Payback Time: New York’s Climate Superfund Act
When Hurricane Ida struck New York in 2021, water flooded the subway tunnels, power grids failed across the city, and lives were lost in apartments. [1] Post-disaster recovery reached billions of dollars, the brunt of which was placed on taxpayers and not those who profited from fossil fuels. In June 2025, New York decided that would no longer be the case. The state passed the Climate Superfund Act, the second law of its kind in the nation to make major fossil fuel companies pay for the staggering costs of climate adaptation. [2] Its premise is simple: if corporations caused the climate crisis, they should be the one footing the bill for the damage it leaves behind. Its implementation, however, is anything but simple. The statute now stands as a test of whether climate accountability can coexist alongside constitutional limits on government power.
The Climate Superfund Act requires oil and gas companies that have produced more than one billion tons of greenhouse gas emissions since 2000 to pay into a state-managed fund of up to three billion dollars annually. [3] These payments will be used to finance coastal resilience projects, flood defenses, and community adaptation programs across New York. The legislation is a spiritual successor to the federal Superfund law, known as CERCLA, which imposes strict liability on polluters responsible for toxic waste cleanup. [4] The new climate law extends that model and mindset from contaminated sites to the atmosphere itself. Instead of polluted soil or groundwater, the “hazardous substance” in this context is carbon, and instead of localized remediation, the state seeks to offset global damage within its borders.
Supporters of the fund argue that the measure reflects an uncomplicated principle of fairness, in that companies that contributed to the problem should contribute to the solution. For decades, fossil fuel corporations have created negative externalities from their production, and left taxpayers feeling the consequences of storms, heat waves, and rising sea levels. By holding these firms accountable, supporters claim, the law will both restore the balance of equities and create a predictable, focused stream of funding for climate adaptation. [5] It also sends a political message to corporate giants that have so far avoided penalization — the era of unaccountable carbon profits is coming to an end.
Yet even amidst all the environmental praise, the statute immediately attracted intense scrutiny from legal scholars and industry groups. Critics call it an unconstitutional experiment in retroactive punishment and extraterritorial regulation. Several fossil fuel companies have already hinted at the possibility of litigation, and most observers expect the law to be challenged and appealed in federal court before the fund can engage in any collection. At the center of the coming dispute is whether a state can impose strict, backward-looking liability for a global problem that transcends its borders. The legislative architects of the Climate Superfund Act looked to CERCLA for guidance, but the analogy here is imperfect. CERCLA, enacted in 1980 in response to toxic waste disasters such as Love Canal, allows the federal government to compel polluters to pay for environmental cleanup regardless of fault. [6] The Supreme Court was able to upheld CERCLA’s retroactive liability provisions specifically under Congress’s commerce power, emphasizing that environmental cleanup serves a remedial rather than punitive purpose. [7] By contrast, New York’s law operates at the state level and addresses harms that are caused by worldwide emissions. The proximate causal link between individual polluters and specific harms created by climate change is abstract and far more tenuous, raising complex legal questions of proportionality and fairness.
This complexity feeds into the first major constitutional challenge: retroactivity. The law calculates each company’s share of liability based on emissions going back a quarter century to 2000, well before the statute’s enactment. Opponents claim this violates the Due Process Clause by imposing financial obligations for conduct that was legal at the time. They point to Eastern Enterprises v. Apfel, in which the Supreme Court struck down a retroactive coal industry tax as an unconstitutional burden on past conduct. [8] Defenders counter that the Superfund payments are not punitive in nature but compensatory for damages, designed to address present costs directly linked to those emissions. Because companies have continued to profit from fossil fuel sales while aware of their climate impacts, the argument goes, they cannot claim unfair surprise. [9]
The second challenge concerns the Takings Clause. Critics argue that forcing companies to surrender billions for a generalized public benefit amounts to a regulatory taking without just compensation. Courts have occasionally found such arguments persuasive when financial obligations seem disproportionate to the harm caused. However, New York’s law parallels CERCLA’s “polluter pays” framework, which has withstood similar challenges for four decades. [10] The state can argue that climate adaptation funding, like toxic cleanup, constitutes a valid exercise of its police powers to protect public health and welfare. Because the payments are not property seizures but cost allocations, they are likely to withstand takings scrutiny.
