Bill Text: NJ S3545 | 2024-2025 | Regular Session | Comm Sub
Bill Title: "Polluters Pay to Make New Jersey More Affordable Act"; imposes liability on certain fossil fuel companies for funds needed for climate change adaptation projects; establishes program in DEP to collect and distribute funds.
Sponsorship: Partisan Bill (Democrat 19)
Status: (Introduced - Dead) 2026-01-08 - Reported from Senate Committee as a Substitute, 2nd Reading [S3545 Detail]
Download: New_Jersey-2024-S3545-Comm_Sub.html
SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 3545
STATE OF NEW JERSEY
221st LEGISLATURE
ADOPTED JANUARY 8, 2026
Sponsored by:
Senator JOHN F. MCKEON
District 27 (Essex and Passaic)
Senator BOB SMITH
District 17 (Middlesex and Somerset)
SYNOPSIS
"Polluters Pay to Make New Jersey More Affordable Act"; imposes liability on certain fossil fuel companies for funds needed for climate change adaptation projects; establishes program in DEP to collect and distribute funds.
CURRENT VERSION OF TEXT
Substitute as adopted by the Senate Budget and Appropriations Committee.
An Act concerning revenues to support climate change adaptation projects and supplementing Title 26 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Polluters Pay to Make New Jersey More Affordable Act."
2. a. The Legislature finds and declares that:
(1) climate change, driven chiefly by the combustion of fossil fuels, is an immediate and grave threat to the State's communities, environment, and economy; its irreversible consequences already confronting the State include rising sea levels, increasing average temperatures, more frequent and severe extreme-weather events, flooding, heat waves, toxic algal blooms, and other climate-related hazards;
(2) preserving the State's quality of life, particularly for today's youth, who will bear the brunt of climate impacts over their lifetimes, constitutes one of the State's greatest challenges for the next three decades and will require a shared sense of purpose, substantial new or upgraded infrastructure, and dependable revenue sources;
(3) New Jersey's Spill Compensation fund already embodies the principle that entities responsible for environmental harm must finance its remediation, yet no analogous mechanism exists to address atmospheric pollution caused by the buildup of greenhouse gases;
(4) decades of peer-reviewed research now make it possible to quantify, with high confidence, the proportion of historic greenhouse-gas emissions attributable to the extraction of fossil fuels by individual companies over the past 50 years and longer, enabling assignment of proportional responsibility, with data regarding emissions attributable to the extraction of fossil fuels being widely available and administratively straightforward to use;
(5) the Legislature therefore intends to establish a Climate Adaptation, Resiliency, and Affordability Program that will require companies with significant historic contributions to greenhouse-gas emissions to bear a share of the cost of infrastructure investments and other adaptation measures necessary to protect State residents, businesses, and natural resources;
(6) while the Legislature is not making any findings of negligence or wrongdoing, or seeking to punish covered companies, it is in the best judgment of the Legislature to establish that the covered companies are strictly liable for monetary contributions to address the harm that has been caused and to require covered companies to contribute, because the emissions associated with the use of their products contributed to climate change;
(7) program payments will support a range of resiliency projects that address the impacts of climate change, such as coastal-wetland restoration; storm-water and drainage upgrades; energy-efficient cooling systems in public and private buildings, including schools and public housing; public-health initiatives targeting climate-related hazards; and emergency responses to extreme-weather events;
(8) based on credible research from government agencies, universities, and respected research organizations, New Jersey residents and businesses have been paying billions of dollars to address the impact of climate change, from more severe flooding to heat waves and wildfires. The cited cost studies are a small fraction of the costs New Jerseyans have already paid and will pay to adapt to climate change, for example: (a) according to a Rutgers University and Stevens Institute of Technology report, climate change caused approximately 13 percent ($8.1 billion) of the $62.7 billion in losses incurred by New York, New Jersey, and Connecticut from Superstorm Sandy; (b) from 2011 to 2024, New Jersey has the fifth highest per capita spending on climate disasters in the nation with every county experiencing at least five disasters; (c) according to peer-reviewed research, the impact of severe heat alone cost over $108 billion in reduction of New Jersey's Gross Domestic Product (GDP) between 1991-2002; and (d) according to a report by the Rhodium Group and co-authored by Rutgers University, University of California, Berkeley, and the University of Chicago, the estimated average annual loss to New Jersey from hurricane-related wind and flood damage today is likely $670 million to $1.3 billion higher than it would have been if sea levels and hurricane activity in the 1980s remained constant;
