Court Blocks New York Law Charging Oil Companies $75 Billion to Pay for Climate Change Costs

New York State’s Climate Change Superfund Act, which would require fossil fuel companies to pay a share of the investments in infrastructure needed to adapt to climate change in the state, ran into a major obstacle, with a U.S. federal judge ruling that it is preempted by federal law, and “cannot be enforced.”

Introduced in 2024 by New York State Governor Kathy Hochul, the Superfund Act was anticipated to require fossil fuel companies to pay approximately $75 billion through 2050, or about $3 billion per year.

Noting a need for “huge investments” in the coming years to adapt to the consequences of climate change, the Act pointed to fossil fuel combustion as the main driver of climate change, and added that research has made it possible to accurately determine the share of greenhouse gases emitted by specific fossil fuel companies over the past several decades, enabling the Superfund program to require companies “bear a proportionate share of the cost” of adaptation.

The legislation was built on similar programs in place in New York requiring entities responsible for environmental problems to help pay for cleanup, including the Inactive Hazardous Waste Disposal Site Program and the Oil Spill Fund.

In early 2025, however, a coalition of 22 U.S. State Attorneys General, led by West Virginia AG JB McCuskey, sued in a federal court to challenge the law, claiming that it “could be devastating to traditional energy producers.” The suit’s primary arguments alleged that the legislation violated 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 that states should not be able to fine companies for GHG emissions that occur beyond their borders.

Following the filing of the suit, President Trump signed an executive order in April 2025, directing the U.S. Attorney General to identify all state and local laws and regulations “burdening  the identification, development, siting, production, or use of domestic energy resources that are or may be unconstitutional,” calling out the New York law, and a similar Vermont law in particular. In May 2025, the U.S. Justice Department filed a similar suit and supported the state Attorneys Generals’ case.

In the ruling, U.S. District Judge Brenda Sannes largely agreed with the plaintiffs, noting that New York’s legislation is “simply beyond the limits of state law,” and that it “operates within an area of law “in which the federal interest is so dominant” that it cannot be enforced.” The court ruled that the New York law is preempted by the U.S.’ Clean Air Act. The court also found that any compensation sought through the law from foreign fossil fuel producers would also be preempted under the foreign affairs doctrine.

In a statement following the ruling, West Virginia AG McCuskey said:

“This is a major victory in the fight against liberal states, trying to balance their budgets on the backs of our hard-working men and women in the coal, oil and gas industries. We were the first to challenge this law because we saw it for what it was – a money grab by the elites in New York, who want to punish West Virginians for doing the jobs that enable them to heat their homes and build their cities.”