cost recovery Environmental Policy & Regulation
Vermont’s recently passed S 259, dubbed the Climate Superfund Act, along with the pending New York Climate Change Superfund Act, represent a paradigm shift in environmental liability. These laws have far-reaching implications for businesses, impacting operational costs, liability exposure, and compliance requirements. Additionally, California, Massachusetts, and Maryland are following suit with proposed legislation, indicating a controversial trend among states to legislate corporate responsibility for climate change. California, Maryland, and Massachusetts have all proposed legislation that would enact programs similar to the Climate Change Superfund Act in that they would require companies to pay compensation for purported GHG emissions. These proposals are similar in scope to the Vermont and New York legislation and target entities responsible for more than 1 billion metric tons of GHG emissions from 2000 to 2018 (Massachusetts) or 2000 to 2020 (California and Maryland).
- The New York “Climate Change Superfund Act” would be overseen by the Department of Conservation (Department) and purports to cover GHG emissions between January 1, 2000, and December 31, 2018.
- The assessment would be completed on or before January 15, 2026 and delivered to various legislative committees.
- The bill would require the State Treasurer to complete an assessment of the cost to the State and its residents of the emission of covered greenhouse gases during the period January 1, 1995 through December 31, 2024.
- The Agency must document all its cleanup costs, including direct expenses (e.g., salary and contractual) and indirect expenses (e.g., overhead).
Superfund Cost Recovery
The process begins with the Environmental Protection Agency (EPA) identifying the PRPs and investigating their role in the contamination. The EPA then sends a “Notice of Potential Liability” to the identified PRPs, outlining the allegations and potential cost recovery obligations. Second, $300,000 is appropriated from the General Fund to the Office of the State Treasurer in Fiscal Year 2025 to support hiring consultants or third-party services to assist in completing the assessment of the cost to the State and its residents of the emission of covered greenhouse gases.
While unclear exactly how the GHG emissions will be calculated for each entity, the new law also directs the Agency to promulgate rules necessary to implement the law’s requirements that should include, but are not limited to, methodologies to identify responsible parties and calculate GHG emissions allegedly caused by each responsible party. The Climate Superfund Act goes into effect on July 1, 2024, and requires the Agency to submit a report detailing the feasibility of this program in 2025 and promulgate implementing regulations in 2026. Cost recovery is a crucial aspect of Superfund that ensures financial responsibility for contaminated sites.
ME – Environment and Natural Resources (Joint)
CERCLA provides liability protection to bona fide prospective purchasers (BFPPs), contiguous property owners (CPOs), and innocent landowners (ILOs or third parties) to promote the cleanup, reuse, and redevelopment of contaminated, potentially contaminated, and formerly contaminated properties. In addition to these statutory protections, EPA uses site-specific enforcement tools to facilitate the acquisition and reuse of properties when perceived liability continues to be an obstacle. For example, EPA may enter a site-specific settlement agreement with a party who is not liable for contamination at the property but who is willing to perform cleanup work on the property.
Office of Justice Programs
More information about these Superfund landowner liability protections and the tools EPA uses to address liability concerns to support cleanup and reuse is available on the Agency’s Addressing Liability Concerns to Support Cleanup and Reuse of Contaminated Lands website. Additional information on Superfund enforcement negotiation process and settlement and orders is available from the Superfund Cleanup Enforcement Policy and Guidance documents database. PRP then have 60-days to respond with a good faith offer to do the cleanup work or pay for it. After that, there can be another 60-days or more for EPA and the PRP to negotiate a settlement. If the PRP does not submit a good faith offer at the end of the initial 60 days, EPA may start the cleanup work itself or issue a unilateral administrative order (UAO), requiring the PRP to do the work. He can either sign the legislation, veto it, or take no action for five days and the bill will become law without his signature.
Vermont and New York Climate Acts are First in a Wave of Likely Climate Change Cost Recovery Laws
Environmental Protection Agency (EPA) eliminated the positions and unit responsible for maintaining the Extended Input-Output (EEIO) model, a key federal tool used to calculate Scope 3 greenhouse gas (GHG) emissions. The move signals a likely end to federal support for EEIO emissions factors, presenting challenges for companies preparing to comply with California’s landmark climate disclosure law, SB 253 (as amended by SB 219). As federal involvement recedes, the private sector and California regulators may fill the gap, introducing uncertainty about how Scope 3 emissions will be quantified going forward. The most effective approach depends on specific circumstances, including the nature of the contamination, the availability of funding, and the legal and political context. Choosing the right model requires careful consideration of the potential benefits and drawbacks of each option. This chapter focuses on different models employed for cost recovery in environmental and water treatment, examining their strengths and weaknesses.
