The California Air Resources Board (“CARB”) hosted a public workshop on August 21, 2025 to provide information on Senate Bills 253, 261 and 219 (the “California climate laws”) and solicit feedback from consumers and investors. The August workshop built on previous discussions from CARB’s May 2025 workshop and release of frequently asked questions in July 2025.
Applicability: Total annual revenues
CARB staff began by addressing the revenue triggers for applicability of the California climate laws. Both “reporting entities” subject to SB 253 and “covered entities” subject to SB 261 have monetary thresholds based on “total annual revenues” which are not defined in the respective laws.
At the May workshop, CARB staff had considered defining “total annual revenue” as gross receipts in accordance with the California Revenue and Taxation Code, but received feedback that gross receipts may pose confidentiality and verification issues, and could be overbroad in application.
CARB staff noted that, as an alternative, they are considering defining revenue as “the total global amount of money or sales a company receives from its business activities, such as selling products or providing services.” The revised definition would avoid deductions for operating costs and other business expenses, and conformed to definitions used by major data tracking and reporting industries. CARB is currently requesting feedback on the potential definition of “total annual revenue.”
Applicability: Doing Business in California
From the outset, one of the most widely discussed parts of the California climate laws was what it meant to “do business in California.” At the May workshop, CARB staff looked to the California Revenue and Taxation Code, which defines “doing business” as either (i) actively engaging in any transaction for the purpose of financial or pecuniary gain or profit, (ii) organizing or commercially domiciling in the state or (iii) meeting certain sales thresholds.
Following feedback from attendees at the May workshop, CARB staff are now reviewing lists of U.S.-based entities to guide what it means to do business in California. CARB has considered using data from the Franchise Tax Board and the California Secretary of State Business Entity database to identify those entities that may be subject to the laws. Among the 816,845 businesses actively registered with the California Secretary of State, an estimated 4,160 will be subject to SB 261, while an estimated 2,596 will be subject to SB 253.
CARB announced that it intends to issue a list of entity names that CARB has identified as presumptively subject to SB 253 and SB 261 in the coming weeks. It confirmed, however, that whether or not a company is identified on the list does not alleviate the company from its compliance obligation if it falls within the applicability thresholds. During the Q&A portion it was noted that certain companies, such as limited liability partnerships and general partnerships, are not contained in the California Secretary of State Business Entity database being used by CARB to develop its list but nonetheless may be required to report if they otherwise meet the requisite thresholds. Companies that are not initially identified as doing business in California by CARB staff are nevertheless responsible for compliance where applicable. Companies should take steps to individually determine whether compliance with the California climate laws is required.
Applicability: Other Considerations
CARB staff are reviewing ways to identify subsidiaries, including through commercial databases such as the California Secretary of State and Franchise Tax Board databases. CARB staff are also considering a voluntary reporting process of parent-subsidiary relationships to avoid needing to report multiple entities for the same parent company. Commentors expressed concerns about whether and to what extent the laws would be applicable to subsidiaries, including subsidiaries of foreign and domestic parent companies that have no connection to California other than through the subsidiary entity. During the August workshop, however, CARB staff made clear that this is still a gray area and is open to comment on the treatment of parent-subsidiary relationships.
After considering stakeholder feedback, CARB staff are proposing to exempt certain entities, including non-profits, government entities, companies whose only business in California is telework employees, and business entities whose only activity in California is wholesale electricity transactions occurring in interstate commerce. In light of the proposed exclusion for telework employees, commentors raised a question as to whether companies without any employees, such as investment funds, would also be exempted. CARB staff is also currently considering how utilities should be treated under the regulations.
Fee Regulation
CARB staff noted that the California climate laws permit the organization to assess an annual fee to implement and administer the new reporting programs. CARB assesses a similar fee to support the state’s cap-and-trade program. In contrast to the cap-and-trade program, which imposes a fee in proportion to a Company’s emissions, the proposed California climate law fees would be a flat fee based on the annual program costs, divided pro rata by the number of covered entities. Companies subject to both SB 253 and SB 261 would be required to pay annual fees to fund each program. Additionally, subsidiaries consolidating reports with parent companies would still be subject to separate implementation fees.
CARB staff estimate an initial cost of $20.7 million to set up the program, and ongoing implementation costs of $13.9 million thereafter, as adjusted for inflation. Based on these estimates and the current estimation of the number of reporting entities and covered entities, an entity subject to SB 253 would be assessed an annual fee of $3,106, and an entity subject to SB 261 would be assessed an annual fee of $1,403.
SB 261 Reporting Requirements
During the August workshop, CARB staff advised that it is intending to issue “minimum requirements” for the first round of reports required under SB 261, due on January 1, 2026. Notably, CARB staff confirmed that Scope 1, Scope 2, and Scope 3 emissions data will not be necessary to meet the “minimum CARB expectations” for the January 2026 reports, even though this information is included in the Metrics and Targets recommendations under the Task Force on Climate Related Financial Disclosures. They further clarified, that if a covered entity has emissions data available, the entity should report it and should use the most recent data that is available. Similarly, CARB stated that it has heard from a number of companies that conducting a scenario analysis is not feasible prior to the January 1 deadline. Therefore, CARB staff advised that they will not be requiring a quantitative discussion of a scenario analysis as a minimum requirement for this reporting cycle.
SB 253 Assurance Criteria
CARB staff discussed limited assurance requirements under SB 253, which are required beginning in 2026 for Scope 1 and 2 emissions, and beginning in 2030 for Scope 3 emissions. CARB staff noted that although there have been discussions around the standards for third-party assurances, CARB would not be publishing a list of approved third-parties.
Commenters also expressed concerns about the availability of data assurance providers given the limited assurance requirements for Scope 1 and 2 emissions coupled with the June 30, 2026 reporting deadline.
Timing of Reporting Requirements
CARB staff proposed a June 30, 2026 implementation deadline for Scope 1 and 2 GHG emissions reporting in connection with SB 253. CARB intends to provide reporting templates by the end of September 2025, which will be subject to public feedback.
SB 261 reports must be posted to an entity’s website by January 1, 2026 and every two years thereafter. A public docket to post links to SB 261 reports will be provided by CARB on December 1, 2025, and covered entities will be required to post the link to their reports by July 1, 2026. SB 261 reports will be required to note which reporting framework is used to meet disclosure requirements, which recommendations and disclosures have and have not been complied with and, if such recommendations or disclosures are not included, an explanation as to why and whether the company plans to include the information in future disclosures.
Next Steps
From August 21 until September 11, 2025, CARB will continue to solicit public comments for feedback on concepts presented in the workshops.
On October 14, 2025, CARB plans to issue a notice of proposed rulemaking, which begins a 45-day public comment period pursuant to California’s Administrative Procedures Act.
CARB’s board will meet from December 11-12, 2025 to consider the adoption of the proposed rule.
