S 2338 — "Polluters Pay to Make New Jersey More Affordable Act"; imposes cost recovery payments on certain fossil fuel companies for funds needed for climate change adaptation; establishes program in DEP to collect and oversee distribution of funds.*

S2338 1R SCS [First Reprint]   SENATE COMMITTEE SUBSTITUTE FOR SENATE, No.

  CURRENT VERSION OF TEXT      SubstituteAs asreported adopted by the Senate EnvironmentBudget and EnergyAppropriations Committee.Committee on June 28, 2026, with amendments.

       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)(1)   climateclimate change, driven chiefly by the combustion of fossil fuels, is an immediate and grave threat to the State’s communities, environment, and economy.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;

 Its      irreversible(2)  consequencespreserving alreadythe confrontingState’s quality of life, particularly for today’s youth, who will bear the Statebrunt includeof risingclimate seaimpacts levels,over increasingtheir averagelifetimes, temperatures,constitutes moreone frequentof the State’s greatest challenges for the next three decades and severewill extreme-weatherrequire events,a flooding,shared heatsense waves,of toxicpurpose, algalsubstantial blooms,new or upgraded infrastructure, and otherdependable climate-relatedrevenue hazards;sources;

          (2)(3)   preserving the State’sNew qualityJersey ofSpill life,Compensation particularlyFund foralready today’sembodies youth, who will bear the bruntprinciple ofthat climateentities impactsresponsible overfor theirenvironmental lifetimes,harm constitutesmust onefinance ofits theremediation, State’syet greatestno challengesanalogous formechanism theexists nextto threeaddress decadesatmospheric andpollution willcaused requireby athe sharedbuildup sense of purpose,greenhouse substantialgases; new or upgraded infrastructure, and dependable revenue sources;

          (3)(4)   thedecades Newof Jerseypeer-reviewed Spillresearch Compensationnow Fundmake alreadyit embodiespossible to quantify, with high confidence, the principleproportion thatof entitieshistoric responsiblegreenhouse-gas foremissions environmentalattributable harmto mustthe financeextraction itsof remediation,fossil yetfuels noby analogousindividual mechanismcompanies existsover tothe addresspast atmospheric50 pollutionyears causedand bylonger, enabling assignment of proportional responsibility, with data regarding emissions attributable to the buildupextraction of greenhousefossil gases;fuels being widely available and administratively straightforward to use;

          (4)(5)   decadesthe ofLegislature peer-reviewedtherefore researchintends nowto makeestablish ita possibleClimate toAdaptation, quantify,Resiliency, withand highAffordability confidence,Program thethat proportionwill ofrequire historiccompanies greenhouse-gaswith emissionssignificant attributablehistoric contributions to thegreenhouse-gas extractionemissions ofto fossilbear fuelsa byshare individualof companies over the pastcost 50 years and longer, enabling assignment of proportionalinfrastructure responsibility,investments withand dataother regardingadaptation emissionsmeasures attributablenecessary to theprotect extractionState ofresidents, fossilbusinesses, fuels being widely available and administrativelynatural straightforwardresources; to use;

          (5)(6)   thewhile the Legislature thereforeis intendsnot making any findings of negligence or wrongdoing, or seeking to establishpunish acovered Climatecompanies, Adaptation,it Resiliency,is andin Affordabilitythe Programbest judgment of the Legislature to establish that willthe requirecovered companies withare significantstrictly historicliable for monetary contributions to greenhouse-gasaddress emissionsthe toharm bearthat ahas sharebeen ofcaused theand costto ofrequire infrastructurecovered investmentscompanies andto othercontribute, adaptationbecause measuresthe necessaryemissions toassociated protectwith Statethe residents,use businesses,of andtheir naturalproducts resources;contributed to climate change;

          (6)(7)   whileprogram thepayments Legislaturewill issupport nota makingrange any findings of negligenceresiliency orprojects 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 harmimpacts that has been caused and to require covered companies to contribute, because the emissions associated with the use of theirclimate productschange, contributedsuch toas:  climatecoastal-wetland change;restoration;

     (7)  program payments will support a range of resiliency projects that address the impacts of climate change, such as:

 coastal-wetland restoration;

          (8)(8)   basedbased 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;

(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;1991- 1[2002] 20221 ;

          (9)(9)   inin its September 2025 report entitled “The Economic Risks of Climate Change in New Jersey,” the Department of Environmental Protection (DEP) finds that climate change poses systemic economic risks to the State, damaging infrastructure and housing markets, threatening tourism and other key industries, and increasing costs while eroding municipal tax bases;

