Judge strikes down New York's Climate Change Superfund Act

ALBANY - A federal judge has struck down New York's Climate Change Superfund Act, ruling that it is "simply beyond the limits of state law."

The ruling stems from a federal lawsuit that more than 20 states filed against New York in February 2025 challenging the constitutionality of the new Climate Change Superfund Act, which established regulations seeking to collect roughly $75 billion from companies - some controlled by foreign nations - deemed responsible for greenhouse gas emissions due to their refinement and production of fossil fuels.

U.S. District Court Chief Judge Brenda K. Sannes stopped short of declaring the statute is unconstitutional, but ruled that it is preempted by federal law and cannot be legally enforced.

"In seeking damages 'for the cumulative impact' of conduct that has occurred 'simultaneously across just about every jurisdiction on the planet,' the Climate Act conflicts with 'the overriding … need for a uniform rule of decision' on matters influencing national energy and environmental policy, and 'basic interests of federalism,'" Sannes wrote in a 63-page decision.

Texas Attorney General Ken Paxton, whose state is one of the plaintiffs in the case, had last year called the law "nothing more than an unconstitutional shakedown of vital American energy industries that form the bedrock of our national economic independence."

The legislation was signed into law at the end of December 2024 by Gov. Kathy Hochul, over the objections of a coalition of business, energy and labor organizations aligned with the Business Council of New York State, which had asked the governor to veto the bill.

It had been stripped from the state budget in 2024 but passed by the state Senate that May and the Assembly a month later.

The federal lawsuit was filed in U.S. District Court in Albany by attorneys generals from Alabama, Arkanas, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and Wyoming. Several industry groups, including the West Virginia Coal Association, Alpha Metallurgical Resources, and the Gas and Oil Association of West Virginia, are also parties to the litigation.

The lawsuit was filed against state Attorney General Letitia James, interim Department of Environmental Conservation Commissioner Sean Mahar, and acting Department of Taxation and Finance Commissioner Amanda Hiller. In the ruling this week, Sannes dismissed the case against Hiller but also denied the state's request for summary judgment.

The U.S. Department of Justice joined the legal battle last September , asking a judge to declare that New York's Climate Change Superfund Act is unconstitutional, and asserting that the legislation is a "lawless overreach" and that the federal government's motion for summary judgment in the case should be granted.

A similar lawsuit filed by the administration of President Donald J. Trump has targeted similar legislation in Vermont. 

"The state of New York believes it can seize control over the makeup of America's energy industry," the 76-page complaint filed by the 20 states asserted. "In an unprecedented effort, New York has set out to impose tens of billions of dollars of liability on traditional energy producers disfavored by certain New York politicians. These energy producers needn't operate in New York before becoming a target. And New York consumers won't bear the brunt of these crushing new costs once they're imposed. Rather, New York intends to wring funds from producers and consumers in other States to subsidize certain New-York-based 'infrastructure' projects, such as a new sewer system in New York City."

The superfund act tasked the state Department of Environmental Conservation with establishing regulations to identify "responsible parties" and the procedures for collecting payments from those companies after issuing notices of cost recovery demands. Although the state attorney general's office and Department of Taxation and Finance would be given authority to enforce the payment demands, it's unclear how that would work, including if the targets are in Russia or other nations at odds with U.S. interests.

The coalition supported by the Business Council characterized the legislation as "bad public policy" in a letter they sent to Hochul two years ago. The letter noted there are significant questions about the implementation of the regulations, whether they would meet constitutional muster, and the potential for "unintended consequences and increased costs for households and businesses."

The group said that the legislation also ignored the direct culprit for carbon emissions - consumers - and is discriminatory because it targets only the largest fossil fuel extraction and processing firms, including those that produce petroleum, natural gas and coal.

State and federal lawmakers who supported the legislation have taken varied positions on fossil fuels. Under former Gov. Andrew M. Cuomo, the state created the "FUEL NY" initiative in response to Superstorm Sandy in 2012, a catastrophic event that created extensive power outages and disruptions to fuel supply systems. That initiative, which remains in place, notes that New York "relies on the continuous availability and resupply of gasoline and diesel fuel to maintain public safety, commerce, and the well-being and economic vitality of its residents, businesses, and governments."

The FUEL NY plan sought to mitigate disruptions in fuel distribution and establish two fuel reserves, as well as a back-up generator program for gas stations in strategic locations, to make it easier for New Yorkers to resume "daily life" following a severe storm.

"Now, state government is proposing to penalize the very same suppliers of gasoline, natural gas, and other fossil fuel-based products," the business coalition group wrote. "By targeting and imposing strict liability only on the extraction and refinement of fossil fuels, the bill disregards the fact that most emissions are generated by the actual use of fossil fuels and not by their refinement or extraction. Imposing a fee on this past activity means is not designed to impact business or consumer behavior, suggesting the main goal of the legislation is to receive funding from the fuels sector."

A memo circulated in the Legislature three years ago by state Sen. Liz Krueger, another Manhattan Democrat, and Assemblyman Jeffrey Dinowtiz, a Bronx Democrat, cited a "peer-reviewed" article that they said ranked a list of violators and helped establish the amount of money they should pay New York. The article analyzed global emissions since 2000 and based the penalties on each company's annual assessment, and places "the burden of the damages caused on the manufacturer, not the users, even if the substance was legally produced and emitted at the time the harm was caused."

That annual assessment list ranges from $222 million for Exxon Mobil to $100 million for Lukoil in Russia and $23 million for Novatek, an oil and gas company that is Russia second-largest producer of natural gas. There are also more than a dozen U.S. companies on the bill's list.

The legislation entitles a fossil fuel company to contest any financial assessments "consistent with due process requirements of the U.S. Constitution."

But the lawsuit filed in federal court against New York contends the law runs afoul of the Constitution and the federal Clean Air Act, which regulates emissions across state lines. 

Krueger, in a statement issued Tuesday morning, criticized Sannes' ruling and noted, "I have always said that there would be many rounds of legal wrangling before the Climate Change Superfund (Act) could begin to provide relief for New Yorkers."

"It is unfortunate that Judge Sannes failed to recognize the clear distinction between a tort lawsuit, which was at issue in the New York City v Chevron decision, and a state Legislature exercising its constitutional powers to raise revenues and protect its citizen," Krueger said. "Regardless, this case will now move up to the 2nd Circuit, where a new panel of judges will have the opportunity to acknowledge the difference between this case and Chevron, or, failing that, to revisit the Chevron decision, which has been widely criticized on both the left and the right."

Krueger was referring to a case in which New York City sued five multinational oil companies under state tort law alleging public and private nuisance, trespass as a result of pollution. That lawsuit, which was dismissed in a unanimous decision by the 2nd Circuit U.S. Court of Appeals, sought billions of dollars to pay for sea-walls and other infrastructure to deal with storm events. The city argued fossil fuel producers were responsible for global warming.

Blair Horner, executive director of New York Public Interest Research Group, had pushed back on the Business Council during the legislative wrangling over the Climate Superfund Act, claiming the organization would rather have "taxpayers and small business owners pick up the entire tab for climate destruction, instead of the wealthy fossil fuel companies who knew they were causing climate change for decades and did nothing to change course."

In a statement issued late Monday, Horner that "the damages caused by the worsening climate are hammering (New Yorkers') wallets and unless this decision is reversed, they will face higher taxes or reduced public services - or both - to the tune of $75 billion."

"NYPIRG urges New York State Attorney General Letitia James to file an appeal, not only to protect the public's health and wellbeing, but to protect taxpayers too," he added.

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This article originally published at Judge strikes down New York's Climate Change Superfund Act .