As reported in past columns, New York’s Climate Leadership and Community Protection Act (CLCPA) calls for greenhouse gas reduction from 1990 levels of 40% by 2030 and 85% by 2050. Consequently, New York is seeking renewable energy generation target of 70% by 2030 and 100% emissions free by 2040. These targets are exceedingly ambitious and are littered with siting, approval, implementation, reliability and cost concerns.
On December 26, 2024, Governor Hochul signed a law titled “Climate Change Superfund Act” to support and fund “climate change adaptive infrastructure projects” across the state. The law will aim to have certain fossil fuel companies pay into a $75 billion fund to support climate resiliency projects. It was passed in June 2024 after consideration of feasibility and not signed until the end of the year. Only one other state in the country, Vermont, has a similar climate law and that law is presently subject to litigation by affected parties.
Under the program, the Department of Environmental Conservation (DEC) will identify companies with the highest emissions, create a notice of payment and arrange for collection of the company’s respective share of the overall fund. DEC will work with the Department of Tax and Finance, as well as the Attorney General’s office to enforce the program. The payments are slated to be collected over the next 25 years. DEC will also be tasked with identifying the climate change adaptive infrastructure projects to be funded.
The law is loosely modeled after the federal Superfund legislation. Basically, it will identify “responsible parties” which consist of entities that were involved in the business of fossil fuel extraction or production from January 2000 to December 2018 that are determined by DEC to be responsible for more than 1 billion metric tons of greenhouse gas emissions. The law establishes a strict liability standard that will seek to assess the responsible party’s share of the total $75 billion fund. Cost recovery demands will be made to the parties with the initial due date to be September 30, 2026. DEC is supposed to issue regulations within the next year to implement the law.
In another corresponding piece of legislation, Governor Hochul also extended a ban on hydraulic fracking in the state for natural gas development by banning the use of carbon dioxide for gas or oil extraction.
In announcing the law, the Governor said that “[e]stablishing the Climate Superfund is the latest example of my administration taking action to hold polluters responsible for the damage done to our environment and requiring major investments in infrastructure and other projects critical to protecting our communities and economy.” Similarly, DEC is enthusiastic about it with Interim Commissioner Sean Mahar saying that “[h]olding polluters accountable for the damages they cause is essential to New York’s environmental protection efforts, and I commend Governor Hochul for signing this historic climate legislation into law. By ensuring those responsible for historic climate-altering emissions bear the costs of the significant health, environmental and economic impacts already being passed on to New Yorkers, this law will complement the state’s efforts to reduce greenhouse gas emissions, help communities adapt to the climate-driven impacts experienced today, and leverage the significant investments the Governor is making in climate resilience.”
As anticipated, the business community is less enthused about the prospects of paying into the Climate Superfund. In response the Business Council stated that it “is certainly disappointed with the so-called “climate superfund” bill, which will impose “punitive” assessments against businesses that produced fuels that were vital to the support of New York’s households, businesses and overall economy for the past several decades. Despite the sponsor’s mantra of “polluter pays,” the bill’s liability standard is substantially different than that outlined in its namesake hazardous waste “superfund” laws. We recognize the importance of responding to global climate change and have been working with state officials to develop effective, workable approaches. However, we expect this legislation to be subject to protracted litigation. Given its potential legal challenges, costs and discriminatory nature, we continue to see it as bad policy for New York State.”
The Vermont law is subject to legal challenge and the New York version will likely face challenge as well. There appears to be various constitutional grounds to challenge the program.
Perhaps to offset the political and financial impact of the new Climate Superfund on the state, Governor Hochul’s proposed budget paused implementing the proposed “Cap and Invest” program. In late 2023, DEC and NYSERDA released an outline of the program to support the goals of the CLCPA through new DEC regulations. The program, when implemented, will establish a mandatory greenhouse gas emission (GHG) reporting program for various entities. DEC will set an annual emissions cap for GHG, with the level being reduced over time to meet the CLCPA goals. The largest GHG entities, such as stationary sources and major fuel suppliers, will be required to purchase emission allowances to be sold by NYSERDA.
Governor Hochul’s announced core principles of the program are affordability, climate leadership, job creation and competitiveness, investment in disadvantaged communities, and funding a sustainable New York. Under the 2024 state budget, approximately two-thirds of the anticipated cap and invest proceeds were slated to support the green energy transition required to meet CLCPA mandates. Although this is one of the Governor’s key climate programs, her decision to delay implementation as part of this year’s budget proposal appears to be an acknowledgment that costs to consumers and political impact are likely to be significant.
As President Trump has been sworn in and issued executive orders to address the expansion of fossil fuel energy development, pipelines, fracking, and natural gas to spur energy production, it’s rather striking to see policies in New York that are aimed at reducing fossil fuel energy production and increasing costs for New York businesses and residents.
George S. Van Nest is Partner in Underberg & Kessler LLP’s Litigation practice group and Chair of the firm’s Environmental and Municipal Law practice groups. He focuses his practice in the areas of environmental law, development, construction and commercial litigation.
Reprinted with permission from The Daily Record and available as a PDF file here.
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