The Act is only the second of its kind in the nation, following closely behind the May 2024 enactment of Vermont’s Climate Superfund Act.

Note: On February 28, 2025, New York Governor Kathy Hochul signed into law Senate Bill 824—an amendment to the Climate Change Superfund Act. Among other things, the amendment expands the coverage period under which parties would be liable for emissions from 2000 to 2024 (previously 2000-2018) while also providing additional time for the New York Department of Environmental Conservation to develop the regulatory schema necessary to implement the Act. Passage of the amendment was quickly met with a new lawsuit filed by the U.S. Chamber of Commerce, the Business Council of New York State, the American Petroleum Institute and the National Mining Association in the Southern District of New York. Duane Morris will continue to follow developments and issue subsequent Alerts on the New York Climate Change Superfund Act.

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On December 26, 2024, the Climate Change Superfund Act (Act) was signed into law by New York Governor Kathy Hochul. The Act seeks to hold major fossil fuel companies financially accountable for alleged contributions to climate change. The Act is only the second of its kind in the nation, following closely behind the May 2024 enactment of Vermont’s Climate Superfund Act. Like the Vermont Climate Superfund Act, the New York Act is akin to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in establishing a fund paid for by “responsible parties,” which under the Act includes any entity that is allegedly responsible for more than 1 billion tons of greenhouse gas emissions during a covered period of 2000-2018. Liability is limited only to the extent an entity does not have sufficient connection with the state of New York to “satisfy the nexus requirements of the United States Constitution.” The stated goal of the Act is to demand payments of $3 billion a year for the next 25 years, totaling $75 billion.

Like CERCLA, where monies recovered from potentially responsible parties are used to fund environmental remediation, the payments assessed against these entities will be used for infrastructure projects tied to climate change mitigation and adaptation. This includes restoring coastal wetlands, upgrading storm water drainage systems, upgrading transportation systems and other related projects. The New York State Department of Environmental Conservation is charged with developing an adaptation master plan to further detail use of the funds.

An amendment to the Act has already been proposed, which may place an even greater burden on targeted parties. This includes extending the covered period of liability from 18 to 24 years and empowering New York authorities to send requests to parties for information about “past practices, production, extraction, refining, emissions, or other historical information” to better determine a party’s liability under the Act.

In the buildup to the enactment of the Act, opponents raised a litany of concerns, including the Act’s alleged preemption of federal statutes such as the Clean Air Act and potentially harmful practical impacts of the legislation such as increased energy costs for consumers and businesses. A coalition of over 20 of the Act’s detractors, including 22 state attorneys general and industry groups, formally challenged the legality of the Act through a lawsuit filed on February 6, 2025, in the District Court for the Northern District of New York.

The New York Climate Change Superfund Act Lawsuit

The coalition of detractors’ lawsuit asserts both federal and New York state law claims and seeks both declaratory and injunctive relief from the provisions of the Act. Among the federal causes of action, the coalition asserts the following:

• The Act is violative of the Equal Protection Clause of the 14th Amendment by imposing liability largely against out-of-state fossil fuel companies and energy producers to benefit in-state interests while excluding many in-state greenhouse gas emitters from liability.
• The Act is violative of the Commerce Clause for targeting and/or discriminating against out-of-state fossil fuel companies and energy manufacturers, improperly burdening interstate commerce and regulating beyond New York's borders.
• The Act impermissibly preempts the Federal Clean Air Act, which regulates the air emissions from the parties targeted by the New York Act.
• The Act does not afford due process to the targeted companies that were at the time engaging in lawful conduct and arbitrarily assigns liability to certain fossil fuel and energy companies.
• The Act allows for the imposition of excessive fines and penalties against a small and specifically targeted group of companies in violation of the Eighth Amendment’s prohibition against excessive fines.

Among the New York state law claims, the coalition’s lawsuit asserts that:

• The Act’s unilateral levying of assessments on energy companies constitutes the taking of “private property … for public use, without just compensation,” violative of New York’s Takings Clause at Article 1, Section 7 of the New York Constitution.
• The Act empowers the state government to make assessments against energy companies in an arbitrary manner and without due process of law in violation of the Due Process Clause of Article 1, Section 6 of the New York Constitution.

While this lawsuit is still in its infancy, it is positioned to result in instructive decisions both for individual states structuring similar environmental legislation seeking to impose climate change costs on private entities and for energy and fossil fuel companies seeking to better understand their potential scope of liability as environmental legislation changes across the country.

For More Information

If you have any questions about this Alert, please contact Alicyn Craig, Louis C. Formisano, Matthew L. Capone, any of the attorneys in our Energy Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.