A troubling trend has been escalating across the Northeast, where states such as New York are enacting so-called “climate superfund” laws.
These laws seek to impose sweeping financial penalties on energy producers for past activities that were perfectly legal at the time. In doing so, these efforts raise serious questions about causation, fairness, and accountability. They are also likely to drive up energy costs.
Their pitch is straightforward. States face floods, heat waves, and other weather-related impacts, all of which can impose tremendous costs. Someone should pay, and so why not fossil fuel companies? But while that approach may sound appealing, it’s the wrong public policy on many levels.
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Traditional superfund laws focus on discrete sites and require clear evidence. Damages and cleanup obligations are tied to the identifiable harms at that particular location. Climate superfund laws abandon that model. They convert a global phenomenon into state-level liability, assigning responsibility for worldwide emissions to a handful of companies. They dial up a revenue target and then plan to funnel any proceeds into broad, loosely defined state programs. That is a far cry from the evidence-based cleanup framework that Congress originally designed.
New York offers a clear example. At the end of 2024, Gov. Kathy Hochul (D-NY) signed legislation creating a climate superfund program designed to extract $75 billion from energy producers over 25 years for climate adaptation projects. The law directs state agencies to impose penalties under a strict-liability framework, calculated based on each company’s share of historical greenhouse gas emissions. It doesn’t require proof that any company’s products caused specific harm in New York. And it doesn’t allege that the companies violated New York law. Rather, it is an after-the-fact rewrite of rules and practices.
While these penalties will be collected in the future, they can start having a real impact now. Large, predictable compliance costs do not just stay on balance sheets. Families and businesses inevitably pay the price. The billions of dollars in costs ripple outward, raising prices for households, manufacturers, farmers, truckers, and anyone who relies on affordable and reliable energy.
New York is not acting alone. Vermont enacted a similar law in 2024. State lawmakers in Connecticut, Maine, Maryland, Massachusetts, New Jersey, and Rhode Island have all considered comparable proposals.
Regardless of political affiliation, Americans should be wary of states unilaterally imposing national climate liability without congressional authorization or a credible way of assigning responsibility for a global problem. Here’s why.
First, these laws punish companies for conduct that complied with the law at the time. For decades, states have encouraged energy development, issued permits, relied on fossil fuels to power economic growth, and taxed the industry accordingly. Now, those same governments seek to reframe that shared history as a retroactive liability and send the bill to a narrow set of firms.
Second, these policies pick winners and losers. Most emissions stem from how Americans heat their homes, move goods, and power their daily activities, yet these laws single out a narrow set of producers and refiners. They ignore other major end users of fossil fuels, including government agencies, and they turn a blind eye to emissions from producers outside the United States, where environmental standards are often weaker.
As one would expect, the dispute has already reached the courts. Last February, 22 states, led by West Virginia, sued New York, arguing that its climate superfund violates federal law, including the Clean Air Act. By penalizing emissions that largely occur beyond its borders, New York is effectively attempting to dictate national energy and climate policy — triggering serious and unresolved constitutional questions.
The Trump administration has weighed in to reinforce those concerns. In April 2025, the president issued an executive order criticizing state climate superfund laws as retroactive and extraterritorial, and ordered a federal review.
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Rather than looking backward, leaders at all levels of government should pursue a forward-looking all-of-the-above approach to energy. They should use market-based principles and remove barriers to the deployment of all sources. Rather than singling out one industry and using it to create a slush fund, they should focus on streamlining their permitting systems and upgrading infrastructure.
Despite the branding, climate superfund laws do not help ordinary Americans. Besides standing on shaky legal ground, these laws drive up costs and divert attention from practical reforms that can strengthen the energy system and deliver real environmental gains.
Jeff Kupfer is president of ConservAmerica and a former acting deputy secretary of energy.