Vermont is being sued over its law requiring large fossil fuel companies to pay for climate change damage in a landmark lawsuit that is expected to be the first of many.
In May 2024, Vermont became the first state to enact a law charging major polluting companies a fee that would funnel into a state fund for infrastructure projects aimed at combating, repairing, or adapting to the effects of climate change.
The law seeks to put the onus on fossil fuel companies rather than taxpayers for projects such as adapting water and sewage systems, repeating roads, or upgrading buildings. Specifically, the law targets companies that have emitted over a billion metric tons of greenhouse gases over the last three decades.
The fund has been long criticized by industry groups, which are now challenging the state in court.
On Monday, the American Petroleum Institute and U.S. Chamber of Commerce filed a federal lawsuit against Vermont.
The lawsuit, filed in the U.S. District Court for the District of Vermont, includes the claim that the state’s law is unconstitutional and in violation of federal law.
It claims the law is preempted by the Clean Air Act, which was enacted in 1963, because it “seeks to impose liability for global greenhouse gas emissions from sources well beyond Vermont’s borders.”
The plaintiffs wrote that the state is not home to any of the energy producers it seeks to fine, saying this could lead to increased energy costs in other states while Vermont could “reap” financial benefits.
“Vermont has thus exceeded the bounds of its authority, inserting itself into an area of law that is and has historically been controlled only by federal law, upsetting the careful regulatory balance the Clean Air Act establishes, violating the extraterritorial restaurants of our federal system and transgressing the bounds of due process and other constitutional protections,” says the lawsuit.
The plaintiffs are asking the court to declare Vermont’s law as unlawful, precluded by and in violation of the Constitution, and preempted by the Clean Air Act.
Lawsuits regarding climate superfund have been expected since Vermont enacted the law earlier this year. The recent filing is also expected to spark a number of other suits regarding similar legislation and funds in other states, such as New York.
Last week, Gov. Kathy Hochul (D-NY) signed a similar controversial climate law targeting the largest emitters from 2000 to 2018. This specifically applies to any company that the state determines is responsible for releasing more than a billion tons of greenhouse gas emissions.
In New York, the targeted companies are not expected to pay the fee until 2028.
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API has also lambasted the law, saying, “This type of legislation represents nothing more than a punitive new fee on American energy, and we are evaluating our options moving forward.”
API did not respond to the Washington Examiner’s request for comment.