Trump Executive Order Targets NY's Climate Change Superfund Act

Apr. 9—ALBANY — President Donald J. Trump signed an executive order this week that directs the U.S. attorney general to evaluate state "climate" laws that his administration alleges may be illegal, including New York's Climate Change Superfund Act, which establishes regulations seeking to collect billions of dollars in penalties from companies deemed responsible for greenhouse gas emissions due to their refinement and production of fossil fuels.

Under the order, U.S. Attorney General Pam Bondi must "take all appropriate action to stop the enforcement of state laws and continuation of civil actions ... that the attorney general determines to be illegal."

"These state laws and policies try to dictate interstate and international disputes over air, water, and natural resources; unduly discriminate against out-of-state businesses; contravene the equality of states; and retroactively impose arbitrary and excessive fines without legitimate justification," the president's order states. "These state laws and policies are fundamentally irreconcilable with my administration's objective to unleash American energy. They should not stand."

More than 20 states, fossil fuel companies and the U.S. Chamber of Commerce recently filed federal lawsuits against New York challenging the constitutionality of the new Climate Change Superfund Act. It was signed into law at the end of December by Gov. Kathy Hochul, over the objections of a coalition of business, energy and labor organizations aligned with the Business Council of New York State, which had asked the governor to veto the bill.

In February, Hochul amended the statute to target only entities whose emissions are attributable to fossil fuel extraction and refining. The amendments also enhanced the ability for companies to pay any penalties in installments over 25 years and requires them to provide historical documentation to help the state Department of Environmental Conservation determine their level of liability.

"We are truly the first generation to experience the effects of climate change and we are the last generation who can do anything about it," Hochul said during her annual address in January. "That's why, despite intense opposition, I signed the Climate Change Superfund Act passed by the Legislature and declared it should be the big corporate polluters who should pay for the consequences of climate change instead of New York taxpayers. And every other state should follow our lead."

Trump's executive order is expected to add fuel to the ongoing court battles over the legislation at a time when many states, including California and New York, are struggling to meet mandates set by other laws to transition their power supplies away from fossil fuels to renewable energy sources, including wind and solar. The president's order accuses New York and Vermont of seeking to "extort" money from fossil fuel companies for past greenhouse gas emissions and claims other states "have taken different approaches in an effort to dictate national energy policy."

"California, for example, punishes carbon use by adopting impossible caps on the amount of carbon businesses may use, all but forcing businesses to pay large sums to 'trade' carbon credits to meet California's radical requirements," the order states. "Some states delay review of permit applications to produce energy, creating de facto barriers to entry in the energy market."

Blair Horner, executive director of the New York Public Interest Research Group, an ardent supporter of New York's Climate Change Superfund Act, said the president's executive order, "if successful, will achieve one thing — shift New York's climate damage costs from the oil industry onto state taxpayers to the tune of $3 billion each year for the next 25 years."

Ken Paxton, the Texas attorney general and, as of this week, a candidate for U.S. Senate, has taken a lead role in the litigation challenging New York's superfund law. He issued a statement in February calling it "nothing more than an unconstitutional shakedown of vital American energy industries that form the bedrock of our national economic independence."

An amended complaint in the federal lawsuit brought by the states against New York was filed in U.S. District Court in Albany this week. The plaintiffs include attorneys general from Alabama, Arkansas, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and Wyoming. Several industry groups, including the West Virginia Coal Association, Alpha Metallurgical Resources, and the Gas and Oil Association of West Virginia, are also parties to the litigation.

The lawsuit was filed against state Attorney General Letitia James, Department of Environmental Conservation Commissioner Amanda Lefton, and acting Department of Taxation and Finance Commissioner Amanda Hiller.

"The state of New York believes it can seize control over the makeup of America's energy industry," the 76-page complaint states. "In an unprecedented effort, New York has set out to impose tens of billions of dollars of liability on traditional energy producers disfavored by certain New York politicians. These energy producers needn't operate in New York before becoming a target. And New York consumers won't bear the brunt of these crushing new costs once they're imposed. Rather, New York intends to wring funds from producers and consumers in other States to subsidize certain New-York-based 'infrastructure' projects, such as a new sewer system in New York City."

