A federal judge dealt a serious legal blow to New York’s Climate Superfund Law on Monday, which may also damage chances for passage of a similar bill in New Jersey that would retroactively penalize energy companies $50 billion for legally providing fossil fuels.
Chief Judge Brenda Sannes of the US District Court for the Northern District of New York ruled that a federal appellate court’s decision in City of New York v. Chevron Corp. is relevant in the case brought against the state by business groups, contrary to New York’s earlier arguments.
Sannes also stated that the Clean Air Act doesn’t authorize New York’s law, thereby preempting it, and also said the Foreign Affairs Doctrine would preempt “any cost recovery demand against a foreign producer.”
New York and Vermont both enacted climate superfund laws in 2024, but were quickly sued over their policies. New York’s Climate Superfund law sought to retroactively penalize fossil fuel companies $75 billion.
In New Jersey, business groups led by NJBIA have labeled New Jersey’s attempt at a Climate Superfund Act as one of the most anti-business bills in state history, one that would lead to higher energy prices for consumers during an affordability crisis and threaten energy jobs.
NJBIA has also maintained that the bill went against the federal Clean Air Act on several different levels.
Sannes said the previous City of New York v. Chevron Corp. decision makes clear that the Climate Act operates in an area where federal law has governed consistently and for more than 100 years, adding later that “it is precisely because the Climate Act operates within an area of law ‘in which the federal interest is so dominant’ that it cannot be enforced.”
The U.S. Chamber of Commerce, one of the plaintiffs in the case, praised the ruling.
“The court today sent a clear message: New York cannot extract billions of dollars from energy companies for their lawful operations over the past 25 years,” US Chamber of Commerce Chief Policy Officer Neil Bradley said in a statement.
NJBIA Deputy Chief Government Affairs Officer Ray Cantor, who has led a large coalition opposing New Jersey’s Climate Superfund Act over the past two years, said the unconstitutionality of the New York law, including preemption of the federal Clean Air Act, was foreseeable.
He also said New York’s law is “legally indistinguishable from New Jersey’s proposed legislation.”
“We urge the supporters of this legislation in New Jersey to recognize that this bill is unfair, punitive to consumers, damaging to New Jersey jobs, and now, clearly unconstitutional,” Cantor said.
“We look forward to having a productive conversation with the Legislature and the Sherrill administration on real solutions to climate change and resiliency.”
Sen. Mike Testa (R-1) offered the same advice.
“Our state’s similar bill should go no further,” Testa said in the statement. “It’s a waste of time and resources.
“New Jersey families deserve a state where they can afford to live, work, and raise their children.”
“Our lawmakers should not be considering the same ill-fated policy in New Jersey,” added Sen. Carmen Amato (R-9).
“As we face an affordability crisis here in the Garden State, we should avoid policies that will not only add to our daily energy costs and threaten jobs but also add huge legal costs to the state because the bill is clearly, and now legally proven, to be unconstitutional.”
At the time of this publication, New York Attorney General Letitia James’s has not commented on the decision of whether the state would appeal it.
