A federal judge has stopped New York from enforcing its ambitious climate law that sought to make major fossil fuel companies contribute $75 billion toward the cost of dealing with climate-related damage.
The ruling puts the state’s Climate Change Superfund Act on hold before it could begin collecting billions of dollars from energy companies.
The law, passed in 2024, required selected fossil fuel producers to collectively contribute $3 billion annually for 25 years beginning in 2028. The money was intended to support infrastructure projects designed to protect communities from the growing impact of extreme weather, flooding and rising temperatures.
The measure targeted companies linked to at least 1 billion tons of greenhouse gas emissions between 2000 and 2018.
Chief U.S. District Judge Brenda Sannes, however, concluded that federal law prevented New York from operating such an emissions-based compensation scheme.
In her ruling, Sannes said the federal Clean Air Act gives the Environmental Protection Agency authority over the regulation of carbon dioxide emissions but does not permit states to create their own system requiring companies to pay compensation based on past emissions.
She warned that allowing individual states to impose such measures could interfere with the need for a consistent national approach to energy and environmental policy.
According to the judge, climate policy involves issues that extend beyond state borders, including energy production, economic growth, foreign policy and national security.
The challenge to the law was brought by 22 Republican state attorneys general along with industry organisations, including the U.S. Chamber of Commerce. The states argued that New York had exceeded its authority by attempting to impose financial responsibility on energy companies for global climate impacts.
One of the state officials leading the challenge welcomed the decision, describing the legislation as an attempt to extract money from energy producers.
New York officials, meanwhile, said they were reviewing the ruling and considering their next steps. The state has maintained that taxpayers should not be left to bear the full financial burden of damage linked to pollution.
New York became the second state in the United States to establish an industry-funded climate “superfund.” Vermont was the first, though its law is also facing legal challenges.
Under New York’s plan, the funds collected from fossil fuel companies would have supported projects involving roads, water infrastructure and sewage systems, as well as measures aimed at protecting communities and coastlines from increasingly severe weather events.
The ruling marks a significant setback for state-led efforts to make fossil fuel companies financially responsible for the long-term costs associated with climate change.
The dispute also highlights a larger legal battle taking shape across the United States: whether individual states can create their own mechanisms to recover climate-related costs from companies whose operations have contributed substantially to greenhouse gas emissions.
