A federal judge in the Northern District of New York has invalidated one of the most consequential climate-related laws New York has enacted in recent years. In State of West Virginia v. James, No. 1:25-cv-00168 (BKS/DJS), consolidated with Chamber of Commerce v. James, No. 1:25-cv-01307 (BKS/DJS), Chief Judge Brenda K. Sannes held on August 31, 2026, that New York’s Climate Change Superfund Act is preempted by federal law and therefore cannot be enforced.
The decision is significant not only because of the size of the program—$75 billion—but because it addresses a fundamental question about who has authority to impose financial responsibility for the consequences of greenhouse-gas emissions that occur across state and national borders.
What Was New York’s Climate Change Superfund?
New York enacted the Climate Change Superfund Act in December 2024. The statute created a “climate change adaptation cost recovery program” intended to require major fossil-fuel companies to contribute toward the costs New York incurs adapting to climate change.
The statute established a $75 billion “cost recovery amount.” The target was effectively $3 billion per year for 25 years. Liability was imposed on a company that, during the statutory covered period, extracted fossil fuels or refined crude oil and was responsible for more than one billion tons of covered greenhouse-gas emissions.
Importantly, the statute did not require a finding that a particular company had caused a particular flood, storm, heat wave or other event in New York. Instead, liability was based on the company’s proportional share of covered greenhouse-gas emissions. The statute expressly included emissions attributable to a company’s fossil-fuel extraction and refining activities worldwide, not merely emissions occurring in New York.
The liability was also strict: a covered company could be responsible “without regard to fault.” The Department of Environmental Conservation (DEC) was responsible for determining covered companies and calculating their respective cost-recovery demands.
The legislation contemplated using the resulting money for climate-adaptation infrastructure. The types of projects include measures addressing flooding, extreme weather, infrastructure resilience, and other climate-related impacts. The statute also directed that a substantial portion of qualifying expenditures benefit disadvantaged communities.
Why Did the Court Strike It Down?
Judge Sannes’s decision rested primarily on federal preemption.
The court’s analysis was heavily influenced by the Second Circuit’s 2021 decision in City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021). There, New York City attempted to hold major oil companies responsible under nuisance and related state-law theories for the consequences of greenhouse-gas emissions. The Second Circuit concluded that disputes involving interstate and international greenhouse-gas emissions implicate federal interests requiring a uniform national approach.
Judge Sannes concluded that the same principle applied to the Climate Change Superfund statute, even though the Superfund was enacted by the Legislature rather than created through common-law claims.
The court reasoned that greenhouse-gas emissions are an interstate and international problem and that federal law, particularly the federal Clean Air Act, occupies the relevant field. Because the Clean Air Act does not authorize a state compensation program of the type created by New York, the court concluded that the state statute is preempted.
The court rejected New York’s argument that the law should receive the usual presumption against federal preemption because it represented an exercise of traditional state authority. According to the court, the subject matter of the statute—liability for the cumulative effects of worldwide greenhouse-gas emissions—was not a traditional state responsibility requiring application of that presumption.
The court also held that the statute was preempted under the federal foreign-affairs doctrine insofar as it contemplated imposing liability on foreign fossil-fuel producers. The court concluded that applying New York law to worldwide emissions could interfere with federal management of international relations and international climate policy.
What Does the Decision Mean Right Now?
The immediate consequence is straightforward: New York cannot enforce the Climate Change Superfund Act as enacted.
The court granted summary judgment to West Virginia and the Chamber of Commerce plaintiffs because it found the Act was preempted by federal law. The parties were directed to report to the court by September 14 regarding how they intend to proceed.
That means the statutory mechanism under which DEC was expected to identify responsible companies, calculate their shares, and issue cost-recovery demands cannot presently be used to collect the planned $75 billion.
This is particularly important because the statute contemplated the issuance of cost-recovery demands on a timetable extending into 2028. The decision intervenes before that collection mechanism could produce the program’s intended revenue.
What Does It Mean for Businesses?
The businesses most directly affected are large companies involved in fossil-fuel extraction and crude-oil refining. Had the statute remained enforceable, companies meeting its emissions threshold could have faced potentially substantial assessments based on their proportional share of covered emissions.
The decision removes that immediate statutory liability.
For most other businesses, including manufacturers, retailers, contractors, professional-service firms and ordinary New York employers, the Act did not impose a direct assessment in the first place. Likewise, real-estate developers were not themselves targets of the Climate Change Superfund simply because they developed property or operated buildings.
There is, however, an indirect business implication. The anticipated $3 billion per year would have created a large source of funding for infrastructure projects throughout New York. Developers and other businesses potentially would have benefited from improvements to public infrastructure, drainage systems, flood resilience and other adaptation projects. Those projects will now have to be financed through other sources unless the law is ultimately revived.
What Does It Mean for Residents?
The Act did not impose a new charge directly on individual homeowners or tenants. Its intended funding mechanism operated at the corporate level.
The more immediate consequence for residents is therefore indirect. The law was intended to provide a dedicated source of money for adapting public infrastructure to climate-related risks. New York officials and legislative sponsors identified needs involving flooding, extreme heat, coastal resilience, and other infrastructure challenges.
Without the Climate Change Superfund revenue, those projects remain possible, but the state must rely on other funding mechanisms, such as existing appropriations, grants, bonds, and other state or federal programs.
What Does It Mean for Municipalities?
Municipalities likewise were not themselves subject to Climate Change Superfund assessments. Their principal interest was on the expenditure side.
Local governments routinely bear substantial costs for stormwater systems, roads, drainage infrastructure, flood mitigation, and other public facilities affected by severe weather. The Climate Change Superfund was intended to create another potential source of funding for those needs, including through programs involving local governments and community organizations.
The decision therefore does not prohibit municipalities from undertaking climate-resilience projects. Instead, it eliminates (or at least presently suspends) the particular state funding mechanism that was expected to support some of those projects.
That distinction matters for municipal officials and land-use practitioners. The ruling does not invalidate New York’s broader environmental, climate, zoning, or land-use laws. It addresses the specific statutory mechanism created by the Climate Change Superfund Act.
What Happens Next?
The most significant question is whether New York will appeal.
The legal issues are also likely to remain relevant beyond this particular statute. The decision relies substantially on City of New York v. Chevron, while the Supreme Court has separately agreed to consider a related question involving whether federal law precludes state-law claims seeking damages for injuries allegedly caused by interstate and international greenhouse-gas emissions.
Accordingly, the ultimate scope of state authority to impose climate-related financial liability remains an issue to watch.
For now, however, New York’s $75 billion Climate Change Superfund is not an operating source of revenue. Fossil-fuel companies do not face the assessments contemplated by the statute, municipalities cannot rely on those assessments as an anticipated funding stream, and residents and other businesses must look to other programs and sources of funding for climate-adaptation projects. The next chapter will depend largely on the outcome of any appeal and on whether New York or other states attempt to structure similar programs differently in response to the court’s reasoning.
Jacob H. Zoghlin is a Partner in Underberg & Kessler LLP’s Litigation department and chairs the firm’s Environmental & Energy Law and Municipal practice groups. His practice focuses on environmental, land use, energy, and municipal law. He regularly represents towns, developers, and community members in matters involving SEQRA, zoning, permitting, and land use litigation. He can be reached at (585) 258-2834 or jzoghlin@underbergkessler.com.
Reprinted with permission from The Daily Record and available as a PDF file here.
