Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: RESOLUTION IN SUPPORT OF THE POLLUTERS PAY
CLIMATE SUPERFUND LEGISLATION
Date: October 14, 2025
Written by: Damien O'Bid, City Manager
Recommendation
It is recommended that the City Council adopt a resolution supporting the enactment of the proposed Polluters Pay Climate Superfund Act (SB 684/AB 1243).
Background
The City has consistently adopted a variety of greenhouse gas reduction policies, including the Electric Vehicle Reach Code (Ordinance 919), prohibitions on new or expanded gas stations (Ordinance 910), a resolution asking the State to accelerate greenhouse gas reduction timelines (Resolution 2021-41), moving the City to 100% renewable Evergreen electricity (June 2019), opposing expansion of off shore oil exploration (Resolution 2018-57), urging the United States Congress to enact a Revenue-Neutral Carbon Fee and Dividend Program (Resolution 2018-26), adopting the Climate Action 2020 plan (Resolution 2018-15) and a variety of related efforts from urban agriculture to waste reduction to bicycle and pedestrian improvements and policies.
According to Woody Hastings of the Climate Center (as of August 25, 2025), there are about 58 California cities and counties at some level of consideration. The following cities and counties have adopted resolutions:
San Francisco County Passed
Albany City Council Passed
Berkeley City Council Passed
San Diego City Council Passed
LA City Council Passed
Port Hueneme City Council Passed
Santa Cruz County Passed
Laguna Beach Passed
La Mesa City Council Passed
In Sonoma County, Sebastopol planned to have it on their Council agenda on Oct.7. Sonoma County staff asked to bring it in October, date uncertain. Santa Rosa, Rohnert Park, City of Sonoma, and Petaluma have all been asked and are all looking at it.
Analysis/Discussion
Assembly Bill (AB) 1243 and companion Senate Bill (SB) 684 (Addis) would establish a “Polluters Pay Climate Superfund Program” administered by CalEPA. The bills direct CalEPA to complete a climate-cost study, identify responsible parties (large historical fossil-fuel producers), calculate a proportionate cost-recovery demand based on emissions since 1990 (covered period varies by draft), and deposit collected sums into a State “Polluters Pay Climate Superfund Fund” for appropriation to mitigation, adaptation, disaster response, and programs benefiting disadvantaged communities. Both bills are active in the 2025–2026 session and have been the subject of committee hearings and amendments; they remain “in progress” as two-year bills at the time of this staff report.
Note that AB 1243 and SB 684 lists Dammon Connolly and Chris Rodgers, among others, as coauthors.
Existing Cap and Trade
Under authority from the California Global Warming Solutions Act (AB 32) and its extensions (e.g. AB 398), CARB issues a limited number of annual GHG “allowances” or permits up to a cap; covered emitters must surrender allowances for emissions or purchase/trade them. The cap declines over time, forcing overall emissions reductions from covered sectors. The program covers large point sources and fuel producers/importers, accounting for a significant share of statewide emissions. Revenue from allowance auctions (and other related sources) is directed to various climate, clean energy, and adaptation programs. The program is forward-looking (i.e. regulates current and future emissions) and is not primarily designed to recover past damages. In 2025, the State Legislature extended the cap-and-trade program (renamed “cap and invest”) through 2045.
Proposed Polluters Pay Superfund Act
AB 1243 / SB 684 is designed to operate in addition to existing climate policy tools; it is not a replacement for cap-and-trade. It seeks retrospective cost recovery (i.e. for climate harms and damages caused over time, especially from 1990 through 2024) rather than allowance pricing of future emissions. CalEPA would conduct a “climate cost study” to quantify total damages attributable to fossil fuel emissions over the covered period, project forward damages through 2045, then allocate to “responsible parties” a share of that cost in proportion to their emissions over that historical period. Collected cost recovery demands would be deposited in a new Polluters Pay Climate Superfund Fund in the State Treasury and, upon appropriation by the Legislature, used to fund adaptation, mitigation, resilience, disaster response, and programs benefiting disadvantaged communities.
Summary Comparison
The superfund approach is a supplemental “polluters pay” surcharge, focused on historic and cumulative responsibility, distinct from permit-based pricing of future emissions under cap and trade. However, the methodology for cost allocation will need to account for already regulated emissions and avoid effectively charging twice for the same emissions under different regimes.
The following table provides a more detailed comparison and relationship between the existing cap and trade program and the proposed Superfund Act.
