Federal Court Strikes Down New York’s Climate Change Superfund Act

On August 31, 2026, the U.S. District Court for the Northern District of New York struck down New York’s Climate Change Superfund Act (the Act). As we reported when the Act was signed into law in 2024, the Act established a Climate Change Adaptation Cost Recovery Program authorizing New York to recover $75 billion over 25 years from fossil fuel companies for their alleged contributions to greenhouse gas (GHG) emissions. As we also reported when challengers filed suit in February 2025, a coalition of twenty-two states and multiple industry associations had argued that the Act was preempted by the Clean Air Act (CAA) and violated the Supremacy Clause, among other issues. Chief U.S. District Court Judge Brenda K. Sannes agreed, granting summary judgment in favor of the challengers and holding that the Act is preempted by federal law and cannot be enforced.

Background

Enacted in December 2024, New York’s Act establishes a $75 billion climate change adaptation cost-recovery program. It directs the New York Department of Environmental Conservation to identify fossil fuel producers and refiners responsible for covered greenhouse gas emissions during the period from 2000 through 2024 and to allocate liability among those entities. Importantly, the statute looks beyond emissions occurring in New York. “Covered greenhouse gas emissions” include emissions attributable to a company’s fossil fuel extraction and refining activities worldwide.

The Act faced legal challenges almost immediately, with two consolidated lawsuits coming before the court. The first, West Virginia v. James, was brought by twenty-two states and several fossil fuel industry associations; the second, Chamber of Commerce of the United States of America v. James, was filed by a group of national and state trade associations. Both sets of plaintiffs sought declaratory and injunctive relief, arguing the Act violated the U.S. Constitution and the CAA.

The Court’s Holdings

On August 31 the district court granted summary judgment for the plaintiffs on federal preemption grounds, relying on the Second Circuit’s 2021 decision in City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021). The court arrived at the following key conclusions:

1. The Act Conflicts With Federal Interests Governing Interstate Pollution: Disputes involving interstate air pollution have long been governed by federal—not state—law. The Act, which imposes strict liability for GHG emissions occurring “worldwide” over a multi-decade covered period, implicates the same federal interests that preempted New York City’s common law nuisance claims in City of New York: the need for a uniform national rule on energy and environmental policy, and basic principles of federalism.
2. The CAA Does Not Authorize the New York Act: Because federal common law previously governed the field of interstate pollution liability, New York may “resort to state law” only to the extent authorized by the CAA. The court found no such authorization.
3. The Foreign Affairs Doctrine Provides an Independent Basis for Preemption: The Act defines covered GHG emissions to include those “attributable to all fossil fuel extraction and refining worldwide.” Because the CAA does not reach foreign emissions, the court separately held that any cost recovery demand against a foreign producer would be preempted by the foreign affairs doctrine, consistent with the Second Circuit’s reasoning that recognizing extraterritorial liability would jeopardize U.S. foreign policy.

The court also held that EPA’s February 2026 rescission of its 2009 GHG endangerment finding has no effect on this analysis. The preemptive force of the CAA turns on the legal framework Congress established, not on how EPA exercises its delegated authority at any given moment.

What Comes Next

The district court acknowledged that other courts have criticized the Second Circuit’s approach in City of New York, and it noted that the Supreme Court has granted certiorari in Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County to consider whether federal law precludes state-law climate claims seeking relief for harms allegedly caused by interstate and international greenhouse gas emissions. The Supreme Court’s eventual decision, therefore, could have substantial implications for the durability of the district court’s reasoning. And, of course, the State of New York may appeal the decision.

For regulated companies, however, the August 31 decision is an important development. It provides a strong—if not yet final—basis for challenging state efforts to impose retroactive financial liability based on the cumulative effects of interstate and global greenhouse gas emissions, particularly where those programs are structured around production or emissions occurring outside the regulating state.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.