CARB Proposes Regulatory Text for the SB 253 and SB 261 Initial Regulation
On December 23, 2025, the California Office of Administrative Law published the proposed regulatory text for the SB 253/SB 261 initial regulation governing new disclosure and reporting obligations. The proposed regulations are largely consistent with the California Air Resource Board’s (CARB) guidance provided during its November 18, 2025 public workshop, with a few new provisions. Importantly, the definitions of key threshold terms including “business entity,” “revenue,” and “doing business in California,” the proposed exemptions from reporting, and the first-year reporting deadline for SB 253 remain the same as indicated in CARB’s previous guidance. The proposed regulation also includes a framework to assess administration and implementation cost-recovery fees, as well as provisions for recordkeeping obligations and the enforcement of penalties. CARB has stated that it will not enforce the proposed regulation, even if adopted, unless the Ninth Circuit lifts its injunction.
CARB Will Not Enforce SB 261 for Failure to Submit Reports by January 1, 2026
On December 1, 2025, CARB released an enforcement advisory stating that in light of the Ninth Circuit’s injunction issued on November 18, “CARB will not enforce Health and Safety Code section 38533 [SB 261] against covered entities for failing to post and submit reports by the January 1, 2026, statutory deadline.” CARB also indicated that after the appeal is resolved it will provide further information, including an alternate date for reporting. Also on December 1, 2025, CARB opened its public docket for posting SB 261 reports for entities that choose to “voluntarily submit” their SB 261 reports. The docket includes fields to submit contact information, provide a link to the company website containing the report, and upload a company statement on official letterhead. Entities submitting consolidated reports must specify the list of subsidiaries included in the report.
California Climate Disclosure Laws Survive First Amendment Challenge but Are Partially Stayed Pending Appeal
Chamber of Commerce v. CARB, No. 2:24-cv-00801 (C.D. Cal.).
Chamber of Commerce v. Sanchez, No. 25-5327 (9th Cir.).
On August 13, 2025, the Central District of California denied the Chamber of Commerce and business groups’ motion to enjoin California’s climate disclosure laws SB 253 and SB 261 on First Amendment grounds. The court found that the plaintiffs’ facial challenge to SB 253 was ripe because even though the California Air Resources Board (CARB) has not issued implementing regulations, “SB 253 is clear that covered companies will be required to report Scope 1, 2, and 3 emissions.” The court concluded that both laws regulate commercial speech and therefore lower levels of scrutiny, not strict scrutiny, applied.
Under the lower levels of scrutiny, the court found that the plaintiffs failed to show a likelihood of success on the merits in their facial challenges to both laws based on California’s substantial government interests in providing investors with reliable information and in reducing emissions. However, the court suggested that if companies with no California investors had brought an as-applied challenge against SB 253, they may have been successful.
The plaintiffs appealed to the Ninth Circuit and also moved the Ninth Circuit for an injunction pending the appeal, requesting relief by November 3, 2025. Following the plaintiffs’ emergency application to the U.S. Supreme Court for an injunction pending appeal in November, on November 18, the Ninth Circuit granted a motion for injunction pending appeal in part, enjoining enforcement of SB 261 pending appeal of the lower court’s previous denial of a preliminary injunction. The Ninth Circuit declined to similarly enjoin SB 253 pending appeal. A hearing on the merits of the district court’s denial of the preliminary injunction for SB 261 and SB 253 is scheduled for January 9, 2026. With enforcement of SB 261 now enjoined pending the Ninth Circuit’s decision on the district court’s denial of preliminary injunction, it is unlikely that the Ninth Circuit takes any further action before the January 9 hearing. The timing of a Ninth Circuit ruling on the underlying constitutionality of the two laws after the January 9 hearing is uncertain.
CARB Public Workshops Provide Key Updates to SB 253 and SB 261 Rulemaking
On August 21, 2025 and November 18, 2025, the California Air Resources Board (CARB) conducted virtual public workshops to provide guidance on SB 253 and SB 261 and to solicit public input. In response to feedback, CARB proposed revisions and refinements to its initial staff concepts for definitions of “revenue,” and “doing business in California” and proposed exemptions. In the November workshop, CARB proposed an August 10, 2026 deadline for both Scope 1 and Scope 2 reporting. CARB also presented draft frameworks for a fee regulation.
Following the workshops, CARB posted and updated various guidance materials to help entities prepare for reporting, including a preliminary list of the entities it believes are subject to SB 253 and SB 261—which has been subject to much criticism—and a draft reporting template and accompanying guidance for Scope 1 and Scope 2 emissions. CARB continues to seek public input as it continues through to the initial rulemaking process that has been delayed into Q1 2026.
CARB Counts on Public Comments on GHG Emissions and Financial Risk Disclosures
In May 2025, the California Air Resources Board (CARB) hosted a virtual public workshop on its plans for implementing California’s greenhouse gas emissions (SB 253) and climate-related financial risk disclosures (SB 261) programs. In the workshop, CARB presented “initial staff concepts” for the implementation of SB 253 and SB 261, including defining “doing business in California,” “total annual revenue,” and corporate parent-subsidiary relationships. CARB also suggested it may look to the International Sustainability Standards Board’s (ISSB) standards instead of the Task Force on Climate-related Financial Disclosures (TCFD) as a framework for SB 261 implementation. CARB has not yet begun formal rulemaking for SB 253 or SB 261. The rulemaking timeline for SB 253 was delayed from July 1, 2025 to the end of 2025, and CARB has not yet decided whether it will issue guidance or regulations for SB 261. This delay in regulations prolongs the uncertainty for companies seeking to determine whether they are covered, what reporting requirements apply and when, and how to prepare for compliance. CARB indicated that “stakeholder input is critical” to the initial staff concepts and other interpretive issues, and stated that it plans to hold additional workshops or stakeholder sessions this year.