NJ’s similar legislative proposal relies on the same central mechanism a NY federal court rejected on August 31.
A federal judge struck down New York’s $75 billion Climate Change Superfund Act, finding that federal law preempted the state program.
New Jersey’s proposed $50 billion climate superfund proposal uses a similar emissions formula, although lawmakers included language intended to distinguish it from the New York law.
The ruling does not bind New Jersey courts, but it provides a road map for a legal challenge and raises questions about how the state can reliably fund needed climate-resilience infrastructure.
A federal judge’s decision striking down New York’s Climate Change Superfund Act could create a legal obstacle for New Jersey lawmakers pursuing a similar $50 billion program.
The immediate effect is limited. The August 31 ruling applies only to New York’s enacted law; New Jersey’s proposal has advanced through legislative committees but has not yet become law. Because New Jersey falls within the federal Third Circuit while New York is part of the Second Circuit, the ruling does not bind federal courts in New Jersey.
However, the decision provides opponents with a detailed legal roadmap for challenging the New Jersey proposal. Both programs would require large fossil fuel companies to pay for emissions linked to products extracted and used around the world over several decades. The global and retrospective reach was central to the New York court’s decision to rule against the law.
Inside the court case
Chief U.S. District Judge Brenda Sannes ruled that New York could not enforce its law because it intruded into an area governed by federal law and national policy.
New York’s program sought to collect $75 billion from fuel producers, refiners and energy companies over 25 years. Each company’s share would have been calculated using greenhouse gas emissions associated with fossil fuels it produced or refined between 2000 and 2018.
New York argued that the program was a cost-recovery system, not a regulation of emissions. The state said it was seeking compensation for climate-related infrastructure costs rather than ordering companies to reduce production or change their behavior.
Sannes rejected that distinction. Relying heavily on the Second Circuit’s 2021 decision in City of New York v. Chevron, she concluded that a state cannot impose liability for the cumulative effects of worldwide greenhouse gas emissions simply by describing the payment as compensation rather than regulation.
The U.S. Department of Justice participated in the hearing in support of the challengers. Following the decision, DOJ said the court had agreed with its position that the Clean Air Act and the federal foreign-affairs power preempted New York’s program. The department has also filed a separate lawsuit against New York’s law and is challenging Vermont’s climate superfund program.
New York Gov. Kathy Hochul’s administration said it was reviewing the ruling and considering its next steps. An appeal would go to the Second Circuit, the same court whose 2021 climate decision formed much of the basis for Sannes’ ruling.
New Jersey’s proposal follows the same model
New Jersey’s pending “Polluters Pay to Make New Jersey More Affordable Act,” introduced as A3735 and S2338, would establish a Climate Adaptation, Resiliency, and Affordability Program within the Department of Environmental Protection.
The proposal would hold fossil fuel extraction companies responsible for a combined $50 billion. Liability would be divided according to emissions associated with fossil fuels extracted between 1995 and 2024; only companies connected to more than 1 billion metric tons of carbon dioxide-equivalent emissions would be covered. However, advocates have also publicly reported they would seek to also target major New Jersey utility providers like PSE&G and New Jersey Natural Gas.
The bill identifies billions of dollars in unmet adaptation needs. Its stated purpose is to shift part of the cost of flood protection, stormwater upgrades and other resilience projects from taxpayers to fossil fuel companies whose products contributed to climate change. At least 51 percent of the grant funding would be directed toward projects benefiting overburdened communities.
New Jersey’s proposed legislation is very similar to that rejected in New York, but it contains several provisions designed to address challenges already facing New York and Vermont. The bill expressly states that its program would be remedial rather than punitive and would not authorize the state to regulate greenhouse gas emissions, fossil fuel production or energy policy. It describes New Jersey as exercising a proprietary interest as a market participant by recovering costs and setting conditions for the use of state-administered funds. It remains to be seen whether those distinctions would be enough for a court to reach a different conclusion.
