Last week, Vermont became the first state to enact a "Climate Superfund" law. As I noted in January, I fear that this will not end well. It seems odd to model a statute on a law frequently given the accolade – deserved, in my view – of the worst statute ever written. Moreover, the Vermont Climate Superfund Act does not seem to reflect any effort to address any of the flaws in the original Superfund law.
I could go on at length, but that would by definition no longer be a blog post, so I'll note only two issues. First, strict liability, a term used in the Act, means liability without fault; it does not mean liability without causation. Now, don't get me wrong; I'm not suggesting that GHG emissions don't cause climate change. However, the fact that GHG emissions cause global warming does not equate to evidence that the emissions of a specific company from 1995 through 2024 caused any particular damages in the state of Vermont. Nor does the statute make much of an effort to link any particular emissions to any particular damages. Nor does the requirement in the statute that the Agency of Natural Resources promulgate regulations impose any obligation on ANR to identify such causation.
This problem with causation segues nicely into the second notable flaw in the Act. As I have also noted previously, the approach in the statute, to impose "damages" on companies based on the amount of fossil fuels that the extracted from 1995 through 2024, actually makes the payments seem much more like a tax than a damages payment. In fact, the payments required under the Act seem very much like the chemicals tax used to fund the actual hazardous substances superfund established under CERCLA.
The cruelest part of the irony inherent in Vermont's imposition of a retroactive tax on the production of fossil fuels, without admitting that it is doing so, is that the tax fails to accomplish the one unambiguous benefit of a tax. For many years now, almost every sentient economist has advocated imposing a tax on carbon. Why? Because it is one action government can take that would actually lead people to reduce their carbon footprint. Unfortunately, because the "tax" imposed by the Act is retroactive, it fails to do what a real carbon tax would; it does not give consumers any incentive to change their behavior to reduce GHG emissions.
Sigh.
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Originally Published 04 June 2024
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