A new law in New York that promises to make oil and gas companies pay for damages caused by climate change is expected to face a court battle before it raises any funds, according to legal scholars and others familiar with the legislation.
Gov. Kathy Hochul signed the landmark legislation, called the Climate Change Superfund Act, during the final days of 2024, making New York the second state to enact such legislation.
The law is meant to raise over $3 billion annually from large oil and gas companies to fund projects that help the state better withstand the effects of climate change, like extreme weather and floods. The aim, Hochul said in a statement, is to hold polluters responsible for their role as major greenhouse gas emitters, which contribute to climate change.
But the law is likely to face intense legal pushback from the oil and gas industry before it is implemented, said Martin Lockman, a climate law fellow at the Sabin Center for Climate Change Law at Columbia University.
“It's enormously financially significant for the oil and gas industry,” said Lockman. “I would expect them to spare no expense in opposing these bills.”
Lawmakers have introduced similar legislation in several other states, including California, Massachusetts, and Maryland. Legal challenges against the law in New York could impact how efforts to pass similar bills across the country fare, said Lockman.
The legal questions over the bill largely focus on whether a state has the authority to penalize a company for air pollution that happens elsewhere. Historically, such issues have been controlled by the federal government.
Last week, industry groups filed a lawsuit against Vermont’s version of the Superfund act, which passed last year. One of the plaintiffs, the American Petroleum Institute, has criticized New York’s version of the law as well.
“This type of legislation represents nothing more than a punitive new fee on American energy,” said a spokesperson for the American Petroleum Institute in a statement. “We are evaluating our options moving forward.”
In New York, the bill has been strongly opposed by the Business Council of New York State, which has criticized the legislation for “discriminating” against the oil and gas industry. The group has also raised concerns that it could increase the cost of energy.
“We certainly agree that states and national governments need to respond to climate change,” said Ken Pokalsky, the Business Council's vice president. “Saying that, one has to recognize a state is a state. It's not a nation. It's not a multinational organization like the U.N. So its ability to change things are limited.”
Though Pokalsky said he did not think the Business Council would be directly involved in any litigation, he said he expected other industry groups to file lawsuits.
However, the bill was written with the understanding that it would have to overcome legal challenges, said Blair Horner, senior policy director at the New York Public Interest Research Group (NYPIRG), which helped craft the legislation.
“You never know in advance what the courts are going to do,” said Horner. “But we did do our homework in the very beginning of this to make sure that we were on solid ground to advance this legislation.”
To Horner, there’s no time to waste. One NYPIRG study found that New York households are already paying $300 annually for climate damages to the state.
“From a New Yorker's point of view there, this is a long-term problem,” said Horner. “Every year is just going to keep getting worse. The price tag for New York taxpayers will just keep going up.”