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The Business Council opposes this legislation that would impose strict liability on entities engaged in the extraction, production and wholesale sale of fossil fuels for specified insurance related costs and general economic damages related to climate change.
This is another bill that conveniently ignores the widespread and significant benefits to New York residents, businesses and governments from having access to adequate, reliable and affordable energy. Current events illustrate the adverse economic impact of even modest disruptions in the state’s fossil fuel supplies and the resultant cost increases that ripple through the state economy. Likewise, we see policymakers responding with multiple proposals to mitigate cost increases on energy consumers.
Even so, under this bill, the state would pursue likely billions of dollars in claims against fossil fuel providers, based on insurance cost increases and storm- and other weather-related damages. Unlike some litigation impacts, these costs will likely be added to the retail price of fuels in New York State. Since this bill will generate an ongoing stream of legal actions, we could expect that any added costs would be treated as a cost of doing business in New York – just like a state-imposed income or excise tax.
The bill is designed to allow the Attorney General to bring civil claims against designated fuel producers and wholesale marketers. Regardless of the bill’s strict liability standard, these legal actions would undoubtedly result in contribution claims against others in the fossil fuel supply chain, even against the ultimate consumers of fuels who actually release GHG emissions into the environment. This is the pattern we have seen with litigation under the strict liability standards of federal CERCLA and New York’s inactive hazardous waste site statutes.
The bill raises other concerns:
- it makes no account for actions that increase the likelihood of weather-related damages. According to a recent report by the Association of Flood Plain Managers,
We know that development in high flood risk areas has exceeded development in low flood risk areas for decades. When the [national flood insurance program] was enacted in 1968, it was thought that it would encourage communities to avoid high-risk development. That did not happen. Why? One of the main reasons is that the short-term rewards for a community to allow that development exceeds the long-term rewards of avoiding risky development. Allowing development rewards communities with property taxes, which are the largest source of tax revenue for local governments. Local elected officials are the ones who decide whether to allow at-risk development in high-risk areas. While the locals may have some costs, the short-term monetary rewards often favor allowing the development.
- It creates the presumption that any and all adverse weather event is the product of human-based climate change, and provides a significant financial incentive to the state to bring litigation in the aftermath of any weather-related damage. Under this bill, how would the state discern the contribution of fossil fuel providers on a storm of “below average” intensity that results in significant damage due to the unique characteristics of the impacted area?
The petroleum and natural gas sectors have a proven record of reliably supplying the energy that New York’s economy and residents rely on, and they will continue to have a significant role supporting New York’s economy even during the state’s planned transition to a lower carbon future.
This type of liability scheme will only add to the state’s energy costs.
For these reasons, we strongly oppose adoption of S.8585-A/A.9279-A.