(9) State and federal agencies have already identified tens of billions in climate adaptation projects, for example: (a) the Department of Environmental Protection (DEP) publicly identified over $15.3 billion in new climate adaptation projects for just 11 of New Jersey's 564 municipalities; (b) the North Jersey Transportation Planning Authority has identified over $3 billion in prioritized climate resiliency projects; (c) a U.S. Army Corps of Engineers (USACE) back-bay coastal resilience plan, for just a portion of the New Jersey shore, proposed the elevation of approximately 6,400 homes and flood-proofing of 279 critical facilities at an estimated cost of $7.6 billion; and (d) a 2022 draft USACE report studied the metropolitan New York City, lower New York, Long Island, and northern New Jersey shoreline and proposed a $52.7 billion plan to comprehensively address the region's coastal storm risk, including the construction of sea walls. These projects represent a small fraction of the costs of needed climate adaptation projects and primarily include projects focused on flood prevention, but New Jersey will also need climate adaptation projects that address severe heat, wildfires, drought, public health risks, and many other climate impacts;
(10) the State, universities, and research organizations have identified hundreds of billions of dollars of potential climate change impacts, including a 2025 Rutgers University report documenting that over 699,000 properties, valued at $273.9 billion, are at risk of flooding. Homes make up the largest percentage of these properties, as well as 31,907 commercial and industrial properties, 4,235 farms, 2,997 apartments, 2,374 church and charitable organization properties, and 942 school properties. By 2050, more than $435.9 billion in current property value Statewide will be exposed to high flood risk, according to a 2025 analysis by Rebuild by Design;
(11) it is time for the covered companies to pay their fair share of climate adaptation costs. Just three of the largest domestic oil and gas producers had combined 2023 profits of $85.6 billion. In 2023, during a downturn in crude oil prices, ExxonMobil, Chevron, Shell, BP, and TotalEnergies still spent over $114 billion on stock buybacks and dividends. Scientific analyses attribute more than 70 percent of post-1988 global greenhouse-gas emissions to the world's 100 largest fossil-fuel companies, underscoring their elevated responsibility;
(12) based on anticipated climate adaptation costs, the Legislature declares that responsible parties shall be strictly liable to the State for a proportionate share of funds needed for climate adaptation projects, in the total amount of $50 billion. This assessment represents only a fraction of the State's anticipated adaptation costs while remaining modest relative to industry capacity;
(13) the program will cover emissions associated with the responsible parties' fossil fuel extraction from 1995 through 2024, a period during which the science of climate change was well established, including the role of "man-made" greenhouse gas emissions, and robust data exist to allocate proportional responsibility;
(14) the program will be remedial in nature, seek compensation for harm arising from past pollution to fund adaptation needs, is not regulatory or punitive, and is not intended to intrude upon areas where federal law preempts State authority; and
(15) the program would not provide any State entity additional authority to regulate greenhouse gas emissions or other pollutants, or to raise other revenue or create any new surcharges on energy consumers or small businesses, beyond an assessment of covered companies.
b. The Legislature therefore determines that it is in the public interest to establish a cost-recovery mechanism that shifts a fair share of adaptation expenses from State taxpayers to the entities whose products have contributed to climate change.
3. As used in this act:
"Carbon dioxide equivalent" means the amount of carbon dioxide by mass that would produce the same global warming impact as a given mass of another greenhouse gas over an integrated 20-year time frame after emission.
