NEW YORK, October 14, 2026 – New York wanted fossil fuel companies to help pay for climate adaptation. Two federal courts have now said the state cannot do it this way. In separate rulings issued Aug. 31 and Sept. 23, federal judges held that New York’s Climate Change Superfund Act is preempted by federal law, delivering a major setback to one of the country’s most ambitious climate-cost recovery programs.
The rulings do not end the political debate over who should pay for rising seas, stronger storms, and overheated cities. But they sharply limit the tools states can use to pursue that money.
What New York tried to do
There was New York’s Climate Change Superfund Act that provided a $75 billion Climate Change Adaptation Cost Recovery Program. This fund was planned to be used for adaptive actions like coastal defence, drainage infrastructure improvements, and other similar projects that could help in reducing climate change risks.
This piece of legislation identified the corporations that extracted fossil fuels or refined crude oil between 2000 and 2024, and that emitted more than 1 billion metric tons of greenhouse gases during the mentioned period.
This project was seen as a “polluter pays” project where those firms that benefited from using dangerous fuels would help finance the defenses of people from climate change.
Why the courts intervened
In West Virginia v. James, Judge Anne Nardacci of the Northern District of New York determined that the Act was preempted under the Supremacy Clause because the federal Clean Air Act preempts the state law. New York claimed that the plan adopted was compensatory in nature rather than regulatory. However, the court did not find such a difference, as it considered that the Act regulates the matter covered by federal law.
It was also recognized that the savings clause of the Clean Air Act did not give the power for the state-law actions contained in the Act. Additionally, it was established that rescission of the 2009 endangerment finding made by the U.S. Environmental Protection Agency could not affect the decision, as Congress delegated its authority concerning the question of regulating the CO2 emissions to the agency.
Three weeks later, Judge Lewis Kaplan of the Southern District of New York also came to the same conclusion in the case of United States v. New York. According to recent tracking in the Climate Litigation Updates by the Sabin Center for Climate Change Law, “the Act treads on the same ground” as federal common law concerning air pollution and is therefore preempted because the Clean Air Act did not authorize the Act.
The foreign-policy issue
Both courts also relied on the foreign affairs doctrine.
Climate change is by its very nature international in scope, because the emissions released in one place will have an effect on the entire atmosphere. The rationale of the district court of the Southern District was that regulating the emissions of foreign-based fossil fuel producers would infringe upon the power of foreign policy of the federal government.
This rationale has implications beyond New York, since it means that states may not be able to levy liability on a globally operating industry.
What happens next
The immediate effect is clear: New York cannot claim funds from the $75 billion program with the preemption rulings in place.
Appeals are imminent, and the rulings may impact other states looking to enact similar climate-cost recovery statutes. However, neither the litigation update from the Sabin Center nor the rulings themselves offer any indication whether higher courts will uphold the New York position.
The proponents will assert that climate-related damages are local, ongoing, and growing more costly—and that states cannot be left alone to bear the burden. The opponents will counter that the greenhouse-gas regulation is a matter for Congress and federal agencies, not the states.
For the time being, the US federal judiciary has ruled in favor of the latter position. New York tried to compel fossil fuel companies to pay for its climate defence. The courts ruled: not so.
