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S2338 1R SCS FISCAL ESTIMATE
LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 2338
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JULY 6, 2026
SUMMARY
Synopsis:
"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.
Type of Impact:
Multi-year State expenditure increase and potential
multi-year State
revenue increase.
Agencies Affected:
Department of Environmental Protection, Department of the Treasury,
Department of Transportation, Board of Public Utilities, Department of
Health, Department of Education, Department of Agriculture, Department of
Community Affairs, Department of Labor and Workforce Development, and
Department of Law and Public Safety.
Office of
Legislative Services Estimate
Fiscal Impact
�
Potential Multi-Year State Revenue Increase
Indeterminate
Multi-Year State Expenditure Increase
Indeterminate
�
The Office of Legislative Services (OLS) lacks the empirical
basis to quantify the State revenue and expenditure increases that may result
from the establishment of the bill�s Climate Adaptation, Resiliency, and
Affordability Program.� This is so because: a) a scientific process is to
determine the greenhouse gas emissions cost recovery demands to be collected;
b) the State�s legal ability to collect the cost recovery demands is subject to
significant uncertainty; and c) the exact timing of compensatory payments and
program expenditures is unknown.
�
The State revenue gain would be from payments by parties deemed
responsible under the bill for New Jersey�s costs attributable to greenhouse
gas emissions.� The bill�s short-term State expenditure increases would accrue
from administrative expenditures, including from the engagement of any
consultants to assist with the determination of cost recovery demand amounts,
and from any legal expenses related to defending the legislation in court.� If
cost recovery demands were collected, the State would also incur longer-term
costs from using the collections to award grants to climate change adaptation
and resilience projects.
BILL DESCRIPTION
����� The bill would establish a Climate Adaptation,
Resiliency, and Affordability Program in the Department of Environmental
Protection.� The bill imposes liability on certain fossil fuel companies for
cost recovery payments, based on the amount of greenhouse gas emissions for
which the companies are deemed responsible, and establishes a program in the
department to collect and distribute compensatory payments.� The department
would be required to submit an assessment of the covered greenhouse gas
emissions attributable to each responsible party within six months after the
bill�s enactment.� The department and other State agencies enumerated in the
bill would have one year following the enactment of the bill to adopt rules and
regulations to implement the program.� The program would require companies with
significant historic contributions to global 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.
����� Within six months following the promulgation of the
rules and regulations, the department would issue proportional cost recovery
demands to each party held responsible for the costs to the State of covered
greenhouse gas emissions, up to a total maximum of $50 billion.� Responsible
parties are defined as entities that, during any part of the covered period,
were engaged in the business of extracting fossil fuels, and are deemed
responsible for more than one billion metric tons of covered greenhouse gas emissions.�
����� Responsible parties would have the option of paying
the assessed cost recovery demand amount either in full within six months of
the issuance of the cost recovery demand or in 20 annual installments, adjusted
to reflect increases or decreases in the Consumer Price Index.� The first
installment would equal five percent of the assessed total and would be due
within six months of the issuance of the cost recovery demand.� The subsequent
annual installments would each equal five percent of the assessed amount.�
����� The department would deposit compensatory payments
into a newly created Climate Adaptation, Resiliency, and Affordability Fund.�
The bill establishes the New Jersey Climate Adaptation, Resiliency, and
Affordability Trust, which would oversee the disbursement of funds for climate
change adaptation projects undertaken by grant recipients.� At least 51 percent
of grant funds issued under the program would be required to be awarded to
projects that provide environmental or other benefits to overburdened communities.�
At least five percent of grant funds under the program would be awarded to
local government entities.
����� The department would be required to publish on its
Internet website, prior to the issuance of any final cost recovery demand, a
plain-language summary of the methodology, emissions factors, and publicly
available data sources used to determine proportional responsibility.
FISCAL ANALYSIS
EXECUTIVE BRANCH
����� None received.
OFFICE OF LEGISLATIVE SERVICES
����� The OLS lacks the empirical basis to determine the
magnitude and timing of the State revenue and expenditure increases that may
result from this bill, for the following reasons:
�
Unknown Cost Recovery Assessments:
� The total cost to the
State of greenhouse gas emissions since 1995 is to be determined by the Department
of Environmental Protection within six months after the bill�s enactment.� The
OLS is not in a position to perform these complex calculations in a more
compressed timeframe.� For context, the OLS notes that similar legislation
recently enacted in the State of New York includes a total assessment of $75.0
billion.
�
Substantial Legal Risk:
� The State�s ability to enforce
the provisions of this bill is subject to substantial legal uncertainty with
the potential for non-trivial legal costs if the State will have to defend the Climate
Adaptation, Resiliency, and Affordability Program in litigation.����
����� Similar laws enacted in Vermont and New
York in 2024 are currently facing legal challenges from other states, industry
groups, and, as of May 2025, the federal government.� It would be overly
speculative for the OLS to forecast the outcomes of these lawsuits and the
extent to which decisions by competent courts might bar, limit, or delay the
implementation of New Jersey�s Climate Adaptation, Resiliency, and
Affordability Program.
�
Unknown Payment Schedule:
� The exact timing of
compensatory payments and program expenditures is unknown.� The Department of
Environmental Protection has up to six months after the bill�s enactment to
calculate the total amount of greenhouse gas emissions costs to the State.� The
department and other State agencies enumerated in the bill have up to one year
following the bill�s enactment to adopt rules and regulations to implement the
law, and the department then would be required to issue cost recovery demands
to responsible parties within six months thereafter.�
����� Beyond these temporal requirements, the
timeline is largely unknown.� The OLS cannot predict how many responsible
parties would dispute the assessment, how many would choose to pay immediately
in full, how many would choose to pay in installments, and the extent to which
litigation might delay the implementation of New Jersey�s Climate Adaptation,
Resiliency, and Affordability Program.
Section:
Environment, Agriculture, Energy, and Natural
Resources
Analyst:
Anna Heckler
Associate Fiscal Analyst
Approved:
Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the
Office of Legislative Services due to the failure of the Executive Branch to
respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980,
c.67 (C.52:13B-6 et seq.).