SB 702 - HB 716
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 22, 2025
Fiscal Analyst: Rebecca Chandler | Email: rebecca.chandler@capitol.tn.gov | Phone: 615-741-2564
SB 702 - HB 716
SUMMARY OF BILL: Enacts the Climate Resiliency Fund Act. Establishes the Climate
Resiliency Fund (Fund), administered by the Department of Environment and Conservation
(TDEC), to finance climate adaptation projects, including flood protections, infrastructure upgrades,
healthcare for climate-related illnesses, renewable energy resilience, and administrative costs.
Requires TDEC to develop a Resilience Implementation Strategy (Strategy), incorporating scientific
methodologies and public input.
Imposes Cost Recovery Demands (CRDs) on fossil fuel extractors and refiners based on their
proportional greenhouse gas emissions from 1995 to 2025, using methodologies set by TDEC.
Requires responsible parties to be subject to strict liability, with payment options including full or
installment-based contributions.
Authorizes TDEC to adopt rules and methodologies for identifying responsible parties and
distributing funds. Implements an audit requirement every five years, conducted by the Comptroller
of the Treasury beginning January 1, 2031, to assess program effectiveness, financial accountability,
and cost efficiency. Requires findings to be submitted to the General Assembly, relevant legislative
committees, the Office of Legislative Budget Analysis, and the Legislative Librarian.
Directs the State Treasurer to evaluate and report on the total economic impact of greenhouse gas
emissions in Tennessee by January 15, 2027. Requires the assessment to include costs related to
infrastructure maintenance, public health, agriculture, and environmental management. Requires
findings to be submitted to the General Assembly, relevant legislative committees, the Office of
Legislative Budget Analysis, and the Legislative Librarian.
FISCAL IMPACT:
STATE GOVERNMENT
EXPENDITURES General Fund Climate Resiliency Fund
FY25-26 $1,755,600 -
FY26-27 $1,153,100 -
FY27-28 & Subsequent Years >$1,153,100
Total Positions Required: 10
OTHER FISCAL IMPACT
The total revenue generated from Cost Recovery Demands to the Climate Resiliency Fund cannot
be determined at this time due to multiple unknown factors, as the amount will depend on the total
SB 702 - HB 716 2
emissions attributed to each responsible party, the methodologies used to calculate historical
emissions, and the cost per metric ton of CO₂e, which has not yet been established. The Fund is
not expected to generate revenue until FY27-28. The total expenditures from the Fund, as well as
the recipients of such funds, cannot be determined with any reasonable certainty.
Assumptions:
• The proposed legislation mandates CRDs from fossil fuel extractors and refiners for
greenhouse gas emissions from 1995 to 2025. Revenue generated from these payments will
support the Fund established under this legislation.
• TDEC will determine the financial obligation for each responsible party based on emissions
data and an assigned cost per metric ton of carbon dioxide equivalent (CO₂e), while the
State Treasurer will assess the overall financial impact of emissions on the state.
• The final cost remains uncertain due to potential variations in emissions estimates, differing
methodologies for calculating historical emissions, and the selection of an appropriate cost
per ton.
• While the proposed legislation outlines basic collection methods, such as lump-sum and
installment payments, it does not establish explicit penalties for responsible parties that fail
to comply with cost recovery demands. However, while unpaid balances become due
immediately if a company misses a payment, liquidates assets, or ceases operations, it does
not specify additional enforcement measures, such as fines, liens, or legal action for
complete non-payment.
• Additionally, the legislation does not provide a structured compliance monitoring process
to ensure responsible parties accurately report emissions or meet their financial obligations
beyond the initial assessment and demand issuance by TDEC.
• As no precedent exists for this type of cost recovery system, challenges may arise in
monitoring compliance, resolving disputes, and managing administrative costs related to
enforcement.
• TDEC and the Treasury Department will need to begin implementation upon passage due
to the proposed legislation’s administrative and enforcement requirements. As CRDs may
not be immediately available, TDEC and the Treasury will need to allocate funds from the
General Fund in advance to CDR collection.
• TDEC will need to establish the Fund, develop the Strategy, set regulatory and enforcement
mechanisms, and coordinate emissions data collection.
• Based on information provided by TDEC, implementation will require hiring nine
additional positions, resulting in an increase in state expenditures.
SB 702 - HB 716 3
Title Salary Benefits
#
Positions Total
Senior
Associate
Counsel $152,616 $33,347 1 $185,963
Environmental
Consultant-3 $100,440 $24,691 1 $125,131
Environmental
Manager-3 $100,440 $24,691 1 $125,131
Program
Manager $87,036 $22,467 1 $109,503
Environmental
Consultant-2 $87,036 $22,467 1 $109,503
Environmental
Protection
Specialist-3 $87,036 $22,467 1 $109,503
Grants
Contracts
Administrator $87,036 $22,467 1 $109,503
Administrative
Services
Assistant-5 $87,036 $22,467 1 $109,503
Data Specialist $67,656 19,252 1 $86,908
Total $1,070,649
• Three of these positions will require fieldwork, necessitating the purchase of three vehicles
at $12,500 each, for a one-time total expenditure of $37,500 ($12,500 x 3). Additional one-
time costs include $6,500 per employee for computer and phone equipment, supplies, and
training, totaling $96,000 [($6,500 × 9) + $37,500] in one-time state expenditures in FY25-
26.
• Based on information from the Treasury Department, the scope of the reports required by
the legislation necessitates hiring two consultants at a rate of $250,000 each in FY25-26,
resulting in a total one-time expenditure of $500,000.
• The Treasury Department will also need to hire an additional Accountant-3 position to
assist with the calculation of the CRDs and other ongoing needs for the Fund. The total
increase in state expenditures is as follows:
Title Salary Benefits
#
Positions Total
Accountant-3 $63,828 $18,617 1 $82,445
SB 702 - HB 716 4
• There will be an additional one-time cost of $6,500 for computer and phone equipment,
supplies, and training.
• The increase of expenditures to the General Fund in FY25-26 will be $1,755,593
($1,070,648 TDEC salaries + $96,000 TDEC equipment + $82,445 Treasury salary +
$6,500 Treasury equipment + $500,000 Treasury consultants).
• The increase of state expenditures to the General Fund in FY26-27 will be $1,153,093
($1,070,648 TDEC salaries + $82,445 Treasury salary).
• Per the language of the legislation, the Fund may be used to pay reasonable administrative
costs. It is assumed that collection of CRDs will not commence until FY27-28.
• Therefore, any expenditures for personnel from the General Fund as a result of this
legislation, will instead be funded from the Fund, resulting is a recurring increase in
expenditures to the Fund of at least $1,153,093 beginning in FY27-28.
• TDEC will be responsible to disperse monies from the Fund to climate change adaptation
projects and community resilience and disaster mitigation outlined in the proposed
language. It is not known if or how many of these projects will finance state government,
local government, and/or private businesses or organizations projects.
• The exact increase in revenue to the Fund, as well as the expenditures of such, cannot be
determined with any reasonable certainty.
• Beginning in 2031, the Comptroller will conduct audits of the Fund. By that time, CRD
revenue is expected to have accumulated, any related expenditures, such as hiring personnel,
will be covered by the Fund.
• It is assumed that any other state departments or agencies or local governments can consult
with TDEC in adopting the Strategy utilizing existing resources and personnel.
• Any increase in expenditures in workload to the Davidson County chancery court as a result
of responsible parties bringing action can be accommodated with existing resources and
personnel.
• It is further unknown whether any federal funds or funds from other sources will be
available to be deposited into the Fund. This fiscal analysis assumes no such funding will be
available.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director