A preliminary injunction motion is set for May, the judge issued a scheduling order, and CARB announced a public workshop to kick off a rulemaking to implement the laws.
The litigation over California’s climate disclosure laws has been ongoing since January 2024. In the latest development, the US District Court for the Central District of California is scheduled to conduct a hearing on a motion for preliminary injunction on May 27, 2025.
The focus of the preliminary injunction remains on whether the disclosures mandated by SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Greenhouse Gases: Climate-Related Financial Risk Act) are commercial, factual, and uncontroversial, and whether California possesses a compelling interest to enforce these regulations.
On April 8, 2025, the judge issued a detailed scheduling order outlining key dates for discovery and trial proceedings, which will occur after the preliminary injunction is decided. The litigation is set to extend into 2026.
Meanwhile, the California Air Resources Board (CARB) is continuing its public outreach efforts to implement SB 253 and SB 261, including a workshop scheduled for May 29, 2025, to engage stakeholders in the regulatory development process.
This post covers the latest developments in the fight over SB 253 and SB 261. For our previous coverage of these laws and litigation, see our additional resources at the end of this post.
Pre-Hearing Motions For and Against a Preliminary Injunction
After the initial motion for preliminary injunction1 filed by the plaintiffs (including the US Chamber of Commerce, the California Chamber of Commerce, and other business groups), the opposition2 filed by the defendants (including the State of California and CARB), and the reply3 in support of the motion filed by the plaintiffs, the battle lines have been drawn over the following main issues.
Whether Strict Scrutiny Should Apply
Three key issues underpin the level of scrutiny the court will apply: whether the disclosure of climate-related risk and GHG emissions required by SB 253 and SB 261 are commercial, factual, and uncontroversial.
California claims that a lower level of scrutiny should apply. In California’s view, the disclosures required by the laws are:
- Commercial because companies speak publicly about their emissions and sustainability practices to attract business, and this speech is therefore advertising with clear economic motive.
- Factual, and do not turn on subjective judgments (even for Scope 3 emissions), because the disclosures follow standardized accounting methodologies (e.g., the GHG Protocol). California argues that those calculations are facts even though they involve estimates.
- Uncontroversial because of the “distinction between a policy position and a business fact.” California maintains that the disclosures do not require a company to articulate its position on a contentious policy issue (climate change); they merely require a company to provide factual information (from which a third party could form an opinion about that policy issue).
The plaintiffs contend that strict scrutiny should apply. In their view, the disclosures required by the laws are:
- Not commercial because they are disconnected from any economic transaction, not advertisements, and not connected to a particular product.
- Not merely factual, because they are calculated in ways that require subjective judgments, particularly for Scope 3 emissions under SB 253 and policy actions around climate change under SB 261.
- Controversial because they are not simply data, and because they require companies to opine on government carbon pricing mechanisms, financial markets, and economic health. This, the plaintiffs argue, illustrates that the laws unavoidably contain aspects of accountability and moral responsibility, and therefore are inherently controversial. The purpose of SB 253 and SB 261, according to the plaintiffs, is to “compel companies to accept blame for increasing the state’s climate risk … for which the State thinks companies bear moral responsibility” (internal citations omitted).
Whether California Has the Requisite Interest to Regulate Speech
California proposes that SB 253 and SB 261 disclosures serve three compelling interests: (1) protecting its investors, consumers, and other stakeholders from fraud or misrepresentation; (2) providing reliable information that enables investors and consumers to make informed judgments about the impact of climate-related risks on their economic choices; and (3) encouraging companies doing business in California to reduce their emissions and thereby mitigate the risks California and its residents face from climate change.
Critically, California cited statistics from an expert declaration that most large companies make climate reduction pledges, and 96% of these statements are “misleading or inaccurate.” Further, California states that the laws proportionally serve these interests because they are tailored to apply to companies seeking investments, which inherently implicate the state’s interest in informing those consumers and protecting those investors who may interact with those companies.
The plaintiffs, on the other hand, claim that giving individuals information is not a sufficiently compelling interest. The plaintiffs also cast doubt on the 96% assertion, arguing that:
- the expert declaration said only that 96% of companies with emissions targets “show signs of greenwashing” — not that they have made false or misleading speech;
- the methodology relied on in the expert declaration is flawed because it includes engaging in lobbying activity that undermines climate action — which should be protected speech — as showing signs of greenwashing; and
- the expert declaration did not identify any false or misleading statements.
Moreover, the plaintiffs contend that even if these interests are compelling, the laws are not narrowly tailored to those interests. Instead, the laws require every company to speak, regardless of its connections (or lack thereof) with California consumers or investors.
Likelihood That Plaintiffs Suffer Irreparable Harm Absent a Preliminary Injunction
California claims that there is no impending harm because CARB has not yet issued implementing regulations for these laws. The plaintiffs assert that SB 261 still requires compliance on January 1, 2026, which signifies irreparable harm because the date is soon enough that companies must already incur costs (such as retaining data) in order to comply. Moreover, according to the schedule set by the judge (see below), it will be a year before summary-judgment briefings conclude.
The hearing on the motion for preliminary injunction is scheduled for May 27, 2025.
Scheduling Order for Discovery and Trial
Based on the judge’s scheduling order, the litigation is likely to persist into 2026 and past the first compliance dates of the laws. Below are some of the noteworthy dates:
CARB’s Public Outreach and Next Steps for Stakeholders
In the midst of the processes for preliminary injunction and impending discovery, CARB continues to work toward its legislatively mandated July 1, 2025, deadline (per SB 219) to promulgate implementing regulations. CARB first solicited public comments in December 2024. The comment period ended on March 21, 2025. CARB has posted the comments here.
CARB announced it will hold a public workshop on May 29, 2025, from 9:30 a.m. to 12:30 p.m. PT, when it will present an overview and timeline for regulatory development, as well as solicit additional feedback. Stakeholders could use this opportunity to guide CARB in its rulemaking process as we await key dates for additional legal developments.
Additional Resources
