Handing Taxpayers The Climate Cleanup Bill

New York had a chance to make Big Oil pay for its pollution by enacting a landmark climate superfund. But as Katya Schwenk uncovers in today’s featured story, Gov. Kathy Hochul and her Democratic colleagues have declined to include the proposal in their final state budget — meaning fossil fuel companies tied to some of the governor’s biggest donors won’t have to pay up.

Rock the boat.

(AP Photo/Hans Pennink and Michael Sohn)

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In states across the country, lawmakers face a daunting budget question: Who should pay to deal with the climate mess created by the fossil fuel industry — taxpayers or the industry itself?

In the Democratic stronghold of New York — which requires expensive infrastructure investments to fortify its cities and towns against flooding — environmental advocates say Democratic leaders are about to offer a troubling answer: New York taxpayers should foot the bill, not the party’s fossil fuel industry donors.

Last year, the Democratic-controlled New York State Senate passed the Climate Change Superfund Act, which would require major greenhouse gas emitters to pony up billions of dollars to help the state deal with the intensifying impacts of climate change. 

However, despite routinely portraying themselves as both climate champions and defenders of taxpayer interests, New York Gov. Kathy Hochul (D) and Democratic legislative leaders have so far declined to include the legislation in the final state budget, which is being ironed out this week. 

If the provisions are excluded, as some environmental groups now presume, the decision would be a massive win for some of Hochul’s major campaign donors who are tied to fossil fuel companies that would have been required to make payments, according to campaign finance records reviewed by The Lever. 

In the absence of a new superfund law, much of the cost of climate mitigation could fall on working-class New Yorkers: Hochul has recently declared that she opposes any new tax increases on the wealthiest residents in her state, which has the country’s second-largest number of billionaires. 

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The governor “turned her back on millions of people in hard-hit disadvantaged communities,” said New York Public Interest Research Group’s Anne Rabe, who noted Hochul’s silence on the measure and expected it to be spiked. 

Provisions that have not been passed by both houses of New York’s legislature regularly end up in the state budget, whose must-pass status makes it one of the easiest ways to enact laws in the state. Hochul’s own news release this week touts the budget’s inclusion of other environmental policy provisions pushed by lawmakers. 

However, when it comes to the superfund proposal, Hochul’s office seems to be citing the fact that the bill has only passed one chamber as a potential reason it could be excluded — and as a reason why Hochul refuses to say anything about it. 

“The Climate Superfund Act has not been passed by the legislature,” Katy Zielinski, Hochul’s deputy press secretary, wrote in response to questions from The Lever before the governor’s office announced a budget deal on Monday night. “The governor will review any bill that passes both houses; we are not going to comment on pending legislation.” 

Hochul’s office did not respond to questions from The Lever on the climate superfund’s exclusion from the deal on Tuesday, and simply reiterated that “Governor Hochul will review all legislation that passes both houses of the legislature.”

The superfund bill could still be passed by New York’s legislature, even if it is excluded from the budget. However, “the New York legislative session now is mostly a budget exercise — almost nothing happens outside the budget, and the next three months will likely see bupkis happen,” a New York Democratic political strategist told The Lever.

During Hochul’s 2022 campaign, the governor received half a million dollars in campaign donations from oil and gas industry companies and executives, as The Lever reported last year. Some of those donors have ties to the 38 fossil fuel companies that could face sanctions under the Climate Change Superfund Act.

John Hess, CEO of New York-based oil and gas giant Hess Corporation, and his wife donated more than $100,000 to Hochul in the 2022 election cycle. Hess would be required to pay $600,000 annually to the state if the climate superfund legislation is enacted, according to a Senate memo with preliminary estimates obtained by The Lever. 

Hochul also received a combined $25,000 in the last election cycle from nephew and uncle Eric and Richard Slifka, the CEO and board chairman, respectively, of oil company Global Partners. Last year, the Massachusetts-based company announced a joint venture with oil behemoth ExxonMobil, which would owe the state $222 million annually under the superfund proposal. 

Hochul has also received $7,000 over the years from the Empire State Energy Association, a trade group representing oil and gas companies in the state and which is lobbying on the legislation. The group represents the Chevron subsidiary Renewable Energy Group. 

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New York’s Climate Change Superfund Act, which received a groundswell of support from environmental groups and community leaders, is part of a growing wave of state-level climate superfund bills that would force fossil fuel polluters to pay into public funds that would, in turn, be used to pay for climate mitigation. The proposals are modeled on the Environmental Protection Agency’s original superfund program, which beginning in 1980 addressed industrial pollution by requiring the companies responsible to aid in the cleanup of these so-called superfund sites.

None of the slate of climate superfund bills proposed around the country has yet become law, but the state of Vermont appears poised to send a bill to its Republican governor’s desk, and legislation is pending in Maryland and Massachusetts. In 2021, federal lawmakers proposed similar legislation but failed to get it off the ground.

“This is the next front in the fight against Big Oil,” said Jamie Henn, the director of Fossil Fuel Media, which is waging a campaign to enact climate superfund legislation nationwide. “These climate superfund bills may be our best tool to finally make polluters pay for the damage they’re doing to our climate and communities.”

