Partial Pause in California Climate Reporting Laws Pending Federal Appeal
With California’s climate disclosure statutes entering their initial implementation phase, companies within scope are preparing for new state-level requirements on emissions data and climate-related financial risk. At the same time, the laws are being tested in federal court, creating a dynamic compliance environment ahead of the first statutory deadlines.
Recent federal court activity has introduced a temporary asymmetry in California’s new climate disclosure regime. The appeal concerning Senate Bill 253 and Senate Bill 261 is continuing, and a procedural order issued in November 2025 has paused enforcement of one statute for the plaintiffs while leaving the other in force. The overview below summarises the scope of both laws, the litigation timeline, and the immediate implications for implementation.
Context and Scope of the Statutes
California’s climate disclosure laws include Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, the Climate-Related Financial Risk Act. Both statutes were amended by SB 219 and are being implemented by the California Air Resources Board through Health and Safety Code sections 38532 and 38533. CARB states that SB 253 applies to US companies doing business in California with total annual revenue above $1 billion. Reporting entities must annually disclose their Scope 1, Scope 2 and Scope 3 greenhouse gas emissions for the prior fiscal year. CARB further notes that first-year disclosures in 2026 cover Scope 1 and Scope 2 emissions. The statute requires limited assurance for Scope 1 and Scope 2 beginning in 2026, and CARB has indicated that limited assurance is not expected for first-year 2026 data submission. Scope 3 disclosures are required in subsequent years beginning in 2027.
SB 261 establishes a Climate-Related Financial Risk Disclosure Program. It applies to public and private US companies that do business in California with annual revenue above $500 million. Covered entities must prepare a climate-related financial risk report describing their climate-related financial risks and the measures adopted to reduce and adapt to those risks. The report is to be posted on the company website by 1 January 2026 and biennially thereafter. CARB indicates that reports may align with existing disclosure standards and recommendations such as the 2017 Task Force on Climate-related Financial Disclosures (TCFD) recommendations or ISSB Standards IFRS S2.
Litigation History
Business groups led by the Chamber of Commerce of the United States of America challenged SB 253 and SB 261 on First Amendment grounds. Following the denial of their request for a preliminary injunction by the United States District Court for the Central District of California on 13 August 2025, the plaintiffs filed a notice of appeal and, on 15 September 2025, moved in the Ninth Circuit for an injunction pending appeal, later supporting that motion with a reply brief.
Ninth Circuit Ruling on the Injunction Request
On 18 November 2025 the United States Court of Appeals for the Ninth Circuit issued an order on the motion for injunction pending appeal. The panel granted the motion as to enforcement of SB 261 and denied it as to enforcement of SB 253. Enforcement of SB 261 is therefore enjoined while the appeal proceeds, whereas SB 253 remains in effect. The order is procedural and does not set out the panel’s reasoning.
Implementation Status and Next Steps
Following the order, enforcement of SB 261 is temporarily paused for the plaintiffs covered by the injunction, namely the members of the U.S. Chamber of Commerce and the aligned business coalition that brought the challenge, despite the statutory reporting date of 1 January 2026. CARB notes that the statute sets 1 January 2026 as the first reporting date for covered entities generally. CARB will open a public docket on 1 December 2025 for covered entities to submit public links to their first-year reports, and the docket will remain open until 1 July 2026. At the same time, CARB is refining the preliminary list of covered and reporting entities that it published in September 2025 and is presenting proposed updates to definitions and exemptions through its workshop process.
SB 253 continues to advance through CARB’s implementation timeline. CARB is developing a proposed initial regulation for Board consideration in 2026 focused on programme fees and a first-year reporting deadline for Scope 1 and Scope 2 emissions, since the statute does not specify a reporting date in 2026. In its November 2025 workshop slides, CARB staff proposed 10 August 2026 as the first-year reporting deadline for Scope 1 and Scope 2 disclosures.
The Ninth Circuit will next consider the merits of the appeal on both statutes. Until a final judgment is issued, SB 261 remains stayed for the plaintiffs covered by the order while SB 253 remains operative for reporting entities within its statutory scope.