"Climate change adaptation project" means a project designed to respond to, avoid, moderate, repair, or adapt to negative impacts caused by climate change and to assist human and natural communities, households, and businesses to prepare for future climate-change-driven disruptions, while maximizing environmental protections. "Climate change adaptation projects" include, but are not limited to: flood protection projects; home buyouts; upgrades of stormwater drainage systems; defensive upgrades to roads, bridges, railroads, and transit systems; preparation for, and recovery from, extreme weather events; preventive health care programs and providing medical care to treat illness or injury caused by the effects of climate change; relocation, elevation, or retrofits of sewage treatment plants and other infrastructure vulnerable to flooding; outdoor tree planting and installation of energy efficient cooling systems and other weatherization and energy efficiency upgrades and retrofits in public and private buildings, including schools and public housing, designed to reduce the public health effects of more frequent heat waves and forest fire smoke; upgrades to the electrical grid to increase stability and resilience, including the creation of self-sufficient microgrids; and response to toxic algae blooms, loss of agricultural topsoil, crop loss, and other climate-driven ecosystem threats to clean water, safe and plentiful drinking water, wetlands, forests, farms, fisheries, and food systems.
"Coal" means bituminous coal, anthracite coal, and lignite.
"Commissioner" means the Commissioner of Environmental Protection.
"Controlled group" means two or more entities treated as a single employer pursuant to: (1) 26 U.S.C. s.52(a) or (b), without regard to 26 U.S.C. s.1563(b)(2)(C); or (2) 26 U.S.C. s.414(m) or (o).
"Cost recovery demand" means a charge imposed upon a responsible party for cost recovery payments under the Climate Adaptation, Resiliency, and Affordability Program established pursuant to section 5 of this act for payment into the Climate Adaptation, Resiliency, and Affordability Fund established pursuant to section 7 of this act.
"Covered greenhouse gas emissions" means, with respect to any entity, the total quantity of greenhouse gas emissions, expressed in metric tons of carbon dioxide equivalent, attributable to the total amount of fossil fuels extracted by that entity during the covered period. "Covered greenhouse gas emissions" includes those emissions attributable to all fossil fuel extraction worldwide by an entity, and are not limited to greenhouse gas emissions within the State.
"Covered period" means the time period beginning on January 1, 1995 and ending on December 31, 2024.
"Crude oil" means oil or petroleum of any kind and in any form, including bitumen, oil sands, heavy oil, conventional and unconventional oil, shale oil, natural gas liquids, condensates, and related fossil fuels.
"Department" means the Department of Environmental Protection.
"Entity" means any individual, trustee, agent, partnership, association, corporation, company, municipality, political subdivision, or other legal organization, including a foreign nation, that holds or held an ownership interest in a fossil fuel business during the covered period.
"Fossil fuel" means coal, crude oil, and fuel gases.
"Fossil fuel business" means a business engaging in the extraction of fossil fuels.
"Fuel gas" means methane, natural gas, and liquefied natural gas.
"Greenhouse gas" means the same as the term is defined in section 3 of P.L.2007, c.112 (C.26:2C-39).
"Notice of cost recovery demand" means the written communication from the department informing a responsible party of the amount of the cost recovery demand payable into the Climate Adaptation, Resiliency, and Affordability Fund established pursuant to section 7 of this act.
"Overburdened community" means the same as the term is defined in section 2 of P.L.2020, c.92 (C.13:1D-158).
"Public entity" means the State, a county, a municipality, a municipal or county authority, or any commission or other political subdivision of the State.
"Qualifying expenditure" means an authorized payment from the Climate Adaptation, Resiliency, and Affordability Fund established pursuant to section 7 of this act to pay for: (1) a climate change adaptation project, including its operation, monitoring, and maintenance; or (2) reasonable expenses associated with the administration of the Climate Adaptation, Resiliency, and Affordability established pursuant to section 5 of this act.
"Responsible party" means an
entity or a successor in interest to an entity that during any part of the
covered period was engaged in the trade or business of extracting fossil fuel
and to which the department has determined more than one billion metric tons of
covered greenhouse gas emissions are attributable, except that "responsible
party" shall not include any entity that lacks sufficient connection with the
State to satisfy the nexus requirements of the United States Constitution.
