Vermont Is First State Sued Over ‘Climate Superfund’ Law (1)

A Vermont law empowering the state to charge polluters for climate change damage is unconstitutional and preempted by the Clean Air Act, the US Chamber of Commerce and the American Petroleum Institute allege in a federal lawsuit.

The lawsuit, filed Monday in the US District Court for the District of Vermont, marks the first of an expected wave of litigation against states, including New York, with climate Superfund laws.

The complaint is an important legal test as more states consider holding fossil fuels liable for expensive global warming-intensified events like floods, fires, and more. Maryland and Massachusetts are among states expected to pursue similar legislation, modeled after the federal law known as Superfund, in 2025.

Plaintiffs argue that the Vermont statute is preempted by the Clean Air Act because “state regulation of greenhouse gases is only permissible as authorized” by the federal law.

Vermont’s law—which directs entities that emitted more than 1 billion metric tons of greenhouse gas over the last three decades to pay into a state-managed fund—also violates the Constitution by discriminating against the economic interests of other states by “targeting large energy companies located outside of Vermont,” according to the complaint.

The funds that Vermont, which doesn’t produce or refine fossil fuels, plans to collect are likely to reach hundreds of millions or billions of dollars, according to the complaint. Companies could increase energy prices in other states in which they operate as a result, the groups said.

“Although Vermont would reap the benefits of millions of dollars to fund its preferred climate change adaptation projects, citizens of other States would receive no benefits, only costs,” according to the lawsuit.

The planned cost recovery demands also constitute an overly “harsh or oppressive” penalty, which violates the Fourteenth Amendment, especially because fossil fuel extraction and refining is legal, plaintiffs argued.

API and the Chamber also accused Vermont of duplicating attempts for monetary and injunctive relief. The state sued ExxonMobil Corp. and other energy giants over alleged climate change deception in 2021, and that litigation is still pending. The state’s climate Superfund law will likely target some of the same companies, the groups said in their lawsuit.

Vermont Gov. Phil Scott (R) allowed the Climate Superfund Cost Recovery Program to become law without his signature in May but said he was “deeply concerned” about possible repercussions, including legal challenges. Vermont’s Climate Action Office, housed in the Agency of Natural Resources, did not immediately respond to a request for comment.

New York Gov. Kathy Hochul (D) signed a similar climate Superfund bill into law on Dec. 26, pointing to the need to fund climate adaptation projects.

Gravel & Shea PC, Lehotsky Keller Cohn LLP, and internal counsel are representing the Chamber and trade group.

The case is USCC v. Moore, D. Vt., No. 2:24-cv-01513, filed 12/30/24.