SB 2008

This bill establishes the climate resiliency fund program to be administered by the department of environment and conservation ("department"") . The purposes of the program are as follows :  Secure compensatory payments from responsible parties based on a standard of strict liability to provide a source of revenue for climate change adaptation projects within this state.  Determine proportional liability of responsible parties.  Impose cost recovery demands on responsible parties and issue notices of cost recovery demands.  Accept and collect payment from responsible parties.  Develop, adopt, implement, and update the strategy that will identify and prioritize climate change adaptation projects.  Disperse funds to implement climate change adaptation projects identified in the strategy. CLIMATE RESILIENCY FUND This bill provides that t he climate resiliency fund (""fund""), as established by this bill, must be administered by the department to provide funding for climate change adaptation projects in this state. The fund consists of cost recovery payments distributed to the fund; monies from time to time appropriated to the fund by the general assembly; an d other gifts, donations, or monies received from a ny source dedicated for deposit into the fund. T he fund must only be used for the following purposes :  Pay qualified expenditures for climate change adaptation projects identified by the department in the strategy and reasonable administrative expenses of the program, including the cost to the comptroller of the treasury associated with hiring technical expertise necessary to complete the audits.  Implement climate adaptation action identified in the strategy.  Implement community resilience and disaster mitigation efforts. As used in this bill, a "" c limate change adaptation project"" is 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 in preparing for future climate-change-driven disruptions . LIABILITY OF RESPONSIBLE PARTIES This bill makes a responsible party strictly liable for a share of the costs of climate change adaptation projects and all qualifying expenditures supported by the fund. Entities in a controlled group must be treated by the department as a single entity for the purposes of identifying responsible parties; and are jointly and severally liable for payment of cost recovery demands owed by an entity in the controlled group. This bill, with respect to each responsible party, requires the cost recovery demand to be equal to an amount that bears the same ratio to the cost to the state and its residents, as calculated by the state treasurer, from the emission of covered greenho use gases as the responsible party's applicable share of covered greenhouse gas emissions bears to the aggregate applicable shares of covered greenhouse gas emissions resulting from the use of fossil fuels extracted or refined during the covered period. If a responsible party owns a minority interest of 10% or more in another entity, then the responsible party's applicable share of covered greenhouse gas emissions must 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. This bill requires t he department to use the United States environmental protection agency's emissions factors for greenhouse gas inventories as applied to the fossil fuel volume data for the purpose of determining the amount of covered greenhouse gas emissions attributable to an entity fro m the fossil fuels attributable to the entity. Cost R ecovery D emands This bill authorizes the department to adjust the cost recovery demand amount of a responsible party who refined petroleum products or who is a successor in interest to an entity that refines petroleum products if the responsible party establishes to the satisfaction of the department that a portion of the cost recovery demand amount was attributable to the refining of crude oil extracted by another responsible party; and the crude oil extracted by the other responsible party was accounted for when the d ep artment determined the cost recovery demand amount for the other entity or a successor in interest of the other entity. T he department must issue the cost recovery demands no later than six months after the adoption of the rules. This bill requires a responsible party to pay the cost recovery demand amount in full no later than six months after the department issued the cost recovery demand. A responsible party may elect to pay the cost recovery demand amount in nine annual ins tallments. The first installment must be paid no later than six months after the department issued the cost recovery demand and must be equal to 20% of the total cost recovery demand. Each subsequent installment must be paid annually beginning one year fr om the initial payment and 10% of the total cost recovery demand. The department may charge reasonable interest on each installment payment or a payment delayed for any other reason and, at the commissioner of environment and conservation's discretion, m ay adjust the amount of a subsequent installment payment or a payment delayed for any other reason to reflect increases or decreases in the consumer price index. The unpaid balance of all remaining installments become due immediately if any of the followin g occurs:  The responsible party fails to pay an installment in a timely manner, as specified in department rules.  There is a liquidation or sale of substantially all the assets of the responsible party.  The responsible party ceases to do business. For a sale of substantially all the assets of a responsible party, this bill provides that the remaining installments do not become due immediately if the buyer enters into an agreement with the department under which the buyer assumes liability for the remaining installments in the same manner as if the buyer were the responsible party. This bill requires t he department to deposit cost recovery payments collected under the climate resiliency fund. A responsible party aggrieved by the issuance of a notice of cost recovery demand must exhaust administrative remedies by filing a request for reconsideration with the department within 30 days following issuance of the notice of cost recovery demand. A request for reconsideration must state the grounds for the request and include supporting documentation. The department must notify the respo nsible party of the final decision by issuing a subsequent notice of cost recovery demand. A responsible party aggrieved by the issuance of a final notice of cost recovery demand may bring an action in Davidson County chancery court. This bill does not supersede or diminish other remedies available to a person at common law or by statute. REPORTING AND RULEMAKING On or before January 15, 2027, this bill requires the department, in consultation with the state treasurer, to submit a report to the general assembly detailing the feasibility and progress of carrying out this bill, including any recommendations for improving the administration of the program. T he department may promulgate rules to effectuate this bill. However, this does not limit the existing authority of a state department, agency, or entity to regulate greenhouse gas emissions or establish strategie s or adopt rules to mitigate climate risk and build resilience to climate change. Report on the C ost of C overed G reenhouse G as E missions On or before January 15, 2028, this bill requires the state treasurer, after consultation with the department and any other person or entity whom the state treasurer decides to consult, to submit to the chief clerks of the senate and the house of representatives; chair of the senate finance, ways and means committee; the chair of the committee in the house of representatives with jurisdiction over budget-related matters; the chair of the s enate energy, agriculture and natural resources committee; the chair of the committee in the house of representatives w ith jurisdiction over environmental-related matters; the office of legislative budget analysis; and the legislative librarian, an assessment of the cost to the state and its residents of the emission of covered greenhouse gas emissions. Climate R esiliency F und P rogram A udit Beginning on January 1, 2032, and every five years thereafter, this bill requires the comptroller of the treasury to evaluate the operation and effectiveness of the program. The comptroller must make recommendations to the department on ways to increase program efficacy and cost-effectiveness, and the results of the audit must be submitted to the chief clerks of the senate and the house of representatives; the chair of the senate energy, agriculture and natural resources committee; the chair of the comm it tee in the house of representatives with jurisdiction over environmental-related matters; the office of legislative budget analysis; and the legislative librarian. The comptroller must be reimbursed from the climate resiliency fund for any costs associat ed with hiring persons who possess the technical expertise necessary to complete the audits required."