4. a. No later than six months after the effective date of this act, the Commissioner of Environmental Protection shall submit to the Senate Environment and Energy Committee and the Assembly Environment, Natural Resources and Solid Waste Committee, or their successor committees, an assessment of the covered greenhouse gas emissions attributable to each responsible party.
b. Each responsible party shall make payments to the State according to its proportional contribution to the total covered greenhouse gas emissions attributable to responsible parties, as determined by the commissioner pursuant to subsection a. of this section. A responsible party shall be strictly liable, without regard to fault, for a share of the cost recovery amount, which shall be used for the costs of climate change adaptive infrastructure projects, including their operation and maintenance, in the total amount of $50 billion.
c. Responsible parties that are entities in a controlled group shall be treated as a single entity for identification purposes, but shall be jointly and severally liable for the payment of any cost recovery demand owed by any entity in the controlled group.
d. If a responsible party owns a minority interest of 10 percent or more in another entity, the responsible party's applicable share of covered greenhouse gas emissions shall be increased by the applicable share of covered greenhouse gas emissions for the entity in which the responsible party holds a minority interest multiplied by the percentage of the minority interest held by the responsible party.
e. In determining the amount of covered greenhouse gas emissions attributable to any entity, the department may:
(1) require an entity to provide information to the department related to past practices, production, extraction, emissions, or other historical information about the entity necessary or appropriate to enable the department to determine whether such entity is a responsible party and, if so, the amount of such responsible party's covered greenhouse gas emissions;
(2) apply consistent emissions factors, consistent with the provisions of the "Global Warming Response Act," P.L.2007, c.112 (C.26:2C-37 et seq.), to convert extraction data into greenhouse gas emissions; and
(3) utilize any pertinent financial information provided by the entity to the Department of the Treasury. Implementing the provisions of this section shall constitute the performance of official duties for the purposes of R.S.54:50-8.
f. Prior to the issuance of any final cost recovery demand pursuant to this act, the department shall publish on its Internet website a plain-language summary of the methodology, emissions factors, and publicly available data sources used to determine proportional responsibility under this section. The publication of this information shall be for transparency purposes only and shall not alter, expand, or otherwise affect the authority of the department to make determinations pursuant to this act.
5. a. There is established the Climate Adaptation, Resiliency, and Affordability Program in the Department of Environmental Protection. The purposes of the program shall be to:
(1) secure payments from responsible parties;
(2) impose cost recovery demands on responsible parties and issue
notices of cost recovery demands;
(3) accept and collect payment from responsible parties; and
(4) disperse funds to implement climate change adaptation projects.
b. The department shall issue the cost recovery demands required under this section no later than six months following the adoption of the rules and regulations required under section 11 of this act.
c. (1) Except as provided in paragraph (2) of this subsection, a responsible party shall pay the cost recovery demand amount in full no later than six months following the department's issuance of the cost recovery demand.
(2) A responsible party may elect to pay the cost recovery demand amount in 20 annual installments, provided that:
(a) the first installment shall be paid no later than six months following the department's issuance of the cost recovery demand and shall be equal to five percent of the total cost recovery demand amount;
(b) each subsequent installment shall be paid one year from the initial payment each subsequent year and shall be equal to five percent of the total cost recovery demand amount. The commissioner shall adjust the amount of a subsequent installment payment to reflect increases or decreases in the Consumer Price Index;
(c) the unpaid balance of all remaining installments shall become due immediately if the responsible party fails to pay any installment in a timely manner, if there is a liquidation or sale of all, or substantially all, the assets of the responsible party, or if the responsible party ceases to do business; and
(d) in the case of a sale of all, or substantially all, the assets of a responsible party, the remaining installments shall not become due immediately if the buyer enters into an agreement with the department under which the buyer assumes liability for the remaining installments due under this section in the same manner as if the buyer were the responsible party.
d. The department shall deposit cost recovery payments into the Climate Adaptation, Resiliency, and Affordability Fund established by section 7 of this act.
e. A responsible party shall not assign any part of its obligation to satisfy a cost recovery demand to a non-responsible party, nor assert any claim for reimbursement or coverage for a cost recovery demand against a non-responsible party.
f. The department shall publish all information, requests for proposals, application forms, procedures, and guidelines related to the Climate Adaptation, Resiliency, and Affordability Program on its Internet website and in a manner that is accessible to the public and all potential recipients.
