The New Jersey State Legislature Assembly Appropriations Committee advanced the chamber’s climate superfund bill (A 3735) on a party line vote, despite Democrats’ concerns around the widespread impacts of imposing a $50 billion tax on the American energy industry.

Before casting a vote in favor of the bill, Assemblyman Kenyatta Stewart (D) expressed his mixed thoughts on the legislation:

“It comes down to really two things. When it comes down to, you know, the fear, of course, like most of us, the fear of losing businesses in the State of New Jersey. I mean, it’s the harsh reality is that we all need a place to work to earn an honest dollar, and I recognize that you lose jobs. I mean, you lose businesses, you lose jobs, and we talk a lot about the cost that’s associated with that. I do, at one point or another, I will tell you, I was concerned about the possibility of it being an unconstitutional taking.” [emphasis added]

Assemblyman Stewart made his remarks after hearing testimony from several industry groups and small business owners expressing a myriad of concerns.

Impacts and Implications

New Jersey has a storied industrial legacy, in part due to the state’s refineries. Michael Karlovich, Vice President of Strategic Communications at PBF Energy in Parsippany, spoke extensively on the importance of refined fuel products to the state’s economy, as well as how the proposed legislation would drive up costs for consumers:

“More than 95% of the vehicles in the state of New Jersey run on liquid transportation fuels, and that excludes off-road construction and agricultural equipment, trains, boats, and planes. So, the fuel as this has been pointed out already, are critically important to the state for the mobility of your constituents, the businesses, and the government entities in the state.

“The companies that would be liable for paying this are going to pass those costs on. Those are operating costs. They get passed on like any other tax.”

Similarly, Eric Blomgren of the New Jersey Energy Markets Group drew on real-world examples to emphasize that the proposed tax would be passed onto consumers:

“We’ve seen that the motor fuel taxes have been assessed at the terminal level, but get passed onto the consumer. We’ve seen in Washington State they enacted a cap and trade program a couple years ago that was supposed to be only affecting the producers, but that cost has been passed onto the residents there at the rate of about 40 to 50 cents a gallon.”

Blomgren also highlighted the disproportionate impact of the proposed legislation on American energy companies, given that the tax is unlikely to be levied on, and collected from, foreign competitors:

“I don’t know if we can really expect our state to get $3 billion from Saudi Aramco, or $700 million from the Iraq National Oil Company, or $300 million from the Turkmenistan National Gas Company.”

The Same Strain on Small Businesses

Michael Giunta, the owner of Bayway Catering, started a small business near the Bayway Refinery two decades ago put the situation bluntly:

“I can’t stress enough what this [bill] would do to small businesses in that area.”

He issued a plea to lawmakers to think about the implications of such economically devastating legislation on regular small businesses:

“I’m hoping that you know I hear about this bill and the trickle-down effect, and I’m just hoping and praying that maybe wait on this bill, you know, like other people said up here to really look at it and see what would happen…”

Silence from Governor Sherrill

Governor Mikie Sherrill launched her term by signing an executive order declaring the energy affordability crisis “an emergency that warrants decisive leadership and coordinated action.”

However, despite her stated commitment to energy affordability, she has yet to publicly comment on the climate superfund bill.

Notably, Michael Egenton, the New Jesey Chamber of Commerce’s EVP for government relations and a member of Gov. Sherrill’s transition team, testified against the proposed legislation:

“I take real big issue of calling my members polluters when they were given the legal authority, both from EPA and DEP, to produce a product and service that we all use. I would bet you, if we did a polling here, majority people drove here using that product, plus the other ancillary products that come from petroleum, whether in the agricultural business, the pharmaceutical business, the tech business…”

As the bill continues to advance through Trenton, will Governor Sherrill signal her intent to sign or veto the legislation?

Bottom Line: Democratic lawmakers are seemingly beginning to recognize the widespread implications of New Jersey’s proposed climate superfund bill. As the bill continues to advance through Trenton, Gov. Sherrill should publicly express her position on the legislation, given its impact on her energy affordability agenda.