SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE COMMITTEE SUBSTITUTE FOR

SENATE, No. 3545

STATE OF NEW JERSEY

DATED:  JANUARY 8, 2026

      The Senate Budget and Appropriations Committee reports favorably a Senate Committee Substitute for Senate Bill No. 3545.

      As substituted and reported, this bill, to be known as the “Polluters Pay to Make New Jersey More Affordable Act,” would make certain entities liable for cost recovery payments, based on the amount of greenhouse gas emissions for which the entities are responsible.  The total amount of the payments would be set by the bill at $50 billion, and funds from the payments would be used to finance climate change adaptation projects.

      Specifically, the bill would apply to “responsible parties.”  The bill would define “responsible party” as an entity or a successor in interest to an entity that, between January 1, 1995 and December 31, 2024, was engaged in the trade or business of extracting fossil fuel and to which more than one billion metric tons of covered greenhouse gas emissions are attributable during that period.  The bill would require the Department of Environmental Protection (DEP) to develop an assessment of the covered greenhouse gas emissions attributable to each responsible party and to submit it to the Legislature within six months after the bill’s enactment.

      The bill would establish the Climate Adaptation, Resiliency, and Affordability Program (CARA program) in the DEP.  Under the CARA program, the DEP would issue cost recovery demands to the companies it found to be “responsible parties,” in an amount that is proportional to the greenhouse gas emissions covered under the bill that are attributable to the responsible party.  The bill would authorize responsible parties to pay cost recovery payments in annual installments over a 20-year period.  The bill would also require the DEP to establish a process by which a responsible party may file a request for reconsideration of its cost recovery demand, and section 6 of the bill would establish various provisions governing this reconsideration process.

      Under the bill, cost recovery payments would be deposited into a newly created fund in the DEP, to be known as the Climate Adaptation, Resiliency, and Affordability Fund (CARA fund).  The bill would direct the DEP to establish a grant program to disperse money in the CARA fund to project sponsors of climate change adaptation and resilience projects.  Under the bill, these projects would include, but not be limited to: flood protection projects; home buyouts; upgrades of stormwater drainage systems; defensive upgrades to roads, bridges, railroads, and transit systems; preparation for, and recovery from, extreme weather events; preventive health care programs and providing medical care to treat illness or injury caused by the effects of climate change; relocation, elevation, or retrofits of sewage treatment plants and other infrastructure vulnerable to flooding; and outdoor tree planting and installation of energy efficient cooling systems and other weatherization and energy efficiency upgrades and retrofits in public and private buildings.  The bill would require that at least 51 percent of grant moneys from the CARA fund be distributed to projects that provide environmental or other benefits to overburdened communities.

      Section 8 of the bill would establish certain project labor standards that public entities would be required to apply when considering and issuing permits, licenses, regulations, contracts, and other administrative approvals and decisions necessary for the implementation of projects funded in whole, or in part, through the CARA fund.  For example, any climate change adaptation project that receives at least $5 million from the CARA fund would be required to be developed and constructed pursuant to a project labor agreement, subject to the provisions of P.L.2002, c.44 (C.52:38-1 et seq.), under the bill.  Finally, the bill would require the DEP to public annual evaluations of the CARA program beginning in the second calendar year after the bill is enacted.

FISCAL IMPACT:

      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 multi-year 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.