6. a. The department shall establish a process by which a responsible party may file a request for reconsideration of its cost recovery demand with the department within 60 days following service of the notice of cost recovery demand if within the United States, and within 90 days following such service outside the United States, and in doing so shall exhaust administrative remedies.
b. A request for reconsideration shall state the grounds for the request and include supporting documentation, which may include, but is not limited to, documentation of the party's covered greenhouse gas emissions and the party's contacts with the State.
c. The department shall consider each request for reconsideration received pursuant to this section, and shall determine whether the requester establishes to the satisfaction of the department that a portion of the requester's cost recovery demand amount was attributable to another responsible party, or an entity that is a successor in interest to the responsible party, and whether the notices of cost recovery demand should be updated. If the department determines that the notices of cost recovery demand should be updated, the department shall issue updated notices of cost recovery demand, which shall include a statement of the grounds of the department's determination, within 60 days following the expiration of all periods for submitting a request for reconsideration under this section.
d. If a notice of cost recovery demand issued pursuant to subsection c. of this section results in a new responsible party receiving a notice of cost recovery demand that was not issued a notice of cost recovery demand by the date required by subsection b. of section 5 of this act, then, in the same manner as set forth in subsections a. through c. of this section, the responsible party shall have 60 days from service within the United States, and 90 days from service outside the United States, to file a request for reconsideration, which filing shall exhaust the responsible party's administrative remedies, and the department shall consider such request for reconsideration and issue updated notices of cost recovery demand, if applicable, in the manner contemplated by subsection c. of this section.
e. If any updating of notices of cost recovery demand pursuant to subsection d. of this section results in a new responsible party that was not previously issued a cost recovery demand, such new responsible party shall also be given the opportunity to file a request for reconsideration in the same manner as set forth in subsection d. of this section, and the process shall continue until no new responsible party results from issuance of notices of cost recovery demand.
f. If the processes in this section result in issuances of notices of cost recovery demand after the applicable payment date, then the applicable payment date shall be the date which is 30 days after the final issuance of notices of cost recovery demand.
7. a. There is established in the Department of Environmental Protection a special, nonlapsing fund to be known as the "Climate Adaptation, Resiliency, and Affordability Fund." Monies in the fund shall be held separately and be dedicated solely for the purpose of making qualifying expenditures.
b. The fund shall be credited with:
(1) cost recovery payments distributed to the fund pursuant to section 5 of this act;
(2) any other moneys appropriated by the Legislature or otherwise made available to the fund for the purposes of this act;
(3) other gifts, donations, or other monies received from any source, public or private, dedicated for deposit into the fund and approved by the State Treasurer; and
(4) any interest earnings or other investment income earned or received on the moneys in the fund.
c. All moneys appropriated or otherwise made available to the fund shall be dedicated for the purposes of the fund. Pending use, moneys in the fund may be invested and reinvested in the same manner as other moneys of the department in the manner provided by law. All earnings received from the investment or deposit of such moneys shall be paid into and become a part of the fund and be available for use pursuant to this act.
d. The department shall establish a grant program to disperse funds from the Climate Adaptation, Resiliency, and Affordability Fund to project sponsors of climate change adaptation and resilience projects. In order to effectuate the grant program, the department shall:
(1) establish eligibility criteria for a program grant award;
(2) adopt guidelines and procedures for the submission of grant applications, including, but not limited to, guidelines and procedures addressing the form and manner in which such applications are to be submitted;
(3) establish criteria for the evaluation and prioritization of program grant applications;
(4) identify the project costs that are eligible for financing through the use of program grant funding, and identify the specific factors that will be considered, by the department, in determining the appropriate dollar amount of each grant award issued under the program; and
(5) identify the terms and conditions for the awarding of a program grant, and for the use of program grant funds awarded, pursuant to this section, including, at a minimum, conditions requiring the recipient of a grant award to report relevant information, to the department, regarding the recipient's expenditure of grant funds awarded thereto under the program.
e. At least 51 percent of grant funds issued under the Climate Adaptation, Resiliency, and Affordability Program shall be awarded to projects that provide environmental or other benefits to overburdened communities.
