On August 13, 2025, the U.S. District Court for the Central District of California dealt a setback to plaintiffs and potentially regulated entities in Chamber of Commerce of the United States of America et al. v. California Air Resources Board et al., Case No. 2:24-cv-00801-ODW-PVC. The court denied plaintiffs’ motion to stay enforcement of California Senate Bill (“SB”) 253 and SB 261, California’s most recent climate disclosure laws, pending resolution of their First Amendment challenge.
The plaintiffs had argued that the laws impermissibly compel speech and sought to pause enforcement until the court could rule on the merits of their claims. However, in rejecting the motion, the court concluded that the plaintiffs had not demonstrated a likelihood of success on their facial challenge to either SB 253 or SB 261. This decision signals a potentially uphill battle for industry stakeholders hoping to challenge the constitutionality of these laws.
Governor Gavin Newsom signed SB 253 and SB 261 into law on October 7, 2023. SB 253, known as the Climate Corporate Data Accountability Act, requires any business with total annual revenues exceeding $1 billion that does business in California to annually estimate and publicly disclose their Scope 1 emissions (direct greenhouse gas (“GHG”) emissions), Scope 2 emissions (indirect GHG emissions from energy use), and Scope 3 emissions (other indirect upstream and downstream GHG emissions).
SB 261, which concerns financial risks related to climate change, requires companies with more than $500 million in annual revenues and that do business in California to disclose biannually their climate-related financial risks and measures they have adopted to reduce and adapt to those risks.
Reporting obligations under SB 253 begin in 2026 for Scope 1 and Scope 2 emissions, although the exact reporting deadline will be determined by implementing regulations. Scope 3 emissions reporting will commence in 2027. The California Air Resources Board (“CARB”), which is responsible for implementing and enforcing both laws, was initially required to issue regulations by January 1, 2025. That deadline was later extended to July 1, 2025 through a legislative amendment. CARB stated this summer, though, that it intends to develop regulations by the end of 2025.
The first SB 261 climate-related financial risk report is due on January 1, 2026.
With the court not scheduled to hear dispositive motions until June 2026, the recent ruling in the Chamber of Commerce case effectively eliminates the possibility of temporary relief from the SB 261 reporting deadline. As CARB continues to develop draft regulations, it remains to be seen whether future legal motions will have any bearing on the SB 253 compliance timeline.
