The U.S. Department of Justice (DOJ) and a coalition of 24 state attorneys general have launched legal challenges against New York and Vermont’s newly enacted “climate superfund” laws. These laws aim to hold fossil fuel companies accountable for the environmental damage caused by climate change, potentially extracting billions of dollars to fund climate-related infrastructure costs. The federal government and the states argue that these laws violate constitutional provisions and could have damaging implications for national energy policy and economic stability.
“These burdensome and ideologically motivated laws and lawsuits threaten American energy independence and our country’s economic and national security,” stated Attorney General Pamela Bondi. “The Department of Justice is working to ‘Unleash American Energy’ by stopping these illegitimate impediments to the production of affordable, reliable energy that Americans deserve.”
New York’s climate law, which targets fossil fuel companies for damages from 1995 onwards, could extract up to $75 billion by 2050. Vermont’s law similarly seeks to recover damages for the state’s climate-related costs. The laws authorize both states to hold fossil fuel companies financially responsible for their emissions and infrastructure impacts. New York’s initiative alone is expected to require energy companies to pay around $3 billion annually.
“The expropriative laws would impose strict liability on energy companies for their worldwide activities,” said Acting Assistant Attorney General Adam Gustafson. “Our filings seek to protect Americans from unlawful state overreach that would threaten energy independence critical to the wellbeing and security of all Americans.”
The challenge is bolstered by a 24-state coalition led by West Virginia Attorney General JB McCuskey, who claims the laws are detrimental to U.S. consumers. “If this law stands, it’s those consumers who will be left paying the price for this ridiculous attempt by Vermont to line their coffers under the guise of ‘climate change,’” McCuskey stated.
At the heart of the lawsuits is the argument that the states are overstepping their bounds, violating the Commerce Clause, Due Process, and federal preemption under the Clean Air Act. Critics argue that the laws unfairly penalize out-of-state fossil fuel producers while allowing local emitters to avoid similar scrutiny.
The move follows Executive Order 14260, signed during the Trump administration, which sought to dismantle state-level regulations that burden energy development, particularly those focused on environmental, social, and governance (ESG) issues.
Industry groups such as the American Petroleum Institute (API) and the U.S. Chamber of Commerce have joined the legal opposition. They argue that the retroactive nature of the laws, and their attempt to impose liability on global companies, undermines U.S. competitiveness and national energy security. API also criticized the laws as an unconstitutional effort to circumvent federal authority over climate and energy policy.
In contrast, state officials in Vermont defend their legislation as a necessary measure to cover the mounting costs of climate change impacts. Vermont State Treasurer Mike Pieciak argued, “To support the health, safety, and prosperity of our communities, we must ensure Vermont is equipped financially to address the impacts of climate change.”
Despite these claims, the legal challenges highlight a larger tension: states seeking to hold energy companies accountable for climate-related damage and costs, while others argue such actions could harm the broader economy and U.S. energy security.
The legal outcomes could have far-reaching consequences, determining the scope of states’ powers in regulating climate policy and setting a precedent for how the U.S. addresses climate accountability in the future.
