New York Enacts Climate Change Law That Fines Companies for Historical Emissions
On December 26, 2024, New York enacted a law requiring certain energy companies to contribute cumulatively $75 billion to a climate "superfund" over the next 25 years.
In the final week of December 2024, New York Governor Kathy Hochul signed the "Climate Change Superfund Act" (S.2129-B/A.3351-B). Although its name evokes the original federal Superfund law from 1980 for hazardous-waste remediation, this novel state law is entirely different. It subjects companies to sweeping retroactive liability in an unprecedented fashion.
The law covers companies with a constitutional "nexus" to the state that were involved in extracting or refining hydrocarbons that emitted over one billion tons of greenhouse gases after combustion between 2000 and 2018. Covered companies must contribute a cumulative total of $75 billion over the next 25 years to New York's "climate change adaptation fund." The fund will finance projects such as coastal-wetlands restoration, energy-efficient building updates, and infrastructure projects for disadvantaged communities.
New York's Department of Environmental Conservation ("DEC") will implement the law, setting required contributions and administering the climate fund. The first payments are due September 30, 2026. DEC will use a strict liability standard regardless of wrongdoing to set each company's required contribution based on past hydrocarbon production levels. Any decision by DEC requiring a company to make a contribution will be subject to administrative appeal and judicial review in state court.
Following Vermont, New York is the second state to enact such a climate "Superfund" law. However, both laws will face legal challenge. On December 30, 2024, the U.S. Chamber of Commerce and the American Petroleum Institute challenged the Vermont statute in federal court, arguing that it is unconstitutional and preempted by the federal Clean Air Act. The suit also argues that Vermont is improperly seeking duplicate monetary and injunctive relief because its new law targets some of the same companies that it is suing in a pending 2021 lawsuit. Other grounds for challenging the laws are numerous and significant due to the retroactive charges by different states on the same hydrocarbon production.
Similar laws are percolating in other states. New Jersey, Maryland, Massachusetts, and California tried to pass similar legislation in 2024, and those efforts are ongoing. Energy companies and other interested parties should be prepared for more to come.
