H.R. 1135 — Polluters Pay Climate Fund Act of 2025

This section establishes the short title of the Act as the “Polluters Pay Climate Fund Act of 2025.”

This section sets forth congressional findings that climate change, driven primarily by fossil fuel combustion, poses an immediate threat to the United States and has already caused rising sea levels, higher temperatures, extreme weather, flooding, heat waves, biodiversity loss, and other ecosystem harms. It states that the federal government, working with states and localities, must develop protective measures and resilience investments, with particular attention to communities of color, low-income communities, and Tribal and Indigenous communities that have experienced systemic disinvestment and fossil fuel pollution. This section further finds that climate-related extreme weather costs the United States at least $150 billion each year, that the protective measures needed over the decade after enactment will require trillions of dollars in new investment, and that the $100 billion each year assessed from fossil fuel companies for the Polluters Pay Climate Fund represents only a portion of the total public cost of climate response. It also states that peer-reviewed research can identify the share of carbon dioxide attributable to specific fossil fuel companies, that the industry has known since before 2000 of its role in causing climate change, and that the Act is not intended to determine fault or affect any person’s or government’s ability to hold polluters accountable for harms caused.

This section establishes a new Internal Revenue Code Chapter 38 subchapter imposing a one-time tax of up to $1 trillion on certain fossil fuel producers and refiners based on their share of covered carbon dioxide emissions. As background, the tax applies to “assessable persons” that are U.S. persons or engaged in a U.S. trade or business during the period beginning on the date of enactment and ending on December 31, 2025, and that, during the covered period of January 1, 2000, through December 31, 2023, extracted fossil fuels or refined crude oil and are determined by the Secretary of the Treasury to be responsible for more than 1 billion metric tons of covered carbon dioxide emissions. The section sets the tax liability for each assessable person at a proportionate share of $1 trillion, based on that person’s covered emissions above the 1 billion metric ton threshold relative to the aggregate emissions of all assessable persons. It defines covered carbon dioxide emissions by fossil fuel category, treating 942.5 metric tons of carbon dioxide as released for every 1 million pounds of coal, 432,180 metric tons for every 1 million barrels of crude oil, and 54,440 metric tons for every 1 billion cubic feet of fuel gases. It also defines fossil fuels to include coal, crude oil, and fuel gases, and specifies that controlled groups are treated as a single assessable person, with joint and several liability for the tax. The section requires payment by September 30, 2026, and permits an assessable person to elect to pay the liability in 9 annual installments: 20 percent in the first installment and 10 percent in each of the next 8 installments. It authorizes the Secretary to adjust emissions calculations in specified cases involving crude oil extraction by another assessable person, and it provides that the installment election is subject to acceleration if a required installment is not timely paid.

This section establishes the Polluters Pay Climate Change Fund in the Treasury and appropriates to it amounts equivalent to the taxes received under Internal Revenue Code section 4691. It directs the Secretary of the Treasury, in consultation with the Administrator of the Environmental Protection Agency and other relevant agencies, to use Fund amounts to support a comprehensive federal response to climate change through climate resilience, adaptation, disaster response, and environmental justice investments, including disaster recovery, climate-resilient infrastructure, energy system resilience, climate-smart agriculture, transportation planning, ecosystem restoration, public health, and drinking water and stormwater infrastructure. This section requires, each fiscal year and to the greatest extent practicable, that at least $15 billion be provided to the Federal Emergency Management Agency for response and resilience programs addressing climate-related disasters, including hurricanes, flooding, extreme heat, and wildfires, of which at least $3 billion must be used for the Building Resilient Infrastructure and Communities program under 42 U.S.C. 5133. As background, the Building Resilient Infrastructure and Communities program provides technical and financial assistance to states and local governments for predisaster hazard mitigation measures. The section also requires at least $6 billion for grants and technical assistance under section 138 of the Clean Air Act, and it directs that 40 percent of amounts appropriated from the Fund each fiscal year be used for investments that benefit environmental justice communities. It further requires the Secretary to establish selection criteria for amounts above the specified minimums, giving highest priority to the most impactful projects and activities.

This section preserves existing common law, State law, and Federal law remedies and expressly bars the Act, the amendments made by the Act, the Clean Air Act (42 U.S.C. 7401 et seq.), and Federal common law from preempting, displacing, or restricting claims under State or local law relating to alleged deception about fossil fuel and climate change, climate-related injury or damage, or failures to avoid climate-related harm, including nuisance, trespass, design defect, negligence, failure to warn, and deceptive or unfair practices claims. It also provides that amounts made available from the Polluter Pays Climate Change Fund under section 9512 of the Internal Revenue Code of 1986 and used under section 4(b) may not be required to be repaid because of a damages award in such a case and may not be used as evidence or to offset damages in such an action.

This section provides that the Act and its amendments do not preempt or supersede any State or local law, regulation, policy, or program, including measures that (1) limit, set, or enforce standards for greenhouse gas emissions, (2) monitor, report, and keep records of greenhouse gas emissions, (3) provide cost recovery for climate adaptation, mitigation, or resilience, or (4) conduct or support investigations.