[co-author: Stephanie Kozol]*
A coalition of industry associations and 22 state attorneys general (AG), led by West Virginia AG JB McCuskey, filed a lawsuit against the State of New York in the U.S. District Court for the Northern District of New York challenging the validity of the state’s recently enacted Climate Change Superfund Act. The complaint asserts that the act’s retroactive imposition of multibillion-dollar fines on fossil fuel companies is both preempted by federal law and violates several bedrock constitutional principles.
Enacted by Governor Hochul in December 2024, the act requires major fossil fuel companies who are purportedly responsible for more than one billion metric tons of greenhouse gas emissions over a period of time to collectively pay $75 billion in fines over 25 years. The law assigns financial responsibility based upon a company’s greenhouse gas emission volume from 2000-2018, regardless of whether each company currently operates in the state of New York. The AGs challenging the act argue that the imposition of retroactive fines on energy producers for lawful activity violates the Commerce Clause by targeting out-of-state entities; that the act violates state and federal constitutional principles of due process, equal protection, and the prohibition on excessive fines and takings; and that the act is preempted by the federal Clean Air Act, which regulates interstate air emissions.
Why It Matters
The lawsuit could have significant implications not only for New York, but for other states considering a similar approach to funding climate change mitigation efforts through legislation. For example, Vermont has already enacted its own Climate Change Superfund Act and a number of other states are reportedly considering a similar approach. A ruling in favor of the plaintiffs could constrain state-led climate initiatives, while a decision upholding the law may embolden other states to adopt similar measures in the near future. Ultimately, the power of the individual states to regulate and punish companies that operate nationally and internationally hangs in the balance. Companies that have become the target of public and/or regulatory scrutiny should continue to track these cases to understand whether the company’s past and present conduct may result in future legal accountability.
*Senior Government Relations Manager
