The U.S. Chamber of Commerce and a top oil and gas industry trade group are requiring that fossil fuel companies pay a share of the damage caused over several decades by climate change.
The federal lawsuit filed Monday asks a state court to prevent Vermont from enforcing the law, which was passed last year. Vermont became the first state in the country to enact the law after it suffered catastrophic summer flooding and damage from other extreme weather. The state is working to estimate the cost of climate change dating back to Jan. 1, 1995.
The lawsuit argues the U.S. Constitution precludes the act and that the state law is preempted by the federal Clean Air Act. It also argues that the law violates domestic and foreign commerce clauses by discriminating “against the important interest of other states by targeting large energy companies located outside of Vermont.”
The Chamber and the other plaintiff in the lawsuit, the American Petroleum Institute, argue that the federal government is already addressing climate change. And because greenhouse gases come from billions of individual sources, they argue it is impossible to measure “accurately and fairly” the impact of emissions from a particular entity in a particular location over decades.
“Vermont wants to impose massive retroactive penalties going back 30 years for lawful, out-of-state conduct that was regulated by Congress under the Clean Air Act,” said Tara Morrissey, senior vice president and deputy chief counsel of the Chamber’s litigation center. “That is unlawful and violates the structure of the U.S. Constitution — one state can’t try to regulate a global issue best left to the federal government. Vermont’s penalties will ultimately raise costs for consumers in Vermont and across the country.”
A spokesman for the state’s Agency of Natural Resources said it had not been formally served with this lawsuit.
Anthony Iarrapino, a Vermont-based lobbyist with the Conservation Law Foundation, said the lawsuit was the fossil fuel industry’s way of “trying to avoid accountability for the damage their products have caused in Vermont and beyond.”
“More states are following Vermont’s lead holding Big Oil accountable for the disaster recovery and cleanup costs from severe storms fueled by climate change, ensuring that families and businesses no longer have to foot the entire bill time and time again,” Iarrapino added.
Under the law, the Vermont state treasurer, in consultation with the Agency of Natural Resources, is to issue a report by Jan. 15, 2026, on the total cost to Vermonters and the state from the emission of greenhouse gases from Jan. 1, 1995, to Dec. 31, 2024. The assessment would look at the effects on public health, natural resources, agriculture, economic development, housing and other areas. The state would use federal data to determine the amount of covered greenhouse gas emissions attributed to a fossil fuel company.
It’s a polluter-pays model affecting companies engaged in the trade or business of extracting fossil fuel or refining crude oil attributable to more than 1 billion metric tons of greenhouse gas emissions during the time period. The funds could be used by the state for such things as improving stormwater drainage systems; upgrading roads, bridges and railroads; relocating, elevating or retrofitting sewage treatment plants; and making energy efficient weatherization upgrades to public and private buildings. It’s modeled after the federal Superfund pollution cleanup program.
The approach taken by Vermont has drawn interest from other states, including New York, where a similar bill in December.
The New York law requires companies responsible for substantial greenhouse gas emissions to pay into a state fund for infrastructure projects meant to repair or avoid future damage from climate change. The biggest emitters of greenhouse gases between 2000 and 2018 would be subjected to the fines.
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