Rising Legal Challenges for the New “Climate Superfund” Legislation

Last year, Vermont achieved a historic milestone by enacting the nation’s first climate superfund law, aimed at enabling the recovery of funds from fossil fuel companies to manage the escalating expenses associated with climate change.

This depends, however, on whether we can prevail against the mounting legal challenges.

Recently, the Department of Justice initiated a federal lawsuit, with Vermont being one of the states, alongside New York, to adopt the Climate Superfund Act. The lawsuit argues the measure is “a bold effort to seize federal authority” and forces others to subsidize state infrastructure expenditures.

Shortly after, West Virginia Attorney General John B. McCauskey announced he was spearheading another challenge against Vermont’s law, claiming it “encroaches upon American coal, oil, and natural gas producers.”

McCauskey had previously filed a similar lawsuit against New York, seeking $75 billion from oil and gas companies over the next 25 years. On Thursday, he warned that the Vermont version could be “even more perilous” as it lacks a financial cap.

He, along with 23 other attorneys, is joining the lawsuit filed late last year by the American Petroleum Research Institute, an affiliate of the US Chamber of Commerce and the Federal Court of Vermont.

West Virginia is a significant source of natural gas and coal, and the complaint asserts that fossil fuel companies operate legally. It argues that “Vermont enjoys affordable and reliable fuels while simultaneously punishing those who produce such energy.”

The Climate Superfund Act is patterned after the federal Superfund program, which aims to clean up hazardous waste sites. This program has been operational for decades, ensuring that businesses contributing to contamination help finance the cleanup.

The new climate superfund law stems from the understanding that the burning of fossil fuels—which generates carbon dioxide and other greenhouse gases—is a primary driver of climate change. Consequently, the law permits states to pursue funding from fossil fuel producers to mitigate the costs of global warming. Similar legislative initiatives are gaining traction in states like California, New Jersey, and Massachusetts.

Patrick Derprue, an expert in environmental law in Vermont, characterized the Justice Department’s case as “a display of virtue signaling” and anticipates a dismissal. He expects the state will argue that the Chamber of Commerce’s lawsuit is premature, given that officials are still determining how the law will be applied and are not directly implicated.

Julie Moore, the secretary of the Vermont Natural Resources Agency, indicated her involvement in both filings and stated her office is reviewing the specifics. She noted that the Justice Department’s actions were “not unforeseen” in light of President Trump’s April 8 executive order, which aims to “protect America’s energy from federal overreach.”

This order explicitly mentions the new laws in Vermont and New York, deeming them threats to national economic and security interests.

Letitia James, the New York Attorney General, who is named in the DOJ lawsuit, stated that the Climate Superfund Act “will ensure that those responsible for the climate crisis contribute to remedying the damages they have inflicted.”

Meghan Greenfield, an environmental attorney with prior experience at the DOJ and the Environmental Protection Agency, now a partner at Jenner & Block, remarked that legal conflicts regarding such new laws are inevitable. Some arguments relevant to these measures are novel and untested, revolving around the concept of “equal sovereignty” between states, which posits that states should be equitably treated by the federal government.

“We are navigating complex legal landscapes, with new types of laws and challenges emerging, making predictions difficult,” she noted.

She also expressed anticipation for further confrontations regarding more conventional state climate regulations, particularly those in New York and California.