Republican States Launch Legal Challenge To New York’s Climate Superfund Law

Nearly two dozen Republican-led states are suing several New York state officials in an attempt to overturn New York’s novel climate change superfund law, which was enacted in late December.

West Virginia Attorney General John B. McCuskey announced the multi-state legal action against the New York law on February 6, calling it unconstitutional and misguided. “This lawsuit is to ensure that these misguided policies, being forced from one state onto the entire nation, will not lead America into the doldrums of an energy crisis,” he said in a statement. Twenty-one other states, along with several fossil fuel associations, joined West Virginia in bringing the new lawsuit, which was filed last week in federal district court in Albany, New York.  

New York’s Climate Change Superfund Act, signed into law by Governor Kathy Hochul on December 26, aims to recover $75 billion from large fossil fuel producers and refiners to help the state cover some of the costs of responding and adapting to damaging climate change impacts like catastrophic flooding, extreme heat, and sea level rise. Under the policy, companies responsible for generating over one billion tons of greenhouse gas emissions between 2000 and 2024 will be required to pay a one-time fee that will go into a newly established state fund. The policy leaves it up to state officials to develop rules determining which companies are on the hook and how much each must pay. A relatively small number of big fossil fuel and cement producers have generated the vast majority of emissions that are driving dangerous climate change, according to research in recent years.

The state of Vermont passed a similar climate superfund law last year, and other states are considering adopting the policy that would, for the first time, hold big fossil fuel firms liable for their climate pollution. But the fossil fuel industry and its allies are already striking back through the courts in an attempt to stop these state laws in their tracks. Just days after the New York law was enacted, the American Petroleum Institute (API) and the US Chamber of Commerce filed a lawsuit challenging Vermont’s climate superfund law, arguing it violates the US Constitution and is preempted by federal law.

The lawsuit challenging the New York law makes those same arguments. Specifically, it alleges preemption under the federal Clean Air Act and preclusion under the federal Constitution, as well as violations of due process under the Fourteenth Amendment and the Commerce Clause in addition to violations of the taking clause of the Fifth Amendment and of the excessive fines clause of the Eighth Amendment. The lawsuit also alleges violations under the New York Constitution.

Some legal experts, however, say these initial legal challenges are premature and unlikely to prevail. That is because the challengers will have to prove that they have been injured or harmed in some way, and right now these laws are still in very early implementation stages and no payment demands have been made. But the 22 states suing to try to stop the New York law may run into even more difficulties when it comes to convincing courts that they have standing, or appropriate grounds to bring a case.

“It’s complete legal overreach,” Robert Percival, an environmental law professor at the University of Maryland, said of the multi-state lawsuit against New York. “A state says another state passes a superfund law, and we don’t like it so therefore it violates all our rights? Just unbelievable.”

According to the New York complaint, West Virginia and other states say they have standing “based on their impending loss of tax revenue if the sale of certain energy products in their states is diminished.”

Rachel Rothschild, an assistant professor of law at the University of Michigan, said this argument is “a bit reaching, in terms of the injury.”

“New York’s law is directed towards fossil fuel companies, not towards other states,” she said. “It’s trying to recoup some of the adaptation costs New York is going to experience because of this harmful activity. That is a traditional area of state police power.”

While industry legal challenges to these climate superfund laws were expected, Rothschild said she had not anticipated that these challenges would come from other states. “Having this become seemingly a battle between states is a significant escalation,” she said. “I think they’re probably trying to scare other states from passing these laws.”

“Carefully Coordinated”

The move by West Virginia and other states to sue New York comes after Alabama led a coalition of 19 Republican states last year to petition the US Supreme Court with a proposed original jurisdiction lawsuit seeking to block climate liability lawsuits from California and several other Democrat-led states targeting Big Oil. That case, Alabama et al. v. California et al., similarly argues that the lawsuits threaten energy producers with ruinous liability and amount to unconstitutional attempts to assert control over the nation’s energy system. A decision from the Supreme Court on this petition remains pending.

These multi-state legal actions mounted by Republican attorneys general challenging state climate liability lawsuits and legislation come at a time when the prospect of holding major fossil fuel companies accountable for the damaging costs of their products is closer than ever to being realized, as states start to adopt climate superfund laws and several of the lawsuits advance towards trials.

But the backlash from Republican AGs defending the fossil fuel industry is not coming out of the blue. The Republican Attorneys General Association (RAGA), which first arose in response to the tobacco litigation in the 1990s, seems to be playing a significant coordinating role. McCuskey, the West Virginia AG, specifically thanked RAGA during his press conference announcing the New York lawsuit, noting the group’s “incredible support” allowed him to take on this multi-state legal action while he settles into his new position. RAGA, as investigative climate journalist Amy Westervelt explains, is a “pay-to-play operation” funded by wealthy conservative donors (such as legal activist Leonard Leo) and corporate interests. In the wake of the infamous 2010 Citizens United ruling, RAGA “was able to create a Political Action Committee to funnel dark money from industry groups and corporations straight to the attorneys general that are supposed to regulate those industries, but are now working on their behalf instead,” Westervelt writes in a recent primer piece.

Several coal industry groups and one coal company as well as the Gas and Oil Association of West Virginia have joined the 22 states in their lawsuit against New York, further indicating coordination between the Republican public officials and private fossil fuel energy interests.

“This is all carefully coordinated. The Leonard Leo network working with the state attorneys general to do the bidding of the oil companies,” Percival said. He called the state’s legal challenge to New York’s law “frivolous” and “political theater.”

Other backers of New York’s climate liability law also suggested the legal challenge is really coming from the fossil fuel industry and Big Oil.

“These coordinated legal attacks on state climate laws reveal an increasingly desperate fossil fuel industry watching its decades of impunity crumble,” said Cassidy DiPaola, communications director of the Make Polluters Pay campaign.

“We always knew that Big Oil & Gas would sue to avoid having to clean up the mess they made, following the playbook of Big Tobacco before them, so this announcement comes as no surprise. We’re very confident in the ability of the statute to withstand legal challenges, and in the ability of our Attorney General to defend it,” New York state senator Liz Krueger, a leading sponsor of the climate superfund legislation, said in a statement commenting on the West Virginia-led lawsuit.

“We look forward to defending this landmark legislation in court and defeating Big Oil once again,” said Paul DeMichele, a spokesperson for Governor Hochul’s office.

Long Road Ahead

The legal battle over state climate superfund laws is just beginning, and legal experts say it will take years and perhaps multiple rounds of litigation to resolve.

“It’s going to be a couple of years before that gets into serious litigation mode,” Patrick Parenteau, emeritus professor of law at Vermont Law and Graduate School, told Climate in the Courts.

In the meantime, Rothschild said that other states could very likely follow the lead of Vermont and New York and enact their own versions of climate superfund laws. But, she added, they should be prepared to “dig in for the fight.”

“Somebody’s going to have to pay for this,” she said. “If [states] don’t try, it will be ordinary citizens who will just be devastated by the financial costs of climate change. And we can’t give up on trying to hold these companies accountable.”