Vermont’s effort to make fossil fuel companies pay for damage caused by climate change was tested Monday in a federal courtroom, where the state argued that two lawsuits challenging its groundbreaking 2024 law should be thrown out.

Vermont became the first state to enact a climate superfund law, modeled on the federal superfund law that taxed petroleum and chemical companies to pay to clean up sites polluted by toxic waste. It took action after suffering catastrophic summer flooding in 2023 as well as damage from other extreme weather, which scientists say is occurring more frequently due to climate change. The money it collects would be used for climate adaptation projects, such as upgrades to stormwater drainage systems, sewage treatment plants and roads.

The U.S. Chamber of Commerce and a top oil and gas industry trade group, the American Petroleum Institute, sued Vermont over the law in December 2024, calling it unconstitutional and a violation of federal law. The Department of Justice also sued Vermont and New York after President Donald Trump ordered Attorney General Pam Bondi to take action against states that may be overreaching their authority in how they regulate energy development. In suing, Bondi called the laws “burdensome and ideologically motivated” and said they threaten American energy independence and national security.

In asking a judge to dismiss the lawsuits Monday, Vermont argued that it has the authority to raise revenue, protect the health and welfare of its citizens and mitigate environmental harms. The state also said that the law does not conflict with federal law or policy, regulate fossil fuel emissions or punish fossil fuel producers.

“As a sovereign state, Vermont gets to do certain things that are exercises of a traditional state authority. The Superfund Act operates squarely in those areas of traditional state authority,” Jonathan Rose of the Vermont attorney general’s office said in U.S. District Court in Rutland.

The plaintiffs in both cases, however, argue that Vermont can’t legally impose liability or penalties on out-of-state energy producers for harms arising from out-of-state and global greenhouse gas emissions.

“This case is not about Vermont’s ability to raise revenue and protect the health and welfare of its residents. It’s about Vermont’s attempt to subject global energy production activity to Vermont law, which brazenly disregards the constitutional division of power in the federal government and the states,” said DOJ attorney Riley Walters.

While other courts have allowed the application of a state law to out-of-state conduct, those cases involved direct and traceable connections between the behavior and the harm, he said.

“It’s impossible to trace in-state harm to any particular source of greenhouse gas emissions, let alone to the fossil fuel production that is even further down along the alleged causal chain,” he said. “There is not a direct and traceable connection between oil that’s extracted in Texas or in Saudi Arabia and a flood or some other weather event that takes place in Vermont.”

West Virginia, a top producer of natural gas and coal, is leading two dozen states intervening in the case with the Chamber and API, out of concern that Vermont will demand to recover billions of dollars from major energy producers and oil refiners in their states. Meanwhile, the Conservation Law Foundation, an environmental advocacy group in New England, and the Northeast Organic Farming Association of Vermont are supporting Vermont in the litigation.

Attorney Bridget Asay, representing the conservation foundation and farmers, told the judge Monday that granting the plaintiffs’ motions to strike down the law “would give the federal government this roving license to seek to enjoin any state law that it disagrees with simply by pleading preemption.

“That would be quite an expansion of the federal role in our state-federal system, and the court should instead require the United States to show concrete imminent injury like any other litigant,” she said.

Republican Gov. Phil Scott allowed the bill to become law without his signature, saying he was concerned about Vermont taking on the oil industry alone. Since then, the idea has gained traction elsewhere. New York Gov. Kathy Hochul, a Democrat, signed a similar measure a few months after Vermont’s law passed. Other Democratic-controlled states are considering climate superfund laws. Some states are seeking damages from fossil fuel companies in state courts for harms caused by climate change.

Jennifer Rushlow, interim vice president for CLF Vermont, said the outcome of the Vermont litigation likely will influence other states.

“This is the first time that a state legislature has taken the gigantic step of pursuing polluters and holding them accountable to clean up the mess that they’ve made,” she said.

A Dartmouth College research team estimated the world’s biggest corporations have caused $28 trillion in climate damage. The researchers published a study last year with the estimated pollution caused by 111 companies, with more than half of the total dollar figure coming from 10 fossil fuel providers.

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Ramer reported from Concord, New Hampshire, and McDermott reported from Providence, Rhode Island.

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Holly Ramer And Jennifer Mcdermott, The Associated Press