By Bob Needham
Michigan Law
Professor Rachel Rothschild is helping to advance a new tool in the fight against climate change.
The idea, based on the “polluters pay” concept, would impose financial liability on major fossil fuel companies for the effects of greenhouse gas emissions. That would create “climate superfunds” that could be used for mitigation and adaptation programs.
Bills to establish these superfunds have been introduced in New York, Massachusetts, and Maryland. The New York bill, for example, would require polluting entities—large oil and gas companies like Exxon Mobil and Chevron—that emitted more than one billion tons of greenhouse gasses between 2000 and 2018 to pay a collective $75 billion over 25 years.
Rothschild, an assistant professor of law, has been doing extensive pro bono work to support the new approach, including researching the constitutionality of the concept, helping to draft legislation, and publicly testifying on the bills. She recently answered some questions about the issue:
1. How did this concept of climate superfunds arise?
There has long been interest in trying to hold fossil fuel companies accountable for not only the fact that they've contributed to climate change but also the fact that they have engaged in a widespread misinformation campaign about the problem. We’ve had the tobacco settlement with the tobacco companies. We've had legislation to deal with black lung disease caused by coal mining. We’ve created the federal hazardous waste superfund to address damages from toxic chemicals. I’m interested in the ways we can use those earlier efforts as precedent to try to get some financial support from companies that profited from greenhouse gas pollution.
This issue spurred the climate litigation that we've seen coming out of a lot of cities and states since 2017. These are lawsuits that have been filed as torts, as nuisance suits, frauds, consumer protection suits. Unfortunately, however, those cases have been mired in procedural disputes for years. So that, in part, has led to a push to try to do something similar legislatively by creating state climate superfunds.
2. What do you like about this approach to fighting climate change?
It deals with the environmental loss and damage that we're going to suffer from climate change given the warming that's already baked in, despite other efforts to reduce emissions. Even if we had a national carbon tax or carbon trade regime put in place tomorrow, we're still going to need to spend a lot of money to protect our infrastructure, natural resources, and human life from the effects of climate change. This type of bill is unique in helping to fund projects that are desperately needed and going to be very expensive.
3. Why is this tactic being pursued at the level of individual states?
There was an attempt to create a climate superfund in the Inflation Reduction Act, which Congress passed last year. It had the support of a number of Democratic senators and representatives, but unfortunately they could not get the 50 votes they needed in the Senate to include a climate superfund in the bill. The environmental groups that have been pressing for this type of fund decided that their best hope was to try to do something in individual states where there is pretty solid Democratic control.
I would be in favor of a national bill if it was possible. But we are running out of time to address climate change, and given the political polarization in this country on environmental issues, we would need a filibuster-proof Democratic majority in Congress to pass a national bill. I don’t think that’s likely to happen in the near term. So I think this is the next best option, and it is consistent with the cooperative federalist approach we’ve taken to many environmental problems since the 1970s. Congress could decide to preempt state efforts to address climate change, but they haven’t yet. Until then, I think states can and should press ahead with these bills.
4. You've spent a lot of your time and effort anticipating possible constitutional challenges to this concept. Does your research indicate that climate superfunds could ultimately withstand the various challenges they are likely to face?
If they are designed in the right way, I believe they should withstand constitutional challenges. That comes with a caveat that it might not be possible to hold every major fossil fuel company liable in every state.
In addition, I don't think it would be wise for the states to just pick a number out of the air that they are going to demand as part of their cost recovery from these companies. The amount of money sought has to be connected to the harm and the loss that are actually suffered in the states.
All to say, what I hope to do in this work is to help states design their bills in such a way that they can be best positioned to withstand what are likely to be the most serious constitutional challenges.
5. What comes next? What are you working on, and are other states likely to join this effort?
Right now the strategy has been to try to see if we can get one of these bills through a state legislature and then try to expand to others.
A major part of my current work has been answering legislators’ questions about the constitutionality of these bills. For example, the American Petroleum Institute recently released a memo laying out their opposition to New York’s bill, including several reasons they believe the bill is unconstitutional. So I drafted a response memo for state legislators explaining why I don't think their arguments have merit and how they're misreading certain cases.
I also recently testified on the Massachusetts bill, and I’ve previously assisted the counsel in the New York State Senate on drafting the language of that bill. One of my law students, Katherine Welty, ’23, helped me throughout the past year with legal research for these bills, and she did amazing work. In addition, I'm hoping to publish a paper related to this topic, though I'm not yet sure what form that will take.
There are potentially difficult legal issues, but I do think that these are promising pieces of legislation, and I hope to see one passed in the next few years.
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