New York’s Climate Change Superfund Act Faces Legal Challenges

Jones Day reports that in December 2024, New York Governor Kathy Hochul signed the Climate Change Superfund Act into law, establishing an ambitious mechanism to fund climate adaptation projects.

The Act compels hydrocarbon-related companies to pay into a $75 billion fund over 25 years to address climate-related impacts. New York’s Department of Environmental Conservation (DEC) will implement the law, setting strict liability-based contributions for companies.

The Climate Change Superfund Act targets companies that extracted or refined hydrocarbons, contributing over one billion tons of greenhouse gas emissions between 2000 and 2018, and has a nexus in New York.

These entities are required to fund projects such as coastal wetlands restoration, energy efficiency upgrades, and infrastructure improvements for disadvantaged communities.

The DEC will determine contributions based on past hydrocarbon production. The first payments are due by September 2026. Companies can appeal DEC decisions administratively or in state court.

New York is now the second state, after Vermont, to enact a climate “Superfund” law, but both statutes are expected to face legal challenges. On December 30, 2024, the U.S. Chamber of Commerce and the American Petroleum Institute filed a federal lawsuit challenging Vermont’s law, arguing that it is unconstitutional and preempted by the federal Clean Air Act. 

The suit also contends that Vermont is improperly seeking duplicative monetary and injunctive relief, as the law targets some of the same companies already named in a pending 2021 lawsuit. Additional legal challenges are likely, particularly given the retroactive financial liabilities imposed by multiple states on the same hydrocarbon production.

The New York Climate Change Superfund Act reflects a growing trend of state-level climate accountability laws with ongoing efforts in New Jersey, Maryland, Massachusetts, and California.