AB1243 - Polluters Pay Climate Superfund Act of 2025.

Amended IN Assembly April 10, 2025 Amended IN Assembly April 07, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1243 Introduced by Assembly Member Addis (Coauthors: Assembly Members Connolly, Garcia, Haney, Kalra, Rogers, and Ward) (Coauthors: Senators Allen, Gonzalez, Menjivar, Stern, and Wiener) February 21, 2025 An act to add Part 4.8 (commencing with Section 71370) to Division 34 of the Public Resources Code, relating to climate change, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 1243, as amended, Addis. Polluters Pay Climate Superfund Act of 2025. The California Global Warming Solutions Act of 2006, until January 1, 2031, authorizes the State Air Resources Board to adopt a regulation establishing a system of market-based declining aggregate emissions limits for sources or categories of sources that emit greenhouse gases (market-based compliance mechanism) that meets certain requirements. Existing law establishes the Greenhouse Gas Reduction Fund and requires all moneys, except for fines and penalties, collected by the state board from the auction or sales of allowances as a part of a market-based compliance mechanism to be deposited into the fund and requires the Legislature to appropriate moneys in the fund for the purpose of reducing greenhouse gas emissions in the state, as provided. Existing law, the California Climate Crisis Act, declares that it is the policy of the state both to achieve net-zero greenhouse gas emissions as soon as possible, but no later than 2045, and achieve and maintain net-negative greenhouse gas emissions thereafter, and to ensure that by 2045, statewide anthropogenic greenhouse gas emissions are reduced to at least 85% below the 1990 levels. This bill would enact the Polluters Pay Climate Superfund Act of 2025 and would establish the Polluters Pay Climate Superfund Program to be administered by the California Environmental Protection Agency to require fossil fuel polluters to pay their fair share of the damage caused by greenhouse gases released into the atmosphere during the covered period, which the bill would define as the time period between the 1990 and 2024 calendar years, inclusive, resulting from the extraction, production, refining, sale, or combustion of fossil fuels or petroleum products, to relieve a portion of the burden to address cost borne by current and future California taxpayers. The bill would require the agency, within 90 days of the effective date of the act, to determine and publish a list of responsible parties, which the bill would define as an entity with a majority ownership interest in a business engaged in extracting or refining fossil fuels that, during the covered period, did business in the state or otherwise had sufficient contact with the state, and is determined by the agency to be responsible for more than 1,000,000,000 metric tons of covered fossil fuel emissions, as defined, in aggregate globally, during the covered period. This bill would require the agency, within one year of the effective date of the act, to conduct and complete a climate cost study to, among other things, quantify the total damage amount, which the bill would define as all past and future climate harms and damages to the state from January 1, 1990, through December 31, 2045, inclusive. The bill would require the agency to update the climate cost study, not less frequently than every 5 years, through January 1, 2045, as provided. The bill would require the agency, within 60 days of the completion of the climate cost study, to determine and assess, as provided, a cost recovery demand for each responsible party listed, which represents the responsible party’s proportionate share of the total damage amount. The bill would require responsible parties to pay their cost recovery demand, as provided. The bill would require the collected cost recovery demands to be deposited in the Polluters Pay Climate Superfund, which the bill would create in the State Treasury. The bill would, upon appropriation by the Legislature, require moneys in the Polluters Pay Climate Superfund fund be expended for, among other things, qualifying expenditures, which the bill would define to include expenditures for projects and programs to mitigate, adapt, or respond to the damages and costs caused to the state from climate change. The bill would require all interest earned on moneys that have been deposited into the fund to be retained in the fund for use in implementing the program. The bill would require the agency to determine the initial implementation costs for the act, as provided, and would require the agency to assess an amount allocated equitably among responsible parties to cover those costs. This bill would require the Director of Finance, within 45 days of the effective date of the act, to perform an initial assessment of the reasonable and appropriate initial implementation costs that will be incurred by