In New York and elsewhere, the fossil fuel industry geared up for a fight, Henn said. And it appears they have Hochul on their side.

“The Taxpayers Have Been Paying for Everything”

New York State Sen. Liz Krueger (D) first introduced New York’s climate superfund bill in January 2023. The bill would have required dozens of fossil fuel companies to pay a collective $75 billion — $3 billion annually over 25 years — in restitution for the damages caused by unchecked carbon emissions in New York.

Any company that does business in the state and is responsible for more than one billion tons of carbon emissions between 2000 and 2020 is on the hook for superfund payments. Lawmakers drew from research by climate scientists to come up with a list of 38 companies that would be responsible for such payments, including oil and gas giants like ExxonMobil, Shell, and Saudi Aramco.

The money would be allocated to climate adaptation projects across the state, funding the kinds of costly infrastructure investments that will be critical to climate resilience in New York, like restoration of eroding wetlands, storm drainage upgrades in dangerously flood-prone urban neighborhoods, and fortification of bridges. In November, 99 mayors and town officials across the state sent a letter urging Hochul to support the bill, saying the funds were needed to support local climate infrastructure projects.

The state’s plans to address the effects of climate change and make these infrastructure improvements, which were mapped out in ambitious climate legislation in 2019, all hinge on whether the state can come up with the money. The infrastructure upgrades and other investments required are estimated to cost tens of billions of dollars over the next two decades.

“These are huge transitions, and to do that you need funds,” Rabe said. And so far, she noted, “the taxpayers have been paying for everything.”

That’s despite record profits for many of the companies on New York’s superfund list. Under the current proposal, Saudi Aramco would pay the state an estimated $644 million annually, a tiny fraction of the Saudi Arabia-owned company’s profits, which reached a historic $161 billion in 2022. ExxonMobil, which recorded a $36 billion profit last year, would be responsible for $222 million a year in payments. 

“Unless we include the Climate Change Superfund Act in the final budget, the Governor is choosing to have New Yorkers continue to foot 100 percent of the bill, which will run into the hundreds of billions over the next several decades,” Krueger, the lawmaker that introduced the bill, said in a statement to The Lever before the deal was announced. 

Krueger and other lawmakers have been fighting to pass the climate superfund bill for over a year. In June 2023, the legislation passed in the Senate, then stalled in Assembly committees. In the fall, environmentalists began pushing for the governor to include the proposal in her executive budget proposal.

But in January, Hochul excluded the proposal from her budget, despite including other climate policies that advocates had pushed for. As budget negotiations progressed between Hochul, the Senate, and the Assembly, which also signaled support for the proposal, the governor was silent on the bill.

On Monday, Hochul’s office touted the environmental provisions in the conceptual budget deal: investments of $500 million toward clean water, $400 million for the state’s Environmental Protection Fund, and $47 million for planting trees. Notably absent was any mention of the climate superfund.

Even so, lawmakers can now push for a vote in the New York Senate and Assembly, and then send the bill to Hochul’s desk. But then, again, the fate of the legislation will be in the governor’s hands.

Big Oil Intervenes

As environmentalists have fought for the climate superfund, the fossil fuel industry lined up to oppose it. In New York, the American Petroleum Institute, the country’s largest oil and gas trade group, emerged as a key opponent of the proposal.

The group sent a letter to New York lawmakers opposing the legislation, City Limits reported in March, warning that estimates of companies’ emissions were “not accurate enough to base a prorated share of a $75 billion-dollar penalty.” The group has sent similar letters to lawmakers considering superfund legislation in both Maryland and Vermont.

The American Petroleum Institute reported spending $35,000 lobbying in New York state in just the first two months of 2024, including lobbying the governor’s office directly on the climate superfund bill.

It was just one of a host of fossil fuel and related industry groups that reported lobbying on the bill over the last year, according to a review of state lobbying disclosures. Others include the American Chemistry Council, a chemical industry trade association, and American Fuel and Petrochemical Manufacturers, another Big Oil trade group.

Multinational oil company BP, which would be sanctioned $183 million annually under New York’s superfund proposal, reported spending $90,000 lobbying New York lawmakers last year, including on the superfund bill. 

Hochul has proven to be an ally of the fossil fuel industry. In April 2023, the governor quietly advanced a proposal to weaken the state’s landmark climate law by raising limits on methane emissions. After outcry, Hochul ultimately walked back that plan — but she has continued to face criticism from environmentalists over her implementation of the climate law, all while continuing to receive campaign donations from the fossil fuel industry.

If New York lawmakers eventually pass the superfund bill and win Hochul’s support, legal experts suggest that the proposal will almost certainly face legal challenges. The American Petroleum Institute is already claiming that states don’t have enough proof to hold fossil fuel emitters liable for damages. 

But the likely long road ahead does not deter advocates.

“We’re just not going to give up,” said Rabe of New York Public Interest Research Group. “Because we can’t afford to. Since we don’t have a dedicated fund, we’re not protecting communities from constant flooding, from extreme heat in the summers.”

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