Federal Judge Blocks New York’s Climate Law Targeting Fossil Fuel Companies
In a significant legal development, a federal judge has invalidated New York’s ambitious initiative to hold fossil fuel companies financially accountable for climate change impacts. The state’s attempt to create a $75 billion fund, aimed at addressing environmental damage, was deemed to overstep state authority and encroach on federal jurisdiction.
The legislation, backed by Democratic Gov. Kathy Hochul in 2024, faced opposition from various fossil fuel interests, business associations, including the U.S. Chamber of Commerce, as well as legal challenges from 22 Republican state attorneys general and the U.S. Environmental Protection Agency.
On Monday, U.S. District Judge Brenda Sannes determined that the state’s climate law ventured into areas traditionally regulated at the federal level. She noted that the law conflicted with the need for a cohesive national energy and environmental strategy and was not sanctioned by the federal Clean Air Act, which assigns the EPA as the principal regulator of greenhouse gas emissions.
Moreover, Judge Sannes stated that the initiative to seek reparations from international fossil fuel producers was unconstitutional as it conflicted with foreign affairs doctrine.
Climate advocates have urged Gov. Hochul’s administration to contest the ruling. A spokesperson for the administration emphasized, “taxpayers shouldn’t have to foot the bill for damages caused by polluters,” indicating that they are evaluating the court’s decision for potential next steps.
This ruling echoes actions taken during President Donald Trump’s administration, which challenged similar state laws in Michigan, Hawaii, and Vermont. Trump had declared a national energy emergency and instructed his attorney general to address states perceived to be overreaching in their energy regulations.
The Department of Justice, under Trump, supported this stance, stating it was “delivering on President Trump’s order to protect American energy from state overreach.” Adam Gustafson, a principal deputy assistant attorney general, remarked, “New York’s law would have expropriated $75 billion from energy companies around the world during an energy emergency and in direct defiance of American foreign policy and federal law.”
The contested New York law mandated significant greenhouse gas emitters to contribute $3 billion annually over 25 years to a fund supporting infrastructure projects aimed at mitigating and adapting to climate change impacts.
Legislators envisioned the bill as a mechanism to compel major oil and gas corporations to share the financial burden for extreme weather repairs and to finance resilience projects, such as coastal wetland restoration and infrastructure enhancements like roads, bridges, and water drainage systems. The fines targeted the top greenhouse gas emitters from 2000 to 2018.
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