the agency. This bill would declare that it is to take effect immediately as an urgency statute. Digest Key Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. This act shall be known, and may be cited, as the Polluters Pay Climate Superfund Act of 2025. SEC. 2. (a) The Legislature finds and declares all of the following: (1) Climate change, resulting primarily from the combustion of fossil fuels, is an immediate, grave threat to the people, communities, biodiversity, environment, and economy of the state. (2) Severe consequences of climate change, including rising sea levels, increasing temperatures, intensifying droughts, wildfires, flooding, heat waves, loss of biodiversity, and other climate change-driven ecosystem threats and extreme weather events, have already materialized, are costing Californians billions of dollars, and constitute an emergency for the state, which must now take urgent action to prevent further damages, protect California residents and communities, and transition to clean renewable energy. (3) Californians, especially California’s most vulnerable populations, low-income communities and communities of color, children, and the elderly, are harmed by the climate emergency and climate-related costs, including escalating costs of utilities, housing, health care, and insurance. (4) The state must develop and implement protective measures to counteract the adverse effects of climate change. (5) Protective measures necessary to mitigate climate change, adapt to the adverse effects of climate change, and expedite the transition away from fossil fuels will require significant new investment. (6) Peer-reviewed research has determined with great accuracy the share of carbon dioxide and methane released into the atmosphere by the operations and products of specific fossil fuel companies. (7) Existing accounting of climate damage costs is known to be significantly undercounted because scientific modeling to calculate damage amounts is conservative by design and continually being refined, and because certain damages are difficult to monetize, including impacts to culture, health, and communities. (8) The fees imposed by this act represent only a subset of the extraordinary costs from climate-driven harms currently borne by state, local, and tribal governments and California residents. (9) The legislative purposes of the fees and the act are designed to have a meaningful impact on the burden borne by taxpayers while being justly and fairly proportional to a fraction of actual historic emissions by the fossil fuel industry. This industry, despite its massive profits of $2,800,000,000 per day for the last 50 years, has thus far externalized its pollution costs on state, local, and tribal governments and California residents. (7) (10) The fossil fuel industry should now contribute its fair share to government expenditures to protect the state from climate disaster. (b) In enacting this act, it is not the intent of the Legislature for either of the following: (1) For the act to be a determination of fault. (2) For the act to have any impact on the ability of any person or entity to hold polluters accountable for harms caused. (c) It is the intent of the Legislature for this act, the program created by this act, and the programs and projects funded by this act to benefit disadvantaged communities and to do no harm to these communities. SEC. 3. Part 4.8 (commencing with Section 71370) is added to Division 34 of the Public Resources Code, to read: PART 4.8. Polluters Pay Climate Superfund Act of 2025 CHAPTER 1. Definitions 71370. For purposes of this part, the following definitions apply: (a) “Agency” means the California Environmental Protection Agency. (b) “Annual payment date” means the date, as determined by the agency, not later than October 1 of each calendar year, by which a responsible party shall pay its cost recovery demand. (c) “Climate cost study” means a study conducted pursuant to Section 71371.3. (d) “Cost recovery demand” means a charge assessed against a responsible party for compensatory cost recovery payments, as determined pursuant to Section 71371.4. (e) “Costs” means direct and indirect costs in current dollars to the state, local and tribal governments, and California residents incurred and projected to be incurred into the future to prepare for, prevent, adapt, or respond to the damages and harms associated with the impacts of covered fossil fuel emissions. (f) “Covered fossil fuel emissions” means the total quantity of greenhouse gases released into the atmosphere during the covered period, expressed in metric tons of carbon dioxide equivalent, attributable to the extraction, production, refining, sale, or combustion, including by third parties, of fossil fuels or petroleum products. (g) “Covered period” means the time period between January 1, 1990, and December 31, 2024, inclusive. (h) “Fossil fuel” means coal, crude oil, petroleum products, or fuel gases, or their