On February 6, 2025, twenty-two states and four energy industry organizations and businesses filed a lawsuit challenging New York's "climate superfund" law.1 This law, signed on December 26, 2024 by New York Governor Kathy Hochul, creates a new state fund for climate change mitigation efforts'with proceeds derived from mandatory contributions by the largest fossil fuel companies subject to New York's personal jurisdiction. Modeled off the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),2 New York's Climate Change Superfund Act3 will require a select group of companies to pay $75 billion over 25 years into New York's Climate Change Adaptation Fund.4 This law and the litigation challenging it merit close attention from all involved in the energy industry, as they illustrate the challenging dynamics at play, as States and private companies seek to navigate a changed political environment in which the federal government is less likely to seek to address climate change or to fund solutions to it.
The Climate Change Superfund Act
The Climate Change Superfund Act adds Article 76 to New York's Environmental Conservation Law, creating the Climate Change Adaptation Cost Recovery Program.5 It is a strict liability law applied to "Responsible Parties"'parties that New York deems responsible for more than 1 billion metric tons of greenhouse gas emissions between January 1, 2000 and December 31, 2018.6 Only entities that are subject to New York's personal jurisdiction (as defined by the "nexus requirements of the United States Constitution") are considered Responsible Parties.7 The law holds Responsible Parties liable for a proportional share of the total greenhouse gas emissions above 1 billion metric tons emitted by all Responsible Parties.8 Responsible Parties are required to pay their proportion of $75 billion into the Climate Change Adaptation Fund beginning on September 30, 2026.9 A Responsible Party can also elect to spread that payment out over 24 years.10
Many details of the scheme are yet to be filled in, including which companies New York will deem to be Responsible Parties. But given the large number of energy companies with business connections to New York, many important companies in the energy industry face potential exposure.
The Constitutional Challenge
A recent lawsuit brings a sweeping challenge to New York's superfund law. It depicts the law as an attempt to impose New York's preferred policy on out-of-state energy producers, and to use the liability the law imposes to fund New York's own priorities. In particular, the lawsuit presents the following...