8. a. In considering and issuing permits, licenses, regulations, contracts, and other administrative approvals and decisions necessary for the implementation of projects funded in whole, or in part, through the Climate Adaptation, Resiliency, and Affordability Fund, each public entity shall apply the following standards:
(1) for any construction work, all employees of any contractors or subcontractors shall be paid the prevailing wage, as determined by the Commissioner of Labor and Workforce Development pursuant to P.L.1963, c.150 (C.34:11-56.25 et seq.) and P.L.2005, c.379 (C.34:11-56.58 et seq.). Whenever a recipient of moneys from the Climate Adaptation, Resiliency, and Affordability Fund contracts building service work or operations and maintenance work to a building service contractor, the contractor shall be held to the same obligations with respect to prevailing wages as the recipient. The recipient shall include terms establishing this obligation within any contract signed with a contractor;
(2) any climate change adaptation project that receives at least $5 million from the Climate Adaptation, Resiliency, and Affordability Fund shall be developed and constructed pursuant to a project labor agreement, subject to the provisions of P.L.2002, c.44 (C.52:38-1 et seq.); and
(3) to the extent practicable, contractors and subcontractors shall participate in apprenticeship programs, workforce training programs, and programs that provide for the recruitment of local or disadvantaged workers.
b. Notwithstanding any provision of this section to the contrary, all rights or benefits, including terms and conditions of employment, and protection of civil service and collective bargaining status of all existing public employees shall be preserved and protected. Nothing in this section shall result in the:
(1) displacement of any currently employed worker or loss of position, including partial displacement such as a reduction in the hours of non-overtime work, wages, or employment benefits;
(2) impairment of existing collective bargaining agreements;
(3) transfer of existing duties and functions related to maintenance and operations currently performed by existing employees of authorized entities to a contracting entity; or
(4) transfer of future duties and functions ordinarily performed by employees of authorized entities to a contracting entity.
9. a. Nothing in this act shall be construed to supersede or diminish in any way existing remedies available to a person or the State at common law or under statute.
b. Nothing in this act shall be construed to preempt, displace, restrict, or limit in any way any other claim or remedy available to a person.
c. Nothing in this act shall be construed to provide the Department of Environmental Protection or any other State agency any additional authority to regulate greenhouse gas emissions or other pollutants, or to collect any additional surcharges or fees from residents or businesses, other than the cost recovery payments authorized pursuant to subsection b. of section 4 of this act.
d. Nothing in this act shall be construed to authorize a responsible party to impose a surcharge, fee, or other direct charge on residential consumers or small businesses for the purpose of recovering any cost recovery payment made pursuant to this act.
10. a. On or before January 1st of the second calendar year following the date of enactment of this act, and annually thereafter on or before September 30th, the department shall publish an evaluation of the Climate Adaptation, Resiliency, and Affordability Program. The purpose of the evaluation shall be to determine the effectiveness of the program in achieving the purposes enumerated in subsection a. of section 5 of this act. Each evaluation shall be published and maintained on the department's Internet website and reported to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1).
b. The evaluation shall include, but not be limited to:
(1) a list of all responsible parties and their respective cost recovery demands, as well as any changes to an entity's status as a responsible party during the preceding program year;
(2) an accounting of all cost recovery demands made to responsible parties, actual monies collected, and penalties or other collection measures taken during the preceding program year;
(3) an accounting of all expenditures from the Climate Adaptation, Resiliency, and Affordability Fund, including, at a minimum, a separate accounting of:
(a) expenditures that benefit overburdened communities;
(b) expenditures used for grant programs for municipalities, community organizations, or other nonprofit organizations; and
(c) expenditures for administrative costs;
(4) a review of the status of climate change adaptation projects funded through the program, including the number of projects that have been completed, and a description of any projects that have been identified but not yet funded;
(5) a summary of the geographic distribution of climate change adaptation projects; and
(6) an identification of future spending needs.
11. No later than one year after the effective date of this act, the Department of Environmental Protection shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to implement the provisions of this act.
12. This act shall take effect immediately.