The third and perhaps most formidable constitutional concern arises under the Dormant Commerce Clause, which restricts states from enacting laws that unduly burden or regulate interstate commerce. Fossil fuel companies argue that New York’s statute effectively penalizes global emissions, many of which occurred outside the state, and thus exerts extraterritorial control over national and international markets. [11] New York responds that the law’s focus is narrow as it aims only to recover costs associated with climate damage within its own borders. Similar arguments have played out in the context of state carbon regulations, where courts often defer to states’ rights to safeguard local environments so long as they do not discriminate against out-of-state entities. The law’s fate may hinge on whether judges interpret the Climate Superfund’s purpose as an environmental protection measure or an economic sanction.
Underlying these debates is a deeper tension between state initiative and federal uniformity in environmental law. In the absence of comprehensive federal climate legislation, states have increasingly filled the void with their own measures. Vermont has already adopted a similar climate superfund, and California legislators are exploring one of their own. [12] While this patchwork approach allows states to experiment with accountability mechanisms, it also risks creating inconsistent standards and multiple overlapping liabilities for national corporations. The Supreme Court has traditionally tolerated state innovation when Congress remains silent, but broad economic impacts could invite federal preemption or judicial intervention.
The most practical solution to these challenges may lie in a federal harmonization approach. Just as CERCLA standardized toxic cleanup across the nation, a federal climate superfund could create uniform criteria for responsibility and cost allocation. Congress could base liability on verified emissions data across the decades, differentiate between producers and refiners, and set proportional payment caps to avoid assigning excessive burdens. Such a system would spread costs more equitably, prevent jurisdictional conflicts, and ensure a long-term and stable source of funding for climate resilience nationwide. [13] Although federal climate policy remain stagnant (even backward in this administration), state-level experiments like New York’s may provide the model — and the political momentum — for eventual national reform.
The outcome of the upcoming legal challenges will shape far more than New York’s balance sheet. If upheld, the law could inspire a wave of state initiatives forcing corporate accountability for climate costs. If struck down, it could solidify the notion that existing legal doctrines are ill-suited to the complexity of modern environmental crises. Either way, the case will test how adaptable American constitutional law remains in an era of planetary-scale harms of climate change.
Edited by Vincent Hosvespian
Endnotes
[1] Jesse McKinley, Ashley Southall, and Ed Shanahan, “Flooding From Ida Kills Dozens of People in Four States,” The New York Times, September 2, 2021, https://www.nytimes.com/live/2021/09/02/nyregion/nyc-storm.
[2] New York State Senate, S2129-B/A3351-B: Climate Change Superfund Act, enacted June 20, 2025, N.Y. Envtl. Conserv. Law art. 76, https://www.nysenate.gov/legislation/bills/2023/S2129.
[3] Sidley Austin LLP, “New York Passes Second-in-the-Nation Climate Change Superfund Act,” Environmental & Energy Brief, January 2, 2025, https://environmentalenergybrief.sidley.com/2025/01/02/new-york-passes-second-in-the-nation-climate-change-superfund-act/.
[4] Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), Pub. L. No. 96-510, 94 Stat. 2767 (Dec. 11, 1980).
[5] Martin Lockman and Emma Shumway, “State ‘Climate Superfund’ Bills: What You Need to Know,” Columbia Law School Climate Law Blog, March 14, 2024, https://blogs.law.columbia.edu/climatechange/2024/03/14/state-climate-superfund-bills-what-you-need-to-know/.
[6] United States v. Olin Corp., 107 F.3d 1506 (11th Cir. 1997).
[7] United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726 (8th Cir. 1986).
[8] Eastern Enterprises v. Apfel, 524 U.S. 498 (1998).
[9] Ibid.
[10] United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726 (8th Cir. 1986).
[11] Healy v. Beer Institute, 491 U.S. 324 (1989).
[12] Pillsbury Winthrop Shaw Pittman LLP, “The Legal Battle Over Climate Superfund Laws: Vermont and New York,” Client Alert, March 2025, https://www.pillsburylaw.com/en/news-and-insights/the-legal-battle-over-climate-superfund-laws.html.
[13] U.S. Environmental Protection Agency, “Superfund: CERCLA Overview,” last modified September 9, 2015, https://www.epa.gov/superfund/superfund-cercla-overview.