A federal judge has delivered another victory to the oil and gas industry, striking down New York’s “Climate Superfund” law. The decision is the latest setback for attempts by blue-state politicians to use state and local laws to hold energy companies liable for international activity.
Judge Brenda Sannes found the law was pre-empted by federal law because it imposed liability for the worldwide production and refining of fossil fuels — activity beyond New York’s borders.
“The Climate Act is an unusual and sweeping statute, designed to address the effects of climate change — a ‘uniquely international problem of national concern,’ ” she wrote.
New York Gov. Kathy Hochul signed the measure into law in 2024, saying it would help pay for climate-related infrastructure projects. It required large energy companies, including ExxonMobil and Chevron, to pay a combined $75 billion over 25 years based on greenhouse gas emissions attributed to their fossil fuel production and refining.
The “Climate Superfund” was initially proposed after the 2nd U.S. Circuit Court of Appeals dismissed New York City’s lawsuit against Chevron, ConocoPhillips, ExxonMobil, Royal Dutch Shell and BP.
That suit was part of a wave of Democratic-led state and local legal actions targeting oil and gas companies that began in 2018. The goal was to force energy companies into multibillion-dollar payouts similar to the tobacco settlements of the 1990s.
The strategy of using state nuisance and consumer protection laws to pursue global emissions claims has largely been a bust. Courts in Delaware, New Jersey, Maryland, Pennsylvania, Puerto Rico and South Carolina have rejected such claims.
Supporters saw the New York law as a legislative end run around those rulings.
“Too often over the last decade, courts have dismissed lawsuits against the oil and gas industry by saying that the issue of climate culpability should be decided by legislatures,” said state Sen. Liz Krueger, D-Upper East Side. “Well, the Legislature of the State of New York — the 10th-largest economy in the world — has accepted the invitation.”
Sannes cited Krueger’s comment as evidence that the failed New York City suit was the basis for the law. She also noted that both sought compensation for the costs of protecting infrastructure from climate change.
“The Court sees no difference between the Climate Act’s scheme to remediate the effects of past greenhouse gas emissions and the City’s suit for compensatory damages,” Sannes wrote.
“There is very little daylight left to distinguish the Climate Act from the common-law claims in City of New York,” she added.
Industry allies and energy analysts say lower court judges are correctly following established precedent.
“When New York tries to say, ‘We’re going to try and regulate for the entire country ourselves by just forcing these companies to give us a bunch of money for stuff that they didn’t do in New York,’ ” said Josiah Neeley, a senior fellow in energy at the R Street Institute, “that sounds like a national question.”
The U.S. Supreme Court is scheduled to hear arguments Oct. 5 in Suncor Energy v. County Commissioners of Boulder County. The justices will consider whether federal law pre-empts state-law claims seeking damages for the effects of interstate and international greenhouse gas emissions.
The Boulder case is not identical. Boulder alleges energy companies misrepresented the dangers of climate change, while New York created a statutory $75 billion cost-recovery program.
The Supreme Court’s ruling could determine whether states and municipalities may impose liability for worldwide emissions.
Glenn Lammi, the executive director of the Washington Legal Foundation, predicted the Suncor Energy decision would determine the fate of any New York appeal.
“All eyes now turn to that case,” he said.
Neeley predicted environmentalists and their allies would continue pursuing their legal strategy against Big Oil. The question, he said, is whether the high court will ultimately resolve the cases.
“If they don’t hear the case, it’s kind of resolved,” he said. “The shortest time would be years, and the longest is never.”
Taylor Millard writes about politics and public policy for InsideSources.com.
