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

On September 23, 2026, a second federal district court struck down New York’s Climate Change Superfund Act (the Act), this time in a lawsuit brought by the United States and the U.S. Environmental Protection Agency (EPA). In United States v. State of New York, Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York held that the Act is preempted both by the Clean Air Act (CAA) and, independently, by the federal government’s exclusive authority over foreign affairs. The Court declared the Act unconstitutional and permanently enjoined New York officials from enforcing it.

This new ruling comes less than a month after the Northern District of New York reached substantially the same result in West Virginia v. James. As we reported on September 1, the N.D.N.Y. held that the Act was preempted by federal law in litigation brought by a coalition of states and industry associations. We also previously described the Act and potential legal challenges when it was enacted.

Background

The Act purported to establish a US$75 billion climate-change adaptation cost-recovery program funded through assessments against certain fossil-fuel producers and refiners. It sought to impose strict liability based on greenhouse gas (GHG) emissions attributed to fossil-fuel extraction and refining from 2000 through 2024, and liability based on each responsible party’s share of covered emissions. Significantly, the Act expressly calculated liability using emissions associated with fossil-fuel extraction and refining worldwide, not merely emissions occurring in New York.

The S.D.N.Y. Finds the Act Preempted by the Clean Air Act

Like the court in West Virginia, Judge Castel relied heavily on the Second Circuit’s 2021 decision in City of New York v. Chevron Corp., which rejected New York City’s effort to recover climate-related damages from fossil-fuel companies under state tort law because claims based on interstate and global GHG emissions implicate federal interests requiring a uniform rule.

In State of New York, New York argued that its Superfund Act is different because it imposes a backward-looking compensatory assessment rather than directly limiting emissions. The Court disagreed. It concluded that substantial monetary liability tied to historical worldwide emissions operates as a form of de facto regulation, reasoning that liability can regulate conduct even when a law does not prescribe an emissions limit.

The Court also rejected any meaningful distinction between state common-law damages — the claims at issue in City of New York — and a state statute imposing comparable liability. Because interstate air-pollution disputes historically have been governed by federal law, and Congress displaced federal common law in this area through the CAA, the Court concluded that New York may impose such liability only if authorized by the CAA. It found no such authorization.

Notably, the Court held that the EPA’s 2026 rescission of its GHG endangerment finding did not alter the preemption analysis. In the Court’s view, the relevant question is whether federal law authorizes the state regime, not whether the EPA currently chooses to exercise its regulatory authority over GHG emissions.

Foreign-Affairs Preemption Provides an Independent Ground

The Court separately held that the Act’s application to foreign fossil-fuel activity intrudes upon the federal government’s exclusive authority over foreign affairs. Because liability is based in part on extraction and refining occurring outside the United States, the Court concluded that the Act reaches matters of international climate policy that must be addressed at the national level rather than through individual state liability regimes.

What Comes Next

The only two federal courts to consider the Act have both concluded that New York may not impose retroactive financial liability based on a producer’s share of interstate and global GHG emissions. The new ruling is also notable because the United States itself brought the challenge and obtained judgment on both CAA and foreign-affairs grounds.

The broader legal landscape remains unsettled. The Supreme Court has granted review in Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County to consider whether federal law precludes state-law claims seeking relief for injuries allegedly caused by interstate and international GHG emissions. Oral argument is scheduled for October 5, 2026. The Court’s decision could bear on the legal principles underlying the New York rulings and on other state climate-liability initiatives. Supreme Court docket. And, of course, New York may (and is likely to) appeal both rulings.

For now, New York remains permanently enjoined from enforcing its Climate Change Superfund Act, subject to further appellate proceedings.

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.