S25-119

What This Bill Does

The Polluters Pay Climate Fund Act of 2025 imposes a new $1 trillion tax on major fossil fuel companies based on their proportional share of cumulative carbon dioxide emissions from January 1, 2000 through December 31, 2023. The tax applies to companies that extracted fossil fuels or refined crude oil and are responsible for more than 1 billion metric tons of covered CO2 emissions during the covered period. Revenue flows into a new Polluters Pay Climate Fund trust fund, which finances federal climate resilience, disaster response, adaptation, and environmental justice investments. The bill mandates at least $15 billion per year to FEMA for climate disaster response (including $3 billion for the BRIC program) and at least $6 billion per year for EPA Clean Air Act grants. 40% of all fund expenditures must benefit environmental justice communities. The bill explicitly preserves all existing state, local, and federal legal remedies against fossil fuel companies and prevents any preemption of state or local climate laws.

Who Benefits and How

• Environmental justice communities (communities of color, low-income, Tribal/Indigenous) receive a guaranteed 40% of all fund expenditures, directly addressing disproportionate climate impacts and historical disinvestment.
• FEMA and federal disaster response programs receive a minimum of $15 billion per year from the fund, including $3 billion for the Building Resilient Infrastructure and Communities (BRIC) program, significantly expanding climate disaster response capacity.
• State and local governments retain full authority to pursue climate litigation, enforce emissions standards, and recover costs for climate adaptation -- the bill explicitly prevents federal preemption.
• Plaintiffs in climate litigation benefit from the explicit preservation of all common law and statutory remedies, and the bill prohibits use of fund payments as evidence or offset in damages lawsuits against fossil fuel companies.
• Climate resilience sectors (clean energy, resilient infrastructure, conservation, agriculture, water systems) benefit from dedicated funding streams for adaptation and resilience projects.

Who Bears the Burden and How

• Major fossil fuel companies (those with >1 billion metric tons of CO2 emissions from extraction or refining during 2000-2023) face a proportional share of the $1 trillion tax, with the first payment due September 30, 2026. Companies include both U.S. persons and those engaged in U.S. trade or business.
• Successor entities to qualifying fossil fuel companies are liable for the tax, preventing avoidance through corporate restructuring or asset sales.
• The Secretary of the Treasury must promulgate implementing regulations within 18 months and administer the tax, including determining emissions attributable to each assessable person.

Key Provisions

• Tax is proportional: each company share of $1 trillion equals its share of total assessable CO2 emissions above the 1 billion metric ton threshold (Sec. 3/4691)
• Installment payments available: 20% in year 1, then 10% per year for 8 more years (Sec. 3/4691(e))
• Acceleration clause: remaining installments become immediately due on business cessation, liquidation, or asset sale (unless buyer assumes liability) (Sec. 3/4691(e)(3))
• CO2 conversion factors specified by fuel type: 942.5 MT/million lbs coal, 432,180 MT/million barrels crude, 54,440 MT/billion cubic feet gas (Sec. 3/4691(d)(8))
• Fund expenditures prioritized by climate impact, with Secretary having discretion on amounts beyond statutory minimums (Sec. 4(b))
• Tax payments cannot be used as evidence or to offset damages in climate litigation (Sec. 5(c))