The superfund law is a continuation of the false narrative that it can hide the significant costs and more related to its planned transition to a low-carbon economy.
The superfund law is a continuation of the false narrative that New York can hide the significant costs and other impacts related to its planned transition to a low-carbon economy.
L ast year, New York lawmakers passed a state bill designed to hold “fossil fuel companies responsible for impacts of pollution on New York communities,” a law that Governor Hochul gave final approval to this March. Despite rhetoric from advocates, the law is almost certainly unconstitutional and will end up being overturned, and the windfall of “free funds” will never materialize.
The Climate Change Superfund Act, which is designed to generate $75 billion over the next 25 years, targets energy companies for their lawful conduct over the past several decades, and unfairly penalizes them contributing to greenhouse-gas emissions without regard to their essential role in supporting New York’s economy.
The Business Council of New York State Inc., New York’s combined statewide chamber of commerce and manufacturers association, recently joined the U.S. Chamber of Commerce, the American Petroleum Institute, and the National Mining Association in filing suit against the state of New York over its so-called “climate superfund” law that was signed into law on February 28, 2025. (Notably, West Virginia and 21 additional states have also filed suit against the New York law, and the U.S. Chamber and the American Petroleum Institute have filed suit against a similar law passed last year in Vermont.)
As we and other pro-business groups have stated since this New York bill was first proposed years ago, we strongly opposed it for practical, policy, and legal reasons. Since political discussions failed to stop this measure, now the legal concerns we have highlighted will be reviewed in the federal court. We believe this bill violates the U.S. Constitution and federal law. Moreover, it is simply bad policy for New York.
The “climate superfund” bill will assess the world’s largest fossil-fuel producers for climate-change damages occurring in New York. Specifically, it proposes to assess all entities whose worldwide extraction of fossil fuel and refining crude oil are responsible for more than 1 billion tons of greenhouse-gas emissions over the period from 2000 to 2024. Each such entity would owe the state its pro-rated share of $75 billion, paid to the state over the years. It exempts any entity “who lacks sufficient contacts with the state to satisfy the due process clause of the United States Constitution,” with its share of the $75 billion assessment falling to the remaining “responsible parties.”
The bill’s sponsors and supporters say the money is needed to fund climate-change response and resiliency investments, and to hold the fuel industry accountable for causing climate change. It purports to apply a “polluter pays” principle, and apply the liability structure set forth in federal and state “superfund” laws addressing contaminated sites. Some advocates have characterized this as having no impact on consumers, with the belief that the targeted companies will not be able to pass the assessment costs onto their final customers, so the cost would be borne by shareholders.
Our lawsuit raises several constitutional and statutory objections, including but not limited to the unlawful regulation of wholly out-of-state activities, the imposition of oppressive and retroactive penalties, and the interference with interstate commerce.
But the policy arguments against this bill are both interesting and compelling.
The bill is penalizing companies for selling fuels that are essential to the state’s economy, and to the well-being of New York families. In fact, since the 2019 passage of New York’s climate-change law that mandates significant reductions in statewide greenhouse-gas emissions and the elimination of fossil-fuel power generation, the state’s use of fossil fuels for electric power has gone up significantly, due in part to the closure of a major nuclear plant, and in part to growing electric power demand.
While imposing penalties under this legislation, the state elsewhere still recognizes the vital need for adequate fuel supplies. Not long ago, in response to Hurricane Sandy, New York created the “FuelNY” initiative establishing a strategic fuel reserve “to maintain public safety, commerce and the well-being and economic vitality of its residents, businesses, and governments.” Now, New York is proposing to penalize the very same suppliers of gasoline, natural gas, and other fossil fuel-based products — even though for most situations during the bill’s applicability period, no alternatives were available to fully serve the electric, heating, and transportation needs of the state.
The state legislature could have taken a more straightforward approach by adopting a carbon tax. In fact, the Hochul administration is developing a “cap and invest” rule that is effectively a tax on the emissions of energy providers and major fossil-fuel consumers, which (once proposed) is expected to generate more annual revenues than the “climate superfund.” (However, we haven’t seen any analysis of the cumulative economic impact of these two separate programs that could impose up to $10 billion or more annually on the fuel industry.)
Last, but certainly not least, this law is a continuation of the false narrative that New York can insulate residents from significant costs and other impacts related to its planned transition to a low-carbon economy. If and when its costs are passed onto consumers through higher fuel costs, we can see its proponents cast the blame on the fuel industry, rather than their aggressive climate policies. And these costs are in addition to rising rates for electric power, increased state funding for renewable energy and storage facilities, and plenty of other transition costs.
Climate change is real. And it requires an effective, thoughtful policy response. But that response also must consider economic impacts and affordability. As we and others have said for years, the likely impact of the “climate superfund” bill further illustrates the need for New York to conduct a detailed analysis of the costs of this transition, and a transparent discussion as to how those costs will impact New York residents and businesses alike.
Editor’s note: This article has been updated since its original publication.