In another blow to the decades-long effort to attack the American energy industry, time has expired for the proposed superfund legislation in New Jersey after state legislative leaders saw the writing on the wall and decline to advance the bill before the session end on January 12.
The controversial “Polluters Pay to Make New Jersey More Affordable Act” would have enacted a “cost recovery program” that would have slammed energy companies with $50 billion in penalties for legally producing energy to pay for climate adaptation projects in the state.
Although the bill was advanced by the Senate Budget and Appropriations Committee in a marathon hearing on January 8, Democratic leadership declined to hold a vote by the chamber because the legislation stalled in the Assembly, meaning it could not reach the desk of outgoing Governor Phil Murphy before the lame duck session concluded.
Both Democrat and Republican lawmakers have raised serious concerns about the bill, arguing that the bill is unconstitutional and also fails to guarantee energy affordability for consumers.
Criticism of the bill has ballooned outside the legislature too, with business and labor groups urging lawmakers to tap the breaks. The NJ Chamber of Commerce noted that passing the bill during the lame duck period would “set a bad precedent”, and New Jersey State AFL-CIO urged lawmakers not to rush through the lame-duck session, arguing that the incoming Mikie Sherrill administration should handle the issue with proper stakeholder input.
Legal Hurdles Ahead
In recent years, as climate litigation campaign has lost significant momentum, with multiple lawsuits tossed out in the courtroom and others stalling, climate superfund legislation – designed and pushed by the same activists behind the litigation campaign – has become the fallback option.
To-date, superfund bills have been introduced in more than ten states and signed into law in two, Vermont and New York. But now both New York’s and Vermont’s statutes are now tied up in federal court, facing challenges from a broad coalition that includes 22 state attorneys general and even the U.S. Department of Justice.
New Jersey’s own effort came amid this climate of uncertainty, and the wariness expressed by lawmakers likely reflects an understanding that passing the legislation would almost certainly trigger an immediate lawsuit, potentially leaving New Jersey to spend years defending a law that might never actually deliver the promised funds.
Bipartisan Skepticism Reigned at Committee Hearing
At the Senate Budget Committee hearing, lawmakers from both parties took aim at the bill’s premise of punishing companies for past lawful activities, warning it would raise costs for consumers. Republican Sen. Declan O’Scanlon blasted the premise of retroactively fining energy suppliers for decades-old emissions:
“Now we are going to retroactively fine them for doing something that was perfectly legal and that we all wanted… to point to them as solely the culprits here when we’re all at fault… is unfair.”
Democratic Committee Chair, Sen. Paul Sarlo, echoed the hypocrisy:
“Each and every one of us… [is] relying on [fossil fuels] one way or another in your everyday life.”
While Sarlo reluctantly voted to advance the bill out of committee, he warned that he would vote against final passage unless the bill was substantially revised.
Other members challenged the bill’s framing and rationale. Sen. Mike Testa (R), criticized supporters’ attempts to compare the climate superfund to historic tobacco settlements, calling the analogy “severely intellectually disingenuous,” underscoring that unlike cigarettes, fossil fuels are essential commodities that society deliberately relies upon.
As O’Scanlon put it, New Jerseyans themselves would end up paying the price at the pump or their utility bills if the state tries to make “polluters pay.”
Business and Labor Groups Push Back Over Affordability
Beyond the State Legislature, New Jersey’s business and labor community has mobilized strongly against the Climate Superfund Act, arguing it would set a dangerous precedent and harm the state’s economy without meaningfully addressing climate change.
Just before the new year, the New Jersey chapter of the AFL-CIO issued a letter to the legislature:
“Policymakers and consumers all recognize that New Jersey has an energy supply and energy affordability crisis. The incoming administration should have their own opportunity to work with various stakeholders to address this problem, and the ‘Climate Superfund Act’ (S-3545: McKeon / Smith) should be debated in that context. Rushing this type of legislation during the ‘lame duck’ session is a mistake and will further exacerbate the problem if not done correctly.”
Business leaders shared concerns about the bill’s approach too. The day before the budget committee hearing, the New Jersey Business Coalition (NJBC), a coalition of over 100 business and industry groups, sent an open letter urging legislators to vote against the bill:
“Given the costs being imposed on consumers during an affordability crisis, the harmful impact of this legislation on two major job creators in this state, the unfairness of retroactive liability, and the negative message it sends to the business community, we ask that you not support this legislation.”
In its letter, the NJ Business Coalition highlighted several key concerns about the Climate Superfund Act, including higher consumer costs, risks to key industries and jobs, unfair retroactive liability and precedent, and named the bill unconstitutional, with the potential to spark years of litigation with no climate benefit to show for it.
Bottom Line: New Jersey’s climate superfund legislation was touted by its backers as a bold way to “make polluters pay” and fund climate resiliency. In reality, faced the same fate as similar efforts elsewhere: strong opposition, legal challenges, and ultimately, defeat in New Jersey’s latest Legislature. Bipartisan skepticism and a lack of support in New Jersey, including from committee chairs like Sarlo, assembly leadership and key constituencies have stalled the bill for now. However, even if the bill had sailed through the legislature, the experience of New York and Vermont suggests it would be immediately entangled in lawsuits and possibly struck down in the courts.
