\u2022 Federal appeals court pauses SB 261, delaying climate-risk disclosures for thousands of companies operating in California.
\u2022 SB 253, the state\u2019s emissions-reporting law, continues toward its 2026 rollout despite industry legal challenges.
\u2022 The ruling intensifies a national debate over state-led climate governance as federal rules face uncertainty.<\/p>\n
Ninth Circuit Halts California\u2019s Climate-Risk Disclosure Law<\/p>\n
A federal appeals court has temporarily stopped California from enforcing Senate Bill 261, a law that would require large companies operating in the state to publicly disclose their climate-related financial risks. The brief order from the Ninth Circuit Court of Appeals arrived only weeks before the first corporate preparations for the 2026 reporting deadline were expected to begin.<\/p>\n
The injunction follows an emergency request filed last week by the U.S. Chamber of Commerce and several business groups. The Chamber asked the U.S. Supreme Court to intervene after the Ninth Circuit initially declined to pause the law earlier this year, choosing instead to hear the full case in 2026.<\/p>\n
The latest ruling grants a halt to SB 261 alone. SB 253 \u2014 California\u2019s sweeping emissions-reporting mandate for companies earning over $1 billion annually \u2014 remains in force and continues on its regulatory timeline. The court provided no explanation beyond the one-page injunction order.<\/p>\n
A High-Stakes Challenge to State Climate Governance<\/p>\n
The case is shaping up as one of the most consequential legal battles over state climate authority in a decade. The U.S. Chamber of Commerce, joined by the California Chamber of Commerce, the American Farm Bureau Federation, the Los Angeles County Business Federation, the Central Valley Business Federation, and the Western Growers Association, argues that California\u2019s disclosure laws compel \u201csubjective speech\u201d in violation of the First Amendment.<\/p>\n
In a statement released after the Ninth Circuit decision, Daryl Joseffer, executive vice president and chief counsel at the U.S. Chamber of Commerce\u2019s Litigation Center, said:<\/p>\n
\u201cThe U.S. Chamber welcomes the Ninth Circuit\u2019s decision to pause California\u2019s unconstitutional climate disclosure law, pending appeal. Stopping this law before its January 1 deadline was critical to businesses and the protection of their First Amendment rights. We look forward to continuing our appeal and securing an injunction of both climate disclosure laws, which result in massive compliance costs for companies and their supply chains. One state should not have the ability to impose this kind of burden on the entire country.\u201d<\/p>\n
The Chamber\u2019s litigation strategy reflects its broader concern that California\u2019s rules could effectively become de facto national standards. Many companies that do business in the state but are headquartered elsewhere would still be required to comply.<\/p>\n
Regulators Press Ahead With Emissions Reporting Under SB 253<\/p>\n
The ruling arrived on the same day the California Air Resources Board (CARB) hosted a public workshop to advance the implementation framework for both laws. CARB remains responsible for enforcement and has been preparing for the first reporting cycles.<\/p>\n
SB 261 \u2014 now paused \u2014 would have required U.S. companies with more than $500 million in annual revenue doing business in California to disclose climate-related financial risks and adaptation measures beginning January 1, 2026.<\/p>\n
SB 253, which remains active, requires companies exceeding $1 billion in annual revenue to report Scope 1 and Scope 2 emissions by June 30, 2026. Scope 3 value-chain disclosures begin in 2027. Covered emissions include supply-chain impacts, business travel, employee commuting, waste, water usage, and procurement.<\/p>\n
CARB\u2019s early list of potentially affected companies spans more than 3,100 businesses, and the agency has acknowledged that the list is incomplete. Entities not named are still responsible for determining whether they qualify.<\/p>\n