizens required rescue,
and the state narrowly avoided a dam breach that would have closed multiple evacuation routes and threatened severe damage and loss of life.
As it was, the recovery process took many months and cost hundreds of millions of dollars, with devastating effects on families and businesses.
One woman and her two children lived without walls or floors for months in the aftermath of the flood; despite spending $40,000 from her savings to try to rebuild their farmhouse, she and her children feared they could not salvage the property and would lose their home.
While the federal government provided a considerable amount of funding to assist with the recovery, Vermont was on the hook for $153 million—an enormous sum for one of the smallest states in the nation to rebuild from a single storm.
In each of the following two years, on almost exactly the same day, Vermont experienced another episode of catastrophic flash flooding.
The total amount of damage from these extreme weather events has now exceeded $1 billion.
The effects of climate change no longer await Americans in a future world that we might still avoid.
They have arrived in cities and states across the country just like Vermont.
Since the 1970s, U.S. temperatures have risen about two degrees Fahrenheit, resulting in more frequent episodes of severe precipitation, poorer air quality, and greater risk of insect-borne diseases.
Warming in the United States is happening about 60% faster than the rest of the globe, leaving the country more susceptible than other parts of the world to particular climate effects.
Even under the most ambitious plans for rapidly reducing greenhouse gas emissions, we cannot avoid some harms from climate change because of warming from past emissions.
These effects include more extreme weather events, sea-level rise, coastal erosion, and floods.
The reelection of President Donald Trump to a second term has only increased the need for Americans to adapt to climate change. The Trump Administration is ending even modest steps to limit greenhouse gas emissions domestically, rolling back climate regulations for power plants and motor vehicles.
The President has also begun the process of withdrawing from the Paris Climate Accords, as he did in his first administration,
even though the United States is the largest historical emitter of greenhouse gases and remains the largest emitter per capita.
The timing of these setbacks in reducing greenhouse gas emissions could not be worse. The United States was already facing a narrow window to avoid serious effects from climate change.
Even if a new president tries to restart the process of regulating greenhouse gas emissions in 2028, the federal government likely would not be able to implement meaningful federal emissions controls until well into the 2030s because of the plodding nature of the federal regulatory process and lengthy judicial review.
The absence of U.S. leadership on climate reductions may make it difficult to ensure that other countries fulfill their commitments to reduce greenhouse gases.
All of this indicates that we are headed to a place where a warming world will upend the lives of Americans.
Adapting to climate harms will not only require profound changes to our day-to-day experiences—they will cost money. As one example, climate change is intensifying storms, leading to more and more episodes of flash flooding just like Vermont experienced in 2023.
The National Oceanic and Atmospheric Administration (NOAA) estimates that approximately one third of flood damage between 1995 and 2023 is attributable to climate change, totaling about $84 billion in 2023 alone.
Yet flooding is only one of many harmful environmental and public health effects that will demand significant financial resources in the coming years. Climate change will also exacerbate numerous other natural disasters, such as wildfires, hurricanes, and heat waves, in addition to the more gradual harms such as sea-level rise, water scarcity, and crop losses.
Who will pay for the costs of responding to these disasters and environmental changes?
At present, taxpayers will be solely responsible for shouldering the severe financial burden of climate adaptation even though present and future populations have had a limited role in causing our predicament.
This inequitable distribution of climate adaptation costs represents a profound economic, ethical, and policy failure.
As documented by decades of scientific research,
the combustion of coal, oil, and natural gas over the course of the twentieth and twenty-first centuries is the primary cause of global warming.
Companies that sell these products have netted large profits, with the top twelve firms earning more than $20 trillion in the last three decades.
Regulations to curb future emissions will not remedy this extreme imbalance between fossil fuel companies’ revenues and the American public’s financial burden in paying for climate adaptation.
To address this issue, Vermont passed a first-of-its-kind law in May 2024 that will require fossil fuel companies to help pay for climate adaptation.
Called the Climate Superfund Act, it will shift a portion of the state’s climate adaptation costs to the companies most culpable for our current crisis.
