MONTPELIER, Vt. — A significant legal battle has emerged as the U.S. Chamber of Commerce, along with a leading oil and gas industry trade organization, has initiated a lawsuit against Vermont. This lawsuit challenges a newly enacted state law mandating that fossil fuel companies contribute financially to offset the damages resulting from climate change over the years.
The federal lawsuit, which was submitted on Monday, seeks to stop Vermont from implementing this legislation, which gained approval last year. Vermont has notably become the first state to introduce such a law, following severe summer flooding and other forms of extreme weather that devastated the region. The state is currently undertaking an evaluation of the financial impact of climate change, with the analysis dating back to January 1, 1995.
According to the lawsuit, enforcing the state law contradicts the U.S. Constitution and conflicts with the federal Clean Air Act. Furthermore, it claims that the legislation breaches both domestic and foreign commerce clauses by unfairly targeting major energy companies located outside Vermont while disregarding the broader interests of other states.
The plaintiffs contend that the federal government is already engaged in efforts to tackle climate change. They argue that emissions stem from countless individual sources, making it impossible to accurately assess the long-term effects of emissions from a single company in a specific location.
Tara Morrissey, senior vice president and deputy chief counsel of the Chamber’s litigation center, stated, “Vermont aims to impose substantial retroactive penalties for actions undertaken three decades ago that were regulated federally. This approach is illegal and breaches the U.S. Constitution’s framework, as one state cannot regulate an international issue that should primarily fall under federal jurisdiction. Such penalties will ultimately increase costs for consumers both in Vermont and nationwide.”
A representative from the Vermont Agency of Natural Resources has confirmed that they have yet to receive formal notification of the lawsuit. In response, Anthony Iarrapino, a Vermont-based lobbyist representing the Conservation Law Foundation, described the lawsuit as a tactic by the fossil fuel industry to avoid taking responsibility for the environmental impacts of their products.
“An increasing number of states are embracing Vermont’s model to hold fossil fuel companies accountable for the expenses associated with disaster recovery and repair from climate-related storms,” Iarrapino remarked. “This ensures that families and businesses do not bear the entire financial burden repeatedly.”
The new law requires the Vermont state treasurer, in coordination with the Agency of Natural Resources, to produce a comprehensive report by January 15, 2026. This report will detail the costs incurred by Vermonters and the state from greenhouse gas emissions between January 1, 1995, and December 31, 2024. The evaluation will consider a wide range of impacts, including public health, natural resources, agriculture, economic development, housing, and others. The state aims to utilize federal data to ascertain the greenhouse gas emissions attributable to specific fossil fuel companies.
This legislative measure operates under a polluter-pays principle, targeting companies involved in the extraction or refinement of fossil fuels accountable for emitting over 1 billion metric tons of greenhouse gases during the specified timeline. The resulting funds could support initiatives such as enhancing stormwater management systems, upgrading transportation infrastructure, relocating or retrofitting wastewater treatment facilities, and conducting energy efficiency upgrades in both public and private buildings. This approach is inspired by the federal Superfund pollution cleanup initiative.
Vermont’s strategy has garnered attention from several other states, including New York, where Governor Kathy Hochul enacted similar legislation in December. This law mandates that companies responsible for significant greenhouse gas emissions contribute to a state fund dedicated to infrastructure projects aimed at repairing or mitigating future climate-related damages, targeting the largest polluters between 2000 and 2018.
