Federal court puts another hold on New York’s climate superfund law

Another federal ruling blocks enforcement

Another federal judge permanently blocked enforcement of New York’s Climate Change Superfund Act, giving the federal government summary judgment on two preemption claims in a September 2026 ruling.

The decision followed another federal court ruling reaching a similar result, leaving New York unable to enforce the climate cost recovery program unless later judicial action changes that status.

New York created the program in 2024

Governor Kathy Hochul signed the Climate Change Superfund Act in December 2024, creating a program designed to collect money from certain fossil fuel producers for climate adaptation projects.

The law imposed strict liability on qualifying companies based on greenhouse gas emissions linked to fossil fuel extraction and crude oil refining during the defined historical period covered.

The law authorized $75 billion

New York authorized a total cost recovery amount of $75 billion, with assessments divided among responsible companies according to their calculated shares of covered greenhouse gas emissions worldwide.

The law gave the Department of Environmental Conservation authority to let responsible parties defer up to 92% of a cost recovery demand. If that option were offered, later payments would have to be made at least annually and completed within 24 years.

Large producers faced potential assessments

Companies could qualify as responsible parties if their covered products were tied to more than 1 billion metric tons of greenhouse gas emissions during the statutory period involved.

The covered period ran from January 1, 2000, through December 31, 2024, following amendments that extended the timeframe beyond dates included in earlier versions of the legislation itself.

Funds targeted climate adaptation projects

Money collected under the program was designated for climate adaptation infrastructure, including projects addressing flooding, coastal risks, extreme heat, and other climate-related conditions affecting New York communities.

The law directed disadvantaged communities to receive at least 35% of program benefits, with a goal of reaching at least 40% under the broader funding framework established there.

The federal government challenged the law

The United States and the United States Environmental Protection Agency filed a federal challenge in May 2025, arguing that New York’s law intruded on areas governed by federal authority.

New York, Governor Kathy Hochul, Attorney General Letitia James, and Environmental Conservation Commissioner Amanda Lefton defended the statute against the federal government’s request for summary judgment in court.

Little-known fact: California’s emissions fell 3.9% in 2024 after lawmakers extended its cap-and-invest program until 2045.

Clean Air Act preemption shaped the ruling

United States District Judge P. Kevin Castel ruled that the Clean Air Act preempted New York’s program because federal law governs regulation of interstate greenhouse gas emissions directly.

The court concluded that New York could not impose strict liability for historical emissions through a system that conflicted with the federal regulatory framework governing those emissions directly.

Foreign affairs provided another basis

The ruling also found that applying the law to emissions generated by activity outside the United States intruded on federal authority over foreign affairs and international climate policy matters.

Judge Castel granted summary judgment to the federal government on its foreign affairs preemption claim, providing an additional ground for the judgment alongside the court’s Clean Air Act ruling.

Other federal claims remained unresolved

The federal government raised additional constitutional claims, but the court found it unnecessary to decide those issues after resolving the two preemption questions presented in this federal case.

The remaining claims were dismissed without prejudice, meaning the September decision did not resolve their underlying merits, while the court still entered a permanent injunction against state enforcement.

An earlier ruling reached a similar result

A separate case had already produced the first federal merits ruling against New York’s Climate Change Superfund Act before Judge Castel issued his decision later in September.

Chief United States District Judge Brenda K. Sannes ruled on August 31 that federal law preempted the statute in litigation brought by other states and industry organizations.

Other states joined the earlier challenge

That earlier lawsuit included 22 states led by West Virginia, along with industry challengers that argued New York lacked authority to impose liability tied to historical emissions directly.

The August ruling and September decision involved separate lawsuits, but both concluded that federal authority prevented New York from enforcing the Climate Change Superfund Act during program implementation.

No company payments had been collected

New York had not issued cost recovery demands to fossil fuel companies before the September ruling, and companies had not made payments under the challenged program by then.

The New York State Department of Environmental Conservation had not begun assessments or collections before Judge Castel permanently barred the state from enforcing the program’s cost recovery requirements.

Curious what happens to New York’s climate law now? Learn how the federal court decision changes the state’s plans.

The permanent injunction stops enforcement

The September judgment declared the Climate Change Superfund Act unconstitutional and permanently barred the named New York defendants from implementing or enforcing its cost recovery requirements under state law.

The injunction means the state cannot proceed with assessments or collections under the law unless later judicial action alters the legal status of the federal court decisions involved.

Wondering why New York cannot enforce its $75 billion climate superfund law? See what the court decision changes.

What do you think about a federal court putting another hold on New York’s climate superfund law? Share your thoughts in the comments.

This slideshow was made with AI assistance and human editing.

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