Modeled on federal and state laws for hazardous waste, the state climate superfund program could support projects designed to avoid, moderate, or repair damage resulting from past fossil fuel use.
It is based on a longstanding legal doctrine known as the “polluter pays” principle, which stipulates that the entities responsible for pollution should be financially liable for the resulting harms.
The Vermont law requires companies to pay a portion of the state’s climate change driven spending so long as they are responsible for selling fossil fuels above a specified level. The threshold is high enough to limit liability to only the largest, most profitable fossil fuel corporations, such as Exxon Mobil and Chevron.
Other states have begun to follow Vermont’s lead as they grapple with the effects of global warming. In December 2024, New York’s governor signed a similar bill to establish a state climate superfund over two years after state legislators first suggested creating such a program.
State legislators in nearly a dozen other states have also drafted and introduced similar bills in the last few years as their states face mounting environmental and public health threats from global warming.
Given the severity of the climate crisis and the failure of numerous federal efforts to adequately address the problem, these state initiatives may become the most significant environmental legislation in a generation.
This Article examines the development of state climate superfund laws and explores the legal and policy issues raised by such legislation, including the choices states will need to make about how to design these laws and the potential legal challenges they will face. In addition to analyzing the history of similar environmental legislation and litigation over its constitutionality, the Article also draws on the author’s experience providing legal advice and assistance to states seeking to pass these laws.
The author further declares that she has received no funding in connection with this Article and that no environmental organizations or state legislators have provided feedback, input, or oversight of any kind regarding its contents. The views in this Article are the author’s own and should not be taken to represent the position of any state official involved in drafting these laws or organizations advocating for or against their passage.
Industry groups, notably the American Petroleum Institute and U.S. Chamber of Commerce, have argued that state climate superfunds are unconstitutional on multiple grounds.
They are currently suing both Vermont and New York to stop implementation of the laws alongside twenty two Republican state attorneys general.
In an unprecedented step, the Department of Justice (DOJ) has brought a similar lawsuit against Vermont and New York, arguing that the federal government has exclusive authority to address climate change.
The extraordinary effort to prevent states from enacting these laws makes clear the considerable legal and financial stakes of state climate superfunds. Beyond the implications for balancing federal and state authority over environmental issues, this litigation could have consequences for other horizontal and vertical federalism disputes.
Should states be able to impose civil penalties on an out-of-state abortion provider if she mails mifepristone into another state?
What about state liability for hackers who obtain private material from someone in another state and share it without consent?
Though answering these questions is outside the scope of this Article, it is worth noting that federalism disputes over state climate superfunds could influence constitutional doctrines governing a wide range of state lawmaking authority.
The Article begins by detailing the growing costs of climate change to states and how these financial challenges have led lawmakers to consider passing climate superfund bills. These legislative initiatives will become even more important in the coming years should President Trump follow through on his threat to significantly reduce or eliminate federal disaster assistance.
Part II provides a historical and theoretical justification for state leadership on climate superfund legislation, including states’ longstanding role in protecting their residents and natural resources from external threats as well as the benefits of policy innovation through state experimentation with superfund design. It also argues that climate change, while global in its origins, is inherently a matter of local concern because of its diverse, unequal effects on natural resources and public health. The local nature of the harm further supports state leadership in holding responsible parties accountable.
Fossil fuel companies, Republican attorneys general, and the DOJ have challenged these laws on a number of constitutional grounds, such as claiming that state climate superfunds infringe on companies’ due process rights, violate the dormant Commerce Clause, and are preempted by federal legislation.
Part III examines these legal issues and analyzes whether state climate superfunds differ in relevant respects from other environmental legislation that has survived similar constitutional challenges. Part IV concludes by exploring the key decisions states are facing as they draft such legislation, including how to define “responsible parties” liable for cost recovery demands, how to apportion liability among fossil fuel companies, and how to distribute funds among various adaptation projects. It offers economic, ethical, and policy rationales for designing the laws in certain ways and suggests the best options for states to recoup a fair portion of their costs while ensuring these laws stand up to legal scrutiny.