          (10)(10)   aa first-of-its-kind report mandated by the Minnesota Legislature and released by the Minnesota Pollution Control Agency in March 2026 found that the quantified impacts of climate change in Minnesota, without further adaptation investment, would be $17 to $22 billion per year by around 2050.2050.  New Jersey has over 3.5 million more people than Minnesota and the State’s economy is approximately 40 percent larger;

 New      Jersey(11)  hasState overand 3.5federal millionagencies morehave peoplealready thanidentified Minnesotatens andof billions in climate adaptation projects, for example:  (a) the State’sDEP economypublicly isidentified approximatelyover 40$15.3 percentbillion larger;in new climate adaptation projects for just 11 of New Jersey’s 564 municipalities;

     (11)  State and federal agencies have already identified tens of billions in climate adaptation projects, for example:  (a) the DEP publicly identified over $15.3 billion in new climate adaptation projects for just 11 of New Jersey’s 564 municipalities;

          (12)(12)   thethe 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;

          (13)(13)   itit 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.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;

 Scientific      analyses(14)  attributebased moreon thananticipated 70climate percentadaptation ofcosts, post-1988the globalLegislature greenhouse-gasdeclares emissionsthat responsible parties shall be strictly liable to the world’sState 100for largesta fossil-fuelproportionate companies,share underscoringof theirfunds elevatedneeded responsibility;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;

          (14)(15)   basedthe onprogram anticipatedwill climatecover adaptationemissions costs,associated with the Legislature declares that responsible partiesparties’ shallfossil befuel strictlyextraction liablefrom to1995 thethrough State2024, for a proportionateperiod shareduring ofwhich funds needed for climate adaptation projects, in the totalscience amount of $50climate billion. change Thiswas assessmentwell representsestablished, onlyincluding athe fractionrole of the“man-made” State’sgreenhouse anticipatedgas adaptationemissions, costsand whilerobust remainingdata modestexist relative to industryallocate capacity;proportional responsibility;

          (15)(16)   thethe program will coverbe emissionsremedial associatedin withnature, theseek responsiblecompensation parties’for fossilharm fuelarising extraction from throughpast 2024,pollution ato periodfund duringadaptation whichneeds, theis sciencenot ofregulatory climateor changepunitive, wasand wellis established,not includingintended theto roleintrude ofupon “man-made”areas greenhousewhere gasfederal emissions,law andpreempts robustState dataauthority; exist to allocate proportional responsibility;

    and (16)       the(17)  the program willwould benot remedialprovide inany nature,State seekentity compensationadditional forauthority harmto arisingregulate fromgreenhouse pastgas pollutionemissions toor fundother adaptationpollutants, needs,1regulate isenergy notproduction,1 regulatoryor to raise other revenue or punitive,create andany isnew notsurcharges intendedon toenergy intrudeconsumers uponor areassmall wherebusinesses, federalbeyond lawan preemptsassessment Stateof authority;covered companies.

and          b.  (17)The  theLegislature programtherefore woulddetermines notthat provideit anyis Statein entitythe additionalpublic authorityinterest to regulateestablish greenhousea gascost-recovery emissionsmechanism orthat othershifts pollutants,a orfair share of adaptation expenses from State taxpayers to raisethe otherentities revenuewhose orproducts createhave anycontributed newto surchargesclimate onchange.  energyThe consumersLegislature oralso smalldetermines businesses,that beyondthe anState assessmentis exercising its proprietary interest as a market participant both in establishing the cost-recovery system and in setting standards for the use of coveredfunds companies.collected through the cost-recovery mechanism.

      b.       The3.  LegislatureAs thereforeused determines that it is in thethis publicact: 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.  The Legislature also determines that the State is exercising its proprietary interest as a market participant both in establishing the cost-recovery system and in setting standards for the use of funds collected through the cost-recovery mechanism.

           “Carbon 3. dioxide Asequivalent” usedmeans inthe thisamount act: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.

          “Carbon“Climate dioxidechange equivalent”adaptation project” means thea amountproject ofdesigned carbonto dioxiderespond to, avoid, moderate, repair, or adapt to negative impacts caused by massclimate thatchange wouldand produceto theassist samehuman globaland warmingnatural impactcommunities, ashouseholds, aand givenbusinesses massto ofprepare anotherfor greenhousefuture gasclimate-change-driven overdisruptions, anwhile integratedmaximizing 20-yearenvironmental timeprotections.  frame“Climate afterchange emission.adaptation projects” include, but are not limited to:  (1) flood protection projects;

     “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:

 (1) flood protection projects;

          “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.

          “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 11 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.