Hochul signs bill that will charge oil and gas firms $75B, but critics say customers will really foot the tab

Today New York Governor Kathy Hochul signed into law the Climate Change Superfund Act, which will charge oil and gas firms an estimated $75 billion over the next 25 years. The controversial measure, sponsored by Senator Liz Krueger and Assembly Member Jeffrey Dinowitz, is modeled on federal and state superfund laws, which charge firms accused of pollution.

While environmental groups heralded the legislation, business groups argued that it will increase the cost of doing business in the state and that consumers will ultimately bear the brunt in terms of higher energy prices.

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“The Climate Change Superfund Act is now law,” said Senator Krueger. “Too often over the last decade, courts have dismissed lawsuits against the oil and gas industry by saying that the issue of climate culpability should be decided by legislatures. Well, the Legislature of the State of New York – the 10th largest economy in the world – has accepted the invitation, and I hope we have made ourselves very clear: the planet’s largest climate polluters bear a unique responsibility for creating the climate crisis, and they must pay their fair share to help regular New Yorkers deal with the consequences.”

However, critics have deemed the bill impractical and contend that it will be subject to protracted legal challenges.

“What would you have them do? Not sell fuel in New York State,” said Ken Pokalsky, vice president of the New York State Business Council. 

A group of business and industry leaders also lambasted the measure: “This legislation is bad public policy that raises significant implementation questions and constitutional concerns. Moreover, its $75 billion price tag will result in unintended consequences and increased costs for households and businesses.”

However, Gov. Hochul heralded the legislation as a victory for the state’s citizens, stating that the funds will be used for climate mitigation efforts.

“This bill would allow the state to recoup $75 billion from major polluters…For too long New Yorkers have borne the costs of the climate crisis, which is impacting every part of the state.”

The bill will result in significant assessments for both domestic and foreign energy producers, with Saudi Aramco of Saudi Arabia likely facing the largest charge at $640 million a year, while state-owned Mexican firm Pemex will be looking at a $193 million annual charge.

Russia’s Lukoil will likely face charges of around $100 million per year.

The assessments are based on estimated yearly CO2 emissions, measured in millions of tons of greenhouse gases.

In total, 38 firms deemed carbon polluters will be on the hook, including American oil giants Exxon and Chevron, the UK’s Shell and BP, and Brazil’s Petrobras.

Critics of the legislation have also noted the potential difficulty in collecting the stipulated assessments from foreign firms.

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The bill is also concerning consumer advocacy groups in light of its implementation in conjunction with other new measures which stand to greatly affect commuters and consumers:

“We also note this measure would come on the heels of the reinstatement of congestion pricing in New York City, and in advance of the Environmental Department’s pending `cap and invest’ rule, which combined will also impose billions of dollars in new assessments on fossil fuel usage, impacting a wide range of consumers,” stated bill opponents.