Last December, New York passed a polluter pays “superfund” type law targeting fossil fuels companies. Under the law, fossil fuels companies face strict liability for GHG emissions and would pay into a $75 billion climate resilience fund. This fund would help New York build infrastructure and manage future effects of climate change-driven extreme weather events. Now, a group of 22 state Attorneys General have challenged the law in federal court. ESG Today summarizes the legal arguments in a recent article:
“Among the key claims, the suit challenges the law for allegedly violating the U.S. Constitution by pre-empting federal legislation, noting that the federal Clean Air Act empowers the EPA to address greenhouse gas (GHG) emissions from fossil fuel facilities, and arguing that states should not be able to fine companies for GHG emissions that occur beyond their borders.
Additional challenges brought against the legislation in the lawsuit include arguments that states may not impose penalties on companies to change conduct that is legal in other states, that it will drive up energy costs in other states and harm U.S. foreign policy, that it “imposes a harsh, retroactive penalty against a select few energy producers who lawfully extracted and refined fossil fuels,” and that it imposes an excessive fine, among others.”
New York’s law is the second in the nation to take the “superfund” approach. Vermont passed a similar law back in June 2024 but also faces litigation from the US Chamber of Commerce and the American Petroleum Institute challenging its law. It’s worth noting that the plaintiff’s preemption arguments rely on the Clean Air Act giving the EPA authority to regulate GHG emissions, an issue the Supreme Court has previously cast doubt on and continues to consider. How these court battles play out will have serious impacts on how states construct climate legislation and how the future of climate resiliency is funded at the state level.
Our members can learn more about climate litigation here.
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