Key Takeaways

  • Two federal courts have invalidated New York’s Climate Change Superfund Act on preemption grounds, foreclosing the state’s plan to collect $75 billion from fossil fuel companies for climate adaptation projects and signaling how a similar challenge to Vermont’s climate superfund law may be resolved.
  • New York’s Climate Superfund Act is preempted because domestic greenhouse gas emissions fall within an area of exclusive federal regulatory authority, and a state cannot recharacterize a compensation scheme for past emissions to avoid that preemption.

Our last issue covered express statutory preemption in the labeling context. A recent decision out of the Northern District of New York centered in on a different type of federal preemption. There, the Court struck down a state law requiring energy producers to pay billions of dollars for past emissions. Chief Judge Brenda Sannes of the Northern District of New York held that New York’s Climate Change Superfund Act is barred by both the Clean Air Act and constitutional preemption principles, granting summary judgment to a coalition of twenty-two states and several energy and business trade groups. State of W. Va. v. James, 2026 WL 2568355, at *1–2 (N.D.N.Y. Aug. 31, 2026). The Superfund Act, signed in late 2024, would have required the largest fossil fuel emitters from 2000 to 2024 to collectively pay $75 billion into a fund for climate adaptation infrastructure. Id.

Chief Judge Sannes found the Superfund Act indistinguishable from the state common law nuisance claims the Second Circuit rejected in City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021), where New York City tried to hold major oil companies liable for damages tied to worldwide greenhouse gas emissions. W. Va., 2026 WL 2568355, at *17–18. The Second Circuit concluded that such a claim would regulate emissions outside New York’s borders and was “simply beyond the limits of state law.” City of New York, 993 F.3d at 92.

New York argued its law differed because it required payment only for past emissions rather than capping future ones. W. Va., 2026 WL 2568355, at *19. Chief Judge Sannes was unpersuaded. She noted that the Second Circuit had already rejected a nearly identical effort by the City to recast its suit and found that tying the payment obligation to past conduct made no difference: domestic greenhouse gas emissions remain a matter Congress placed under exclusive federal control through the Clean Air Act. Id. Because federal common law governed this area before the Clean Air Act displaced it, Chief Judge Sannes held that New York needed specific congressional authorization to legislate in this space and found none. Id. at *23–24. She separately held that any cost recovery sought from a foreign producer would independently be preempted under the constitutional foreign affairs doctrine, since the Superfund Act intrudes on a field reserved to the federal government without addressing any traditional state responsibility. Id. at *28.

Vermont enacted a similarly structured climate superfund law in 2024 and the U.S. Chamber of Commerce, together with a trade group representing major fossil fuel companies, has sued to block it relying on the same Second Circuit precedent, in a case that remains pending. See Chamber of Com. of U.S. v. Moore, No. 2:24-cv-01513 (D. Vt. filed Dec. 30, 2024). Meanwhile, Judge P. Kevin Castel of the Southern District of New York reached the same conclusion as Chief Judge Sannes last week, enjoining New York’s Superfund Act in a separate suit. See U.S. v. New York, No. 1:25-cv-03656 (S.D.N.Y. Sept. 23, 2026). Whether that reasoning continues to carry over will be one of the more consequential open questions in climate liability law this year.