The superfund act tasks the state Department of Environmental Conservation with establishing regulations to identify "responsible parties" and the procedures for collecting payments from those companies after issuing notices of cost recovery demands. Although the state attorney general's office and Department of Taxation and Finance would be given authority to enforce the payment demands, it's unclear how that would work, including if the targets are in Russia or other nations at odds with U.S. interests.

"These state laws and policies weaken our national security and devastate Americans by driving up energy costs for families coast-to-coast, despite some of these families not living or voting in states with these crippling policies," Trump's order states.

His order also accuses the laws and policies of undermining federalism "by projecting the regulatory preferences of a few states into all states."

The coalition supported by the New York Business Council characterized the legislation as "bad public policy" in a letter they sent to Hochul last year. The letter noted there are significant questions about the implementation of the regulations, whether they would meet constitutional muster, and the potential for "unintended consequences and increased costs for households and businesses."

The group said that the legislation also ignores the direct culprit for carbon emissions — consumers — and is discriminatory because it targets only the largest fossil fuel extraction and processing firms, including those that produce petroleum, natural gas and coal.

State and federal lawmakers who support the legislation have taken varied positions on fossil fuels. Under former Gov. Andrew M. Cuomo, the state created the "FUEL NY" initiative in response to Superstorm Sandy in 2012, a catastrophic event that created extensive power outages and disruptions to fuel supply systems. That initiative, which remains in place, notes that New York "relies on the continuous availability and resupply of gasoline and diesel fuel to maintain public safety, commerce, and the well-being and economic vitality of its residents, businesses, and governments."

The FUEL NY plan seeks to mitigate disruptions in fuel distribution and establish two fuel reserves, as well as a back-up generator program for gas stations in strategic locations, to make it easier for New Yorkers to resume "daily life" following a severe storm.

"Now, state government is proposing to penalize the very same suppliers of gasoline, natural gas, and other fossil fuel-based products," the business coalition group wrote. "Imposing a fee on this past activity means is not designed to impact business or consumer behavior, suggesting the main goal of the legislation is to receive funding from the fuels sector."

The law received staunch support from many Democratic lawmakers, including U.S. Rep. Jerrold Nadler, a Manhattan Democrat who wrote a letter to Hochul last year urging her to sign the bill.

"The Climate Change Superfund Act is unique in that it holds the companies responsible for the largest greenhouse gas emissions accountable in a way that keeps those costs from being passed on to the public," Nadler wrote, adding that it is expected to cost hundreds of billions of dollars "to shore up New York against the impacts of climate change."

A memo circulated in the Legislature two years ago by state Sen. Liz Krueger, another Manhattan Democrat, and Assemblyman Jeffrey Dinowtiz, a Bronx Democrat, cited a "peer-reviewed" article that they said ranked a list of violators and helped establish the amount of money they should pay New York. The article analyzed global emissions since 2000 and based the penalties on each company's annual assessment, and places "the burden of the damages caused on the manufacturer, not the users, even if the substance was legally produced and emitted at the time the harm was caused."

That annual assessment listed ranges from $222 million for Exxon Mobil to $100 million for Lukoil in Russia and $23 million for Novatek, an oil and gas company that is Russia second-largest producer of natural gas. There are also more than a dozen U.S. companies on the bill's list.

The legislation entitles a fossil fuel company to contest any financial assessments "consistent with due process requirements of the U.S. Constitution."

But the lawsuit filed in federal court against New York contends the law runs afoul of the Constitution and the federal Clean Air Act, which regulates emissions across state lines.

"And rather than focusing on greenhouse-gas emissions released in New York, the act punishes a small group of energy producers for global greenhouse gases emitted from all sources into the atmosphere from 2000 to 2018," the complaint states. "Yet coal, oil, and natural gas were helping New York during that time. They helped keep the lights on in Albany, manufacture the steel that supported New York City's iconic skyscrapers, and fuel the industry that keeps New York ports humming."

Several environmental groups issued statements Wednesday condemning Trump's executive order.

"President Trump's order attack on 'climate superfund' and cap-and-invest laws is his latest attempt to destroy our constitutional rights and punish states taking action on the climate crisis," said a statement issued by NY Renews. "It will condemn New Yorkers to astronomical energy bills and a country where heat waves, floods, and other extreme weather events assault our health."