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• Federal pushback intensifies: The U.S. Justice Department and 24 state attorneys general have launched legal challenges against New York and Vermont’s climate liability laws, alleging federal overreach.
• Billions at stake: New York’s law could extract $75B from fossil fuel companies by 2050, prompting industry fears of widespread operational shifts or shutdowns.
• Constitutional clash: Lawsuits argue the states are violating federal authority and constitutional protections by retroactively penalizing companies and attempting to dictate national energy policy.

The U.S. Department of Justice has filed lawsuits against New York and Vermont, challenging their newly enacted “climate superfund” laws that seek to hold fossil fuel companies financially accountable for climate-related damages. The DOJ argues the laws are unconstitutional and threaten national energy policy.

“These burdensome and ideologically motivated laws and lawsuits threaten American energy independence and our country’s economic and national security,” said Attorney General Pamela Bondi. “The Department of Justice is working to ‘Unleash American Energy’ by stopping these illegitimate impediments to the production of affordable, reliable energy that Americans deserve.”

The Vermont and New York laws, passed in 2024 and 2025 respectively, authorize the states to recover billions from energy companies to cover infrastructure costs and environmental damages from 1995 onward. New York’s legislation alone seeks $75 billion through 2050 — approximately $3 billion per year.

“These expropriative laws would impose strict liability on energy companies for their worldwide activities,” added Acting Assistant Attorney General Adam Gustafson. “Our filings seek to protect Americans from unlawful state overreach that would threaten energy independence critical to the wellbeing and security of all Americans.”

Echoing the federal challenge, a coalition of 24 states, led by West Virginia Attorney General JB McCuskey, has joined parallel lawsuits. McCuskey emphasized the threat to the national energy economy:
“Our coalition stood up to New York to stop this madness and we have once again joined forces to stand up to Vermont to ensure America’s energy independence and to protect consumers nationwide. If this law stands, it’s those consumers who will be left paying the price for this ridiculous attempt by Vermont to line their coffers under the guise of ‘climate change.’”

The lawsuits accuse Vermont and New York of violating multiple constitutional provisions, including the Commerce Clause, Due Process Clause, and federal preemption under the Clean Air Act. The complaints also argue the laws unfairly target out-of-state producers while exempting local emitters.

“This is a case about a single state attempting to dictate energy and economic policy for the entire nation,” reads the multistate complaint. “Vermont’s law threatens to drive up energy prices for Americans across the country and could force producers to shutter their operations altogether.”

The legal offensive stems from President Trump’s Executive Order 14260, which directs federal agencies to dismantle state regulations that “burden” domestic energy development — with a focus on laws related to ESG initiatives and greenhouse gas emissions. The order refers to the Vermont and New York statutes as “climate change extortion laws.”

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Industry groups, including the American Petroleum Institute and U.S. Chamber of Commerce, have also sued Vermont and New York, claiming the laws unlawfully seek to retroactively assign liability and threaten national energy security.

“These laws are not only an attack on the companies that provide Americans with affordable and reliable energy,” API stated, “but also an unconstitutional affront to the federal government’s role in setting climate and energy policy.”

Meanwhile, Vermont officials defended the legislation, highlighting its intent to address rising environmental costs.
“To support the health, safety, and prosperity of our communities, we must ensure Vermont is equipped financially to address the impacts of climate change,” said Vermont State Treasurer Mike Pieciak. “Our office stands ready to start implementing the Climate Superfund Act, to ensure the costs of climate change are shouldered by the polluters responsible, not Vermonters.”

However, the states challenging the laws argue that such measures could force energy producers to redirect operations overseas, to countries with lower environmental standards such as China, India, or Russia — undercutting U.S. competitiveness and security.

“Vermont can’t have its cake and eat it too,” the complaint asserts. “It benefited from affordable and reliable fossil fuels for decades. Now, it seeks to penalize the very producers who made that possible.”

The outcomes of these legal battles could redefine the boundaries of state power in regulating climate policy — and reset the national dialogue on energy accountability.

Read the official Office of Public Affairs Press Release here.

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