On February 6th, 22 states sued to halt the implementation of New York state’s Climate Superfund Act. This legislation, signed into law in December, demands payments from large energy companies for past “climate” damage. The state of New York will use the revenue as a slush fund for various projects and payoffs. The challenging states have a strong legal argument as the legislation is on shaky legal foundation even before getting to constitutional questions. The legislation also ignores the actual users of energy products, who are both responsible for actual emissions as well as people who are residents in New York and subject to its taxes, unlike many of the targeted companies.
If New York was genuinely concerned about its greenhouse gas emissions, it would implement a strong carbon tax or even prohibit the use of oil and natural gas, or the importation of electricity from coal. However, the state isn’t pursuing these measures because cutting off access to such resources would drastically harm people’s lives. Any attempt to do so would likely result in the governor and legislature being voted out of office at the earliest chance.
Like people everywhere, New Yorkers value the ability to heat their homes and fuel their vehicles affordably and reliably. This “superfund” proposal, much like past unsuccessful climate lawsuits, is essentially a sneaky attempt to generate revenue in a way that lawmakers hope voters won’t catch on to. Any fines the state collects will likely be passed down to consumers through higher gas, heating, and electricity costs. The government is counting on consumers blaming “greedy” corporations for the price hikes, rather than the superfund law that triggered them in the first place.
Beyond the political dishonesty inherent in this line of legislation, the superfund law ignores some very basic legal concepts that make its survival in court questionable. First, the law ignores well-established concepts of liability. As mentioned above, the law ignores the end users of the targeted energy products, seeking money from the producers of the products. But that is not how our liability system works; you don’t get to charge automakers fees for the costs of car crashes caused by people driving recklessly.
Second, the law is trying to extract the fines retroactively, going back to the year 2000, and for activity that was at the time perfectly legal and remains legal today. Retroactive fines are generally not allowed for good reason because there is no way to comply with a law before the law even exists. Oil, natural gas, and coal are not illegal products so the idea of fining companies for their sale is inherently suspect.
Third, the entire exercise of trying to measure greenhouse gas emissions and calculate fines on producers, especially while ignoring their end use, is an entirely arbitrary process. The amount of greenhouse gas emissions from a given unit of coal, oil, or gas greatly depends on its end use. Is the product burned, or is it used in an industrial process? Is it used in an older power plant or refinery, or a newer one with scrubbers and modern emissions control technology? Is the end use in a private home or a large business? How is the product transported? Are the products used in the U.S. or overseas? All these questions significantly affect ultimate greenhouse gas emissions. That end use is not known by the producer that New York is seeking to fine. Therefore, the actual amount of emissions cannot be known. The fines must be assessed based on vague estimates. That introduces another inherent layer of unfairness and arbitrariness that weakens the legal case for these fines.
Finally, there is the question of federal supremacy in this area. The Clean Air Act explicitly preempts states from regulating emissions already being regulated federally. This is to avoid duplication and conflicting mandates from state vs. federal regulation. Federal regulators already regulate numerous aspects of emissions from conventional energy producers, everything from pipeline emissions to emissions from vehicle tailpipes and power plants. New York’s superfund law thus seeks regulatory control over already federally regulated activities.
The state attorneys general and several affected industry groups have sued to stop this illegal, unconstitutional cash grab. They are likely to prevail, but in the meantime, there is great potential for costly disruptions and compliance efforts; the only result of which will be increased energy costs, with no effect on the climate. That fact highlights an irony of this legislation. New York isn’t banning the use of these supposedly damaging energy sources because the state depends on these sources to keep the lights on and heat homes. It’s just another excuse to siphon money from the private sector to keep the government revenue train rolling.
