How Climate Change Superfund Laws May Shake Up Environmental Liability

On December 26, 2024, New York Governor Kathy Hochul signed into law the “Climate Change Superfund Act,” which seeks “to establish a climate change adaptation cost recovery program that will require companies that have contributed significantly to the buildup of climate change-driving greenhouse gases in the atmosphere to bear a proportionate share of the cost of infrastructure investments and other expenses necessary for comprehensive adaptation to the impacts of climate change in New York state.”  New Jersey has introduced similar legislation known as the “Climate Superfund Act.”

These new environmental laws may be even more significant in the wake of the U.S. Supreme Court’s decision to allow a Hawaii state case seeking billions of dollars from fossil fuel producers to move forward. The Court recently denied certiorari, thereby clearing the way for the case to continue in Hawaii state court and potentially indicating the justices’ intent to allow state-law climate change cases to proceed.

New York’s Climate Change Superfund Act

New York’s Climate Change Superfund Act (Act) is now law. The Act, which is modeled after federal Superfund laws, seeks to transfer the costs of addressing climate change from local governments and taxpayers to fossil fuel companies that have contributed most significantly to the buildup of greenhouse gases. As stated by the New York Legislature,  its intent is to hold “companies that have contributed significantly to the buildup of climate change-driving greenhouse gases in the atmosphere to bear a proportionate share of the cost of infrastructure investments and other expenses necessary for comprehensive adaptation to the impacts of climate change in New York state.”

Under New York’s Climate Change Superfund Act, strict liability is imposed on “responsible parties,” which are defined as those entities, including successors, that the New York State Department of Environmental Conservation (NYSDEC) determines to be responsible for more than one billion tons of greenhouse gas emissions during any part of the period from Jan. 1, 2000, to Dec. 31, 2018. Responsible parties will collectively be required to pay $75 billion ($3 billion annually) spread out over 25 years. Each party’s liability is proportionate to its share of the aggregate covered greenhouse gas emissions.

The NYSDEC is tasked with adopting implementing regulations to carry out the law, including the identification of responsible parties, the procedures for issuing notices of cost recovery demands and collecting payment on those demands, and procedures for identifying projects that would qualify as climate change adaptive infrastructure projects The agency must also adopt a “statewide climate change adaptation master plan for the purpose of guiding the dispersal of funds in a timely, efficient, and equitable manner to all regions of the state.”

New Jersey’s Proposed Climate Superfund Act

Similar legislation is currently pending in the New Jersey Legislature. The “Climate Superfund Act” would imposes liability on certain fossil fuel companies for damages caused by climate change. The bill, Senate Bill No. 3545/Assembly Bill No. 4696, would also establish a program in the Department of Environmental Protection (NJDEP) to collect compensatory payments from the fossil fuel companies and distribute them, in the form of grants, to climate change adaptation and resilience projects.

The proposed Climate Superfund Act would apply to fossil fuel companies that fall under the definition of “responsible party” established in the bill, namely an entity or a successor in interest to an entity that was engaged in the trade or business of extracting fossil fuel or refining crude oil and is determined by the NJDEP to be responsible for more than one billion metric tons of greenhouse gas emissions between January 1, 1995 (the year on which the first United Nations Conference of Parties climate change conference was held) and the last day of the calendar year on which the bill takes effect. Each responsible party would be strictly liable for the damages and be required to make compensatory damages to the State. 

Under the proposed legislation, the State Treasurer would prepare and submit to the Legislature, an assessment of the damages to the State and its residents that have resulted from greenhouse gas emissions since 1995. The NJDEP would then be required to calculate and collect the proportional share of damages attributable to each responsible party, based on the proportion of total greenhouse gas emissions for which the party is responsible. 

New Jersey’s Climate Superfund Act is currently pending before the Senate Budget and Appropriations Committee and the Assembly Environment, Natural Resources, and Solid Waste Committee. Its likelihood of passage is still uncertain at this time.

Impact of SCOTUS Cert Denial in Hawaii Climate Change Suit

On January 13, 2025, the Supreme Court rejected appeals filed by several oil companies seeking to quash a lawsuit in Hawaii that would hold them liable for climate change impacts, such as severe weather and rising sea levels. The City of Honolulu’s lawsuit alleges that the oil companies knew that their fossil-fuel products would cause an increase in greenhouse-gas emissions, yet failed to warn of that risk and instead engaged in advertising and other speech to persuade governments and consumers not to take steps designed to reduce or regulate fossil-fuel consumption, thereby causing increased emissions and climate change.

The defendants, which include ExxonMobil, Chevron, BP, Sunoco, and Shell, argue that climate change suits belong in federal and not state court. However, the Hawaii Supreme Court ruled that the lawsuit was not preempted by federal law because it “does not seek to regulate emissions and does not seek damages for interstate emissions.”

The Supreme Court’s appeal denial is significant given the rise in state-level climate change litigation. Approximately 40 U.S. cities, states, and counties have brought similar suits in state courts. The Supreme Court’s action will not only allow Honolulu’s lawsuit to proceed, but also will also give the greenlight for other ongoing cases to proceed to trial and potentially encourage more local governments to file suit.

Key Takeaway

State-level climate change laws, such as New York’sClimate Change Superfund Act, are being considered across the country. These laws have the potential to result in significant liability for the fossil fuel industry. However, it is not yet clear whether they will survive legal challenges, particularly with the U.S. Supreme Court not yet inclined to weigh in.

We encourage entities that may be impacted by these new environmental laws to stay on top of legal updates and contact a member of Scarinci Hollenbeck’s Environmental Law Group with any questions or concerns.