byproducts. (i) “Fuel gas” includes, but is not limited to, methane, natural gas, liquefied natural gas, and manufactured fuel gas. (j) “Fund” means the Polluters Pay Climate Superfund established pursuant to Section 71372. (k) “Greenhouse gas” has the same meaning as set forth in Section 38505 of the Health and Safety Code. (l) “Notice of cost recovery demand” means a written or electronic communication informing a responsible party of the amount of cost recovery demand due, payable to the fund. (m) “Petroleum products” means a liquid hydrocarbon at atmospheric temperature and pressure that is the product of the fractionation, distillation, or other refining or processing of crude oil and that is used as, useable as, or may be refined as, a fuel or fuel blendstock, including, but not limited to, gasoline, diesel fuel, aviation fuel, bunker fuel, and renewable fuels containing more than 5 percent petroleum products. (n) “Program” means the Polluters Pay Climate Superfund Program established pursuant to Section 71371. (o) (1) “Qualifying expenditures” means expenditures for projects and programs within the state to mitigate, adapt, or respond to the damages and harms from climate change, as well as ongoing operation and maintenance for those projects or programs that satisfy the regulations adopted pursuant to Section 71373.2. (2) Qualifying expenditures shall include all reasonable costs incurred by the agency and other public agencies for administering and implementing projects or programs financed by the fund. Administrative costs shall not exceed 10 percent for any project or program financed by the fund. (3) Qualifying expenditures shall include expenditures for projects and programs that mitigate or adapt to climate change and its impact to the state, local and tribal governments, and California residents. Qualifying expenditures may include, but are not limited to, investments in any of the following: (A) Community disaster preparedness, response, and recovery, that includes including, but not limited to, any of the following: (i) Hardening of structures in existing, at-risk, and recovering communities. (ii) Evacuation planning and design. (iii) Postdisaster soil and water remediation. (iv) Emergency housing, health, transportation, and medical response. (v) Sustainable community planning and infrastructure, including community resilience centers, affordable infill housing, and public services funding to support emergency services and disaster response. response, including support for local and tribal governments and public agency operational continuity during and after climate-related events. (B) Energy efficiency and resiliency, including, but not limited to, climate-resilient schools, electric school buses, vehicle-to-grid bidirectionality, microgrids, community solar, accelerating the transition to clean energy sources, building and infrastructure decarbonization, and maintaining, enhancing, and expanding zero-emission infrastructure, including public transit, or building and infrastructure decarbonization. transit operations, to increase ridership and transition to zero-emission fleets. (C) Green workforce development and development, job training, and support for first responders and essential workers during responding to climate disasters, and financial support programs for workers whose livelihoods are impacted by climate change. (D) Regenerative agricultural practices. (E) Natural system protections, such as preservation or nonextractive restoration of shrublands, forests, grasslands, deserts, or riparian areas, or groundwater recharge or recharge, storage, or instream flow projects. (p) “Responsible party” means an entity, including, but not limited to, an individual, trustee, agent, partnership, association, corporation, or other legal organization, including a foreign nation, that satisfies all of the following conditions: (1) (A) The entity holds or held a majority ownership interest in a business engaged in extracting or refining fossil fuels during the covered period or is a successor in interest to the entity. (B) For purpose purposes of subparagraph (A), entities in a commonly controlled group, as defined in Section 25105 of the Revenue and Taxation Code, shall be treated as a single entity for purposes of this subdivision and shall be jointly and severally liable for the payment of any cost recovery demand owed by any entity in the commonly controlled group. (2) During any part of the covered period, the entity did business in the state or otherwise had sufficient contacts with the state to give the state jurisdiction over the entity pursuant to Section 410.10 of the Code of Civil Procedure. (3) The agency determines that more than one billion 1,000,000,000 metric tons of covered fossil fuel emissions, in aggregate globally, are attributable to the entity during the covered period. (q) “Total damage amoun [Text truncated for display. Full text available on Congress.gov.]