SECOND FEDERAL COURT STRIKES DOWN NEW YORK CLIMATE SUPERFUND LAW AND BLOCKS ENFORCEMENT

NEW YORK — A second federal court has struck down New York’s Climate Change Superfund Act, ruling that the state law is preempted by federal authority and permanently blocking state officials from enforcing it.

U.S. District Judge P. Kevin Castel of the Southern District of New York issued the ruling on September 23, 2026, in a case brought by the United States and the Environmental Protection Agency against the State of New York, Governor Kathleen Hochul, Attorney General Letitia James, and Department of Environmental Conservation Commissioner Amanda Lefton.

The ruling follows a separate decision issued in August by the U.S. District Court for the Northern District of New York that also ruled against the law.

The Southern District case centered on whether New York could impose a $75 billion climate adaptation cost-recovery program on large fossil fuel producers based on greenhouse gas emissions attributed to fossil fuels they extracted or refined during the covered period.

New York enacted the Climate Change Superfund Act in December 2024 and later amended it. The law established a climate change adaptation cost recovery program intended to collect payments from qualifying fossil fuel companies and use those funds for infrastructure projects designed to address climate-related impacts within the state.

Under the statute, companies classified as responsible parties could be held strictly liable for a proportional share of the $75 billion total. The calculation was based on each company’s share of qualifying greenhouse gas emissions attributed to fossil fuels extracted or crude oil refined during the statutory period.

The law applied to entities determined to be responsible for more than one billion metric tons of covered greenhouse gas emissions and required sufficient contacts with New York to satisfy constitutional due process requirements. The liability structure did not depend on a finding that a company had violated an environmental law or committed misconduct.

Instead, the statute imposed strict liability based on the amount of qualifying emissions attributed to the company’s fossil fuel production or refining activity. New York described the payments as compensatory funding intended to help finance climate adaptation infrastructure.

The state law provided that responsible companies collectively contribute $75 billion, with each company’s share calculated according to its proportion of covered emissions. The United States challenged the law in federal court in May 2025.

The federal government argued that New York had entered areas governed by federal law by imposing financial liability tied to greenhouse gas emissions occurring across the United States and internationally.

The Justice Department sought a declaration that the law was unconstitutional and unenforceable and requested a permanent injunction preventing New York officials from implementing it.

New York opposed the federal government’s challenge. The state disputed the federal government’s standing and defended the law as a cost-recovery mechanism designed to address climate adaptation expenses within New York.

The case ultimately moved to summary judgment.

Judge Castel concluded that the United States had standing to challenge the law based on the federal government’s sovereign interests in regulating interstate greenhouse gas emissions and conducting foreign affairs. The court then ruled for the federal government on two separate preemption grounds.

The first involved the Clean Air Act.

The court concluded that the Clean Air Act displaced federal common law governing interstate greenhouse gas emissions and that, under controlling precedent, New York’s Climate Change Superfund Act was preempted because federal law did not authorize the state to impose this form of liability for interstate and global emissions.

The ruling focused on the nationwide and international reach of the emissions calculations used to determine liability. Under the statute, covered emissions were not restricted to greenhouse gases physically released inside New York.

Instead, the calculation could include emissions attributed to fossil fuels extracted or refined by responsible companies across the world during the statutory period.

The court found that imposing state financial liability on that basis intruded into an area governed by federal law. The second basis for the decision involved foreign affairs.

Judge Castel concluded that the law, as applied to foreign activities of fossil fuel producers, entered a field reserved to the federal government.

The court determined that New York’s attempt to impose cost-recovery obligations based partly on international fossil fuel activity could interfere with the federal government’s authority over foreign relations and international climate policy. That finding resulted in foreign-affairs preemption.

The court did not reach the federal government’s remaining constitutional claims because the two preemption rulings provided all of the relief sought. Those remaining claims were dismissed without prejudice.

The court ordered judgment entered for the United States and EPA and permanently enjoined New York officials from enforcing the Climate Change Superfund Act. The judgment closed the Southern District case at the district court level. The ruling represents the second federal district court decision against the New York law.

In August, Chief U.S. District Judge Brenda K. Sannes of the Northern District of New York also ruled against the Climate Change Superfund Act in separate litigation. The two cases were brought by different plaintiffs but challenged overlapping aspects of the same statute. The Southern District case was brought directly by the United States and EPA. The Northern District litigation involved a separate coalition challenging New York’s authority to impose the climate cost-recovery program.

Both courts reached the conclusion that federal law prevented New York from enforcing the statute.

The Justice Department described the latest decision as confirmation that national greenhouse gas policy and international climate matters fall within federal authority rather than individual state control.

Associate Attorney General Stanley E. Woodward Jr. criticized the New York law following the ruling and argued that it could affect energy costs and interfere with national energy policy.

Principal Deputy Assistant Attorney General Adam Gustafson of the Justice Department’s Energy and Natural Resources Division said both federal courts had concluded that the state could not establish its own framework for assigning liability tied to global greenhouse gas emissions.

Those statements represent the Justice Department’s position on the litigation and the policy consequences of the law. The court’s ruling itself was narrower.

Judge Castel did not determine whether climate adaptation projects are necessary, whether fossil fuel producers should bear financial responsibility for climate impacts as a matter of policy, or whether New York’s stated environmental goals were legitimate. The decision addressed whether this particular state statute could operate within the existing federal legal framework.

New York’s law was designed to shift part of the cost of future climate adaptation away from state taxpayers and onto large fossil fuel producers whose historical production was used to calculate their share of greenhouse gas emissions. The state Legislature described the $75 billion total as funding for projects intended to prepare infrastructure for climate-related impacts.

The federal court concluded that the method New York chose exceeded the state’s authority because the liability calculation reached interstate and foreign emissions governed by federal law and implicated federal foreign-affairs authority.

The distinction is important. The ruling does not prohibit New York from adopting environmental or infrastructure policies generally. It prevents enforcement of this specific climate cost-recovery structure as currently written. The permanent injunction means New York cannot impose the Superfund Act’s payment obligations while the judgment remains in effect. Any future change to that status would depend on subsequent appellate proceedings, legislative action, or another development in the litigation.

For now, the Climate Change Superfund Act has been invalidated by two separate federal district courts.

The September ruling adds a second legal barrier to New York’s attempt to collect $75 billion from major fossil fuel producers for climate adaptation projects and reinforces the central issue now surrounding the law: how far a state can go in assigning financial responsibility for greenhouse gas emissions generated through national and international economic activity.

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United States District Court, Southern District of New York — United States of America and U.S. Environmental Protection Agency v. State of New York, et al., Case No. 25-cv-3656 (PKC), Opinion and Order, Document 117. (Free Download)

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