The U.S. Department of Justice and 24 state attorneys general have launched legal action against New York and Vermont, challenging recently passed “climate superfund” laws designed to hold fossil fuel companies accountable for climate-related damages. These laws, part of broader ESG and carbon neutral strategy efforts, could extract up to $75 billion from energy firms by 2050 in New York alone. 

Filed under the premise of federal overreach, the lawsuits argue the laws violate constitutional provisions, including the Commerce Clause and Due Process Clause, while conflicting with federal authority under the Clean Air Act. Critics claim these measures unfairly target out-of-state producers and retroactively penalize companies for decades of emissions — threatening to disrupt national energy markets and hinder U.S. competitiveness. 

Acting Assistant Attorney General Adam Gustafson emphasized that these state-led initiatives impose excessive liability on energy companies for global activities. Meanwhile, Vermont and New York maintain their regulations are essential to cover infrastructure damage and environmental costs, aligning with ESG principles and promoting polluter accountability. 

Industry organizations, including the American Petroleum Institute and U.S. Chamber of Commerce, have also filed suits, warning that such legislation jeopardizes national energy security and undermines the federal government’s role in climate policy. The lawsuits reflect broader resistance to ESG regulations under President Trump’s Executive Order 14260, which directs federal agencies to block state-level rules perceived as burdensome to domestic energy development. 

While Vermont defends its Climate Superfund Act as a necessary tool to finance climate resilience, critics warn it could lead to higher consumer costs and drive energy production to nations with weaker environmental safeguards. The legal outcome could reshape the balance of state and federal power in climate regulation, with far-reaching implications for ESG policy and carbon neutral strategy enforcement across the U.S. 

Sources: 

https://esgnews.com/24-states-sue-new-york-vermont-over-climate-superfund-laws-targeting-fossil-fuel-firms/ 

https://www.esgtoday.com/trump-24-states-sue-new-york-and-vermont-over-laws-charging-fossil-fuel-companies-for-climate-change/