Category
Polluters Pay Climate
Superfund Act (AB
1243 / SB 684)
California Cap-andTrade Program (AB
32, AB 398, etc.)
Interaction /
Relationship
Core Purpose
Recover the historical
and ongoing costs of
climate damages from
major fossil fuel
producers.
Reduce current and
future emissions by
setting an economywide declining
emissions cap and
allowing trading.
Complementary but
distinct: one is
retrospective
(liability), the other
prospective
(prevention).
Policy
Mechanism
“Cost recovery” demands
(retroactive fees) on
fossil fuel companies
proportional to their
historical greenhouse gas
emissions.
Market-based
allowance trading;
covered entities must
purchase or surrender
allowances for each ton
of emissions.
Different legal bases:
Polluters Pay =
liability/restitution;
Cap-and-Trade =
permit-based
compliance system.
Regulatory
Agency
California Environmental
Protection Agency
(CalEPA).
California Air
Resources Board
(CARB).
Agencies will need
coordination to avoid
conflicting definitions
of emissions and
responsible entities.
Covered
Entities
“Responsible parties” —
mainly large fossil-fuel
producers, extractors,
refiners, and importers.
Large stationary
sources, utilities, fuel
suppliers, and importers
above emissions
thresholds.
Overlap likely in
refinery/fuel sectors
— these entities
would be subject to
both regimes.
Time Frame of
Responsibility
Historical (approx.
1990–2024) and
prospective damages
through 2045.
Ongoing and future
emissions (2021–2045,
extended).
Sequential coverage:
Cap-and-Trade
governs the future,
Polluters Pay covers
the past.
Revenue
Destination
“Polluters Pay Climate
Superfund Fund” — used
for adaptation, resilience,
Greenhouse Gas
Reduction Fund
(GGRF) — used for
Potential
coordination
challenge: ensure
wildfire recovery, and EJ
programs.
mitigation and cleanenergy investments.
funding priorities
complement rather
than duplicate.
Revenue
Predictability
Uncertain; depends on
outcome of climate-cost
study, assessments, and
litigation.
Moderate; allowance
auctions occur quarterly
with relatively
predictable revenue.
Synergy: Polluters
Pay could supplement
GGRF in years of low
allowance prices.
Economic
Signal
One-time or periodic
lump-sum liability →
limited marginal
incentive effect.
Continuous price signal
→ incentivizes
emission reductions.
Complementary: one
recovers damages, the
other shapes future
behavior.
Legal Basis
State cost-recovery
authority modeled after
environmental superfund
principles (e.g.,
CERCLA).
Emissions regulation
under AB 32 authority.
Distinct legal
frameworks—but
both could face
challenges over
federal preemption or
commerce clause if
applied to out-of-state
actors.
Litigation
Risk
High — retroactive
liability and
extraterritorial reach
likely contested.
Moderate — program
upheld previously in
courts.
Risk of cross-impact:
lawsuits on Polluters
Pay could cite
conflict with cap-andtrade regulation.
Equity &
Justice Focus
Targets historical
polluters to shift cost
burden away from
taxpayers; emphasizes
climate justice and
community recovery.
Funds various
programs, many
benefiting
disadvantaged
communities (e.g., via
SB 535, AB 1550).
Reinforcing equity
emphasis: both target
community benefits,
though with distinct
legal rationales.
Financial Considerations
There are no anticipated direct financial considerations for the City. It is possible, if enacted, there would be new revenue available from the state for mitigation, adaptation and disaster response. However, most of Sonoma County, including Cotati, does not contain what are generally considered disadvantaged communities. The bills, as currently drafted, require no less than 40% of the funding to go to disadvantaged communities.
The actual amounts (and timing) are highly uncertain and depend on the climate-cost study, CalEPA’s determinations, legal outcomes, and legislative appropriation decisions. Any funds would be deposited to a state trust/fund and distributed only upon appropriation.
If enacted, the program would create new charges for certain industries. It is unknown how or if they would pass the costs back through in their products and services.
Environmental Issues
Where it can be determined with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA review.
This general rule can be applied to activities which could be subject to the CEQA process, but which logic dictates should not be subject to CEQA review. Therefore, based on the information provided above, the proposed resolution is exempt from CEQA pursuant to Section 14.03.021 of the CEQA Guidelines in that there is no possibility that the activity may have a significant impact on the environment.