US Chamber of Commerce, oil group sue Vermont over law requiring companies to pay for climate change damage

The U.S. Chamber of Commerce and a top oil and gas industry trade group have filed a lawsuit against Vermont over its new law requiring that fossil fuel companies pay for damage the state attributes to climate change.

The federal lawsuit, which was filed Monday, urges a state court to block the state from enforcing the law, which was passed by lawmakers last year, according to The Associated Press. The state said it is working to estimate the cost of climate change dating back to 1995.

Vermont became the first state in the country to enact a law of its kind after it suffered catastrophic summer flooding and damage from other extreme weather, the outlet noted.

The Chamber and the American Petroleum Institute argue in the lawsuit that the U.S. Constitution precludes the act and that the state law is preempted by the federal Clean Air Act, The Associated Press reported. The lawsuit also says 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."

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The plaintiffs say that the federal government is already addressing climate change, according to the report. The plaintiffs add that since greenhouse gases come from billions of individual sources, it is impossible to measure "accurately and fairly" the impact of emissions from a particular entity in a particular location over multiple 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," Tara Morrissey, senior vice president and deputy chief counsel of the Chamber’s litigation center, said, according to the report. "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."

The law requires the Vermont state treasurer, in consultation with the Agency of Natural Resources, to issue a report by Jan. 15, 2026, on the total cost to the state and its residents from the emission of greenhouse gases from Jan. 1, 1995, to Dec. 31, 2024. The review would examine the effects of greenhouse gasses on various areas, including public health, natural resources, agriculture, economic development and housing.

The state would use federal data to determine whether the amount of covered greenhouse gas emissions can be traced to a fossil fuel company.

The share of funds collected from the companies could be used by the state for things like improving stormwater drainage systems, upgrading roads and bridges, elevating or retrofitting sewage treatment plants and making energy-efficient weatherization upgrades to public and private buildings.

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The law in Vermont captured interest from other states, including New York, where a similar bill was signed into law last month.

The New York law requires companies responsible for substantial greenhouse gas emissions to pay into a state fund for infrastructure projects to repair or prevent future damage from climate change, and the biggest emitters of greenhouse gases between 2000 and 2018 would face fines.