Vermont v. Big Oil In Court: State’s Climate Deception Case Moves Closer To Trial, While Industry Allies Challenge Landmark Climate Superfund Law

The Green Mountain State “has become ground zero for climate litigation”

The state of Vermont is a step closer to putting Big Oil on trial for alleged climate change deception with a recent state court ruling rejecting oil companies’ motions to dismiss the state’s climate accountability case. At the same time, Vermont officials are now facing a new lawsuit brought by industry groups representing major oil companies that seeks to quash Vermont’s first-in-the-nation “climate superfund” legislation enacted just last year. “Vermont has become ground zero for climate litigation,” Patrick Parenteau, professor of law emeritus and senior fellow for climate policy at Vermont Law and Graduate School, told Climate in the Courts.

Through both litigation and legislation, Vermont is pursuing what some legal experts describe as complementary strategies to hold large oil and gas companies accountable for climate damages and for alleged deceitful conduct including engaging in climate change denial and greenwashing. In 2021 Vermont sued a handful of major petroleum companies claiming violations under the Vermont Consumer Protection Act, arguing the companies lied about the climate risks of their products and that they continue to lie to consumers by portraying their business as more environmentally friendly than it actually is. That lawsuit is one of more than 30 climate deception cases filed by municipalities and states against the fossil fuel industry. In 2024, Vermont also passed a historic piece of legislation, called the Climate Superfund Act, that imposes strict liability on large fossil fuel producers and aims to make them help pay for climate costs incurred by the state.

As anticipated, Vermont will have to defend that law, the first of its kind in the country, in court. On December 30, the US Chamber of Commerce and the American Petroleum Institute filed a lawsuit in Vermont’s federal district court arguing that the Climate Superfund Act is unconstitutional and barred by federal law. Defendants include the secretary of Vermont’s Agency of Natural Resources, Julie Moore, who is responsible for issuing cost recovery demands to companies under the new law, as well as Jane Lazorchak, director of the Agency of Natural Resources, who is responsible for administering the climate superfund program.

Vermont’s Climate Superfund Act does not reference specific companies, but it does target large fossil fuel extractors and refiners responsible for generating over one billion tons of climate pollution from 1995 through 2024. The law leaves it up to state agencies to determine who those companies are and how much each has to pay. The US Chamber and API say in their complaint that it can be assumed that four big oil companies – ExxonMobil, Chevron, Shell USA, and BP America – would be among those targeted, and all four companies are members of both the US Chamber and API.

Their lawsuit argues the Vermont law unfairly “seeks to punish a narrow set of energy producers for global greenhouse gases” and is unlawful under the US Constitution and the federal Clean Air Act. Echoing arguments made by oil companies in climate deception lawsuits, the Chamber and API say the Clean Air Act preempts state law pertaining to climate change. “Because Vermont’s Act seeks to impose liability for global greenhouse gas emissions from sources well beyond Vermont’s borders, the Clean Air Act preempts it,” the complaint argues. It further asserts that the Climate Superfund Act violates various provisions under the US Constitution, including the Due Process and Commerce Clauses. The Chamber and API additionally claim that Vermont’s law imposes “an excessive fine in violation of the Eighth Amendment” and amounts to an unconstitutional “taking” in violation of the Fifth Amendment.

The lawsuit was filed just days after another, much larger state – New York – enacted its version of the climate superfund law. The New York Climate Superfund Act, signed by Governor Kathy Hochul on December 26, seeks to recover a specific amount, $75 billion over 25 years, from large fossil fuel companies. That law is also expected to face legal challenges. Industry groups might claim that the $75 billion amount is arbitrary. However, in challenging Vermont’s climate superfund law, which does not peg a specific cost recovery figure, the Chamber and API argue it imposes an “unconstitutionally vague penalty.”

Parenteau said the challenge to Vermont’s law is “premature at this point” because the state is in the early stages of implementation and has not demanded any payments yet. “[The Chamber and API] are arguing associational standing through injury to their members like Exxon but none of their members has been billed for anything yet,” he told Climate in the Courts.

State’s Consumer Protection Case Against Oil Companies Advances

While the Vermont Attorney General Office will now have to defend the state’s climate superfund law in court, the Vermont AG has already gone on offense against Big Oil with its climate deception case filed in 2021 under the state’s consumer protection statute. The state got a significant procedural win in that case in December when Superior Court Judge Megan Shafritz denied all of the oil company defendants’ grounds for tossing out the case. The companies put forth a bunch of arguments for dismissal, including that the lawsuit violates the Commerce Clause and the First Amendment free speech right under the Constitution. But Shafritz ultimately rejected these claims, allowing the case to advance towards pre-trial discovery.

Oil company defendants such as Exxon are expected to appeal the ruling, and Parenteau said the appeal will go to the Vermont Supreme Court, which he said will likely uphold Shafritz’s ruling. “But,” he said, “this [appeal] will no doubt delay the case and drive up the costs of litigation which is Exxon’s strategy in all these cases.”