A recent federal court victory secured by the U.S. Chamber of Commerce and an ongoing Pennsylvania case underscore an important legal question with significant implications for employers: Can states and local governments impose financial liability on energy companies for global climate change?

The answer increasingly coming from courts is that these disputes are best resolved by federal law, not a patchwork of state-level lawsuits and liability schemes.

Last week, Chief U.S. District Judge Brenda Sannes struck down New York’s Climate Change Superfund Act, ruling the state cannot enforce a law that would have required fossil fuel companies to pay $75 billion over 25 years into a fund intended to cover climate-related damages. The court sided with a coalition that included 22 state attorneys general and business groups led by the U.S. Chamber of Commerce, finding the law was preempted by federal law.

The decision represents an important check on efforts to address climate policy through retroactive liability rather than through federal legislation and regulation. Employers have long argued that allowing individual states to impose their own climate liability standards would create significant uncertainty for energy producers, investors, and consumers alike.

The issues raised in the New York case closely mirror arguments now before Pennsylvania’s Commonwealth Court.

In March 2024, Bucks County filed suit against several major oil companies and the American Petroleum Institute (API). The Bucks County Court of Common Pleas dismissed the case in May 2025, concluding that the claims were preempted by federal law. In April, the PA Chamber joined a coalition amicus brief urging the Commonwealth Court to affirm that dismissal.

Like the parties challenging New York’s law, the coalition argues that climate change is a national and global issue that cannot be addressed through state-law claims targeting individual companies. Allowing such lawsuits to proceed would invite conflicting legal standards across jurisdictions and expose businesses to substantial liability for activities already governed by federal law.

The broader concern for employers extends beyond litigation currently before the courts. Similar concepts have also been proposed through legislation.

House Bill 1931, introduced in Pennsylvania during the previous legislative session, would allow lawsuits against energy companies for extreme weather events for which they are deemed “potentially responsible.” The legislation has not advanced, but such proposals could create sweeping liability exposure and increase costs for consumers.

A report by the U.S. Chamber Institute for Legal Reform concluded that enactment of H.B. 1931 could significantly increase costs borne by Pennsylvania households and taxpayers by encouraging expansive climate-related litigation and increasing legal risks for energy producers.

For Pennsylvania employers, the stakes reach well beyond the energy sector. Affordable and reliable energy remains a key competitive advantage for the Commonwealth’s manufacturers, industrial facilities, data centers and other energy-intensive businesses. Policies that increase litigation risks and costs for energy production can ultimately affect energy prices, investment decisions and the state’s broader economic competitiveness.

The next major development will come from Pennsylvania’s Commonwealth Court, which must decide whether to uphold the dismissal of the Bucks County lawsuit. As courts continue to weigh these questions, the outcome could determine the extent to which climate-related disputes are resolved through federal law or through an expanding network of state and local liability actions.