The assessment would include effect on public health, natural resources, biodiversity, agriculture, economic development flood preparedness and safety, housing, and other Superfund Cost Recovery relevant effects. Superfund settlement agreements, once finalized, are enforceable in a court of law. EPA is committed to strengthening efforts to reach settlements with PRPs and believes that settlements are most likely to occur when EPA interacts frequently with PRPs. PRPs will generally attempt to negotiate the extent of their liability for the cleanup costs owed to EPA. If a PRP agrees to reimburse EPA for its costs, the resulting settlement may be documented in a judicial consent decree or in an administrative settlement.
- Through the publication of this fact sheet, EPA hopes to ensure that all stakeholders involved in the Superfund process fully understand the important role of cost in remedy selection under existing law, regulation and policy, and to summarize recent initiatives aimed at enhancing the cost-effectiveness of remedial actions.
- This chapter presents real-world examples of cost recovery in environmental and water treatment, illustrating different approaches and outcomes.
- Vermont’s S 259, which became law without the governor’s signature in 2024, is aimed at addressing the alleged financial and environmental repercussions of climate change.
- A former industrial site has been contaminated with heavy metals due to the actions of several companies over the past 50 years.
- Dr. Hall, a former commissioner of the Federal Energy Regulatory Commission (FERC), focuses his practice on the economic regulation of public utilities.
Like its federal namesake — the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) — the Vermont Climate Superfund Act establishes strict liability for parties responsible for GHG emissions. But any similarity to CERCLA ends there, as CERCLA relates solely to contaminated waste sites. The Vermont Climate Superfund Act directs the Agency to determine the amount of the cost recovery demand for entities that “hold or held an ownership interest in a fossil fuel business during the covered period,” provided that it is proportionate to the costs incurred by the state and its residents from the amount of GHGs that the responsible party purportedly emitted. To do so, the Climate Superfund Act appropriates $300,000 for fiscal year 2025 for the “purposes of hiring consultants or third-party services to assist in the completion of the assessment required” to determine the cost to Vermont of covered GHG emissions, with the assessment due by January 15, 2025. The law then directs the cost recovery payments to go to the Climate Superfund Cost Recovery Program Fund that, in turn, would provide funding for climate change adaption projects in the state. Neighboring New York followed on the heels of Vermont, enacting a similar statute several days later, which as of the date of this Update was still awaiting action by Democratic Gov. Kathy Hochul.
The New York “Climate Change Superfund Act” would be overseen by the Department of Conservation (Department) and purports to cover GHG emissions between January 1, 2000, and December 31, 2018. Responsible parties under the bill would include “any entity (or a successor in interest to such entity described herein), which, during any part of the covered period, was engaged in the trade or business of extracting fossil fuel including coal or refining crude oil” and is responsible for more than 1 billion tons of covered GHG emissions, as determined by the Department. Under the Climate Change Superfund Act, the total assessment rate per year is $3 billion over the next 25 years, with 35% to 40% of the funds going toward climate-change-adaptive infrastructure projects that directly benefit disadvantaged communities. As with the Vermont Climate Superfund Act and CERCLA Superfund liability, a responsible party would be strictly liable for a share of the cost of climate change adaptive infrastructure projects. Similar to Vermont’s law, the California proposal would defer to a state environmental regulator, the California Environmental Protection Agency, to determine the total costs incurred as a result of climate change and assess the cost demand for each responsible party. Meanwhile, the proposals in Massachusetts and Maryland include a predetermined total cost for climate change adaptation and mitigation.
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States are increasingly holding the fossil fuel sector liable for costs related to climate change. Our Environment, Land Use & Natural Resources Group unpacks what companies need to know about these new state “superfund” laws. A former industrial site has been contaminated with heavy metals due to the actions of several companies over the past 50 years.
The EPA is tasked with cleaning up the site and pursuing cost recovery from potentially responsible parties. This chapter outlines key best practices to enhance the effectiveness and fairness of cost recovery in environmental and water treatment projects. A statement of work (SOW) is the technical attachment to several “Work” administrative settlements, consent decrees, and unilateral administrative orders.