The New Jersey Business & Industry Association (NJBIA) warns that the assessments could return to residents and employers through higher energy prices, reduced investment and job losses. NJBIA has called the proposal one of the most anti-business bills in state history, particularly as New Jersey faces broader affordability and energy-cost concerns.
“The court today sent a clear message: New York cannot extract billions of dollars from energy companies for their lawful operations over the past 25 years,” US Chamber of Commerce Chief Policy Officer Neil Bradley said in a statement.
NJBIA Deputy Chief Government Affairs Officer Ray Cantor said New York’s law is “legally indistinguishable from New Jersey’s proposed legislation.” He described the New Jersey bill as “unfair, punitive to consumers” and damaging to jobs, while urging lawmakers to pursue other approaches to climate resilience.
The NY ruling could prove influential nationally
The ruling creates both legal and practical questions. A federal court decision in New York is not binding precedent in New Jersey. A federal judge hearing a challenge to the New Jersey program could reach a different conclusion, particularly if the final legislation contains meaningful distinctions or if Third Circuit precedent permits a different analysis.
Still, the New York decision will almost certainly be cited by fossil fuel companies, trade organizations, other states and the federal government in any lawsuit against New Jersey. It provides a clear road map for a legal challenge to the legislation. The New York decision would carry considerably more weight if the Second Circuit upholds Sannes’ ruling.
New Jersey could spend considerable public resources defending a program built around the same worldwide emissions formula rejected in New York.The issue may ultimately be influenced by the U.S. Supreme Court. The justices are scheduled to hear arguments in October in Suncor Energy v. Boulder County, a case asking whether federal law prevents state-law claims seeking compensation for injuries attributed to global greenhouse gas emissions. Although that case involves litigation rather than a legislatively created fund, its treatment of federal preemption could affect climate-superfund programs nationwide.
New Jersey now has a choice
The New York ruling does not automatically end New Jersey’s proposal, but it changes the environment in which lawmakers will consider it. Advancing substantially similar legislation without further revisions would invite an immediate and potentially lengthy federal challenge.
Lawmakers could pause while the New York appeal and Supreme Court case proceed. They could also revise the proposal to establish a clearer connection between the companies being charged, conduct occurring in New Jersey and specific costs incurred by the state.
Narrowing the program could reduce the amount of money available for resilience work. Leaving its worldwide emissions formula intact, however, would preserve the feature most vulnerable under the New York court’s reasoning.
Meanwhile, New Jersey’s infrastructure needs remain regardless of how the litigation develops. The proposal identifies more than $15.3 billion in climate-adaptation projects in only 11 municipalities, more than $3 billion in prioritized transportation-resilience projects and hundreds of thousands of properties facing flood exposure.
Sources:
F Minus. (2026, June). New Jersey’s double agents: The local government lobbyists fighting the creation of a climate superfund. https://fminus.org/report/new-jerseys-double-agents/
New Jersey Business & Industry Association. (2026, September 1). Court’s blow to NY’s climate superfund law could impact legality of NJ’s controversial bill. https://njbia.org/courts-blow-to-nys-climate-superfund-law-could-impact-legality-of-njs-controversial-bill/
New Jersey Legislature. (2026). Assembly Bill No. 3735: Polluters Pay to Make New Jersey More Affordable Act. https://pub.njleg.gov/Bills/2026/A4000/3735_R1.HTM
New Jersey Legislature. (2026). Senate Bill No. 2338: Polluters Pay to Make New Jersey More Affordable Act. https://pub.njleg.gov/Bills/2026/S2500/2338_U1.HTM
Tri-State Infrastructure News. (n.d.). Federal judge strikes down New York’s controversial climate superfund law. https://tristateinfrastructurenews.com/federal-judge-strikes-down-new-yorks-controversial-climate-superfund-law/
U.S. Department of Justice. (2026, August 31). New York judge blocks State of New York’s unconstitutional Climate Superfund Act. https://www.justice.gov/opa/pr/new-york-judge-blocks-state-new-yorks-unconstitutional-climate-superfund-act
