Big Business strikes out in bid to duck California emissions disclosure

(CN) — A federal judge on Wednesday denied a request by the U.S. Chamber of Commerce to block a pair of new California laws which require large businesses to disclose their greenhouse gas emissions and report their climate-related financial risk.

In his 41-page decision, U.S. District Judge Otis Wright II found that although Senate Bill 253, also known as the Climate Corporate Data Accountability Act, and Senate Bill 261 do regulate commercial speech, the Chamber has failed to show that the laws unlawfully restrict First Amendment speech.

“Plaintiffs argue they will be irreparably harmed by SBs 253 and 261 because the laws compel speech in violation of the First Amendment,” the George W. Bush appointee wrote. “As plaintiffs have not demonstrated that the laws violate the First Amendment, they have also not shown irreparable harm.”

Though the judge did find that SB 253 and 261 compelled commercial speech, he said both support “substantial government interests” — either reducing emissions or making sure potential investors in California companies are aware of their climate contributions, which could inform the risk levels of their investments.

Wright also rejected the Chamber’s claim that requiring businesses to report greenhouse emissions from indirect sources — like their electricity providers, business travel and purchased goods and services — would provide a “misleading” picture of their emissions.

“SB 253 merely requires companies to report data on emissions. It does not require companies to say whether they are ‘responsible’ for those emissions or advocate for any (or no) policy response to climate change,” the judge wrote.

The California Attorney General’s Office, which represented the defendant California Air Resources Board, celebrated the decision.

“We are glad that the court denied plaintiffs’ motion for a preliminary injunction and are committed to defending California’s climate disclosure laws as litigation in this case continues,” a spokesperson for the office said in an email.

Attorneys for the Chamber did not immediately respond to a request for comment.

Senate Bills 253 and 261 were signed into law by Governor Gavin Newsom on Oct. 7, 2023. SB 253 requires the California Air Resources Board to develop regulations for businesses with more than $1 billion in annual revenue to disclose their greenhouse gas emissions to a reporting organization so they can be made publicly available. The law would require the disclosure of emissions data beginning with the 2027 reporting year.

SB 261 similarly requires that businesses with more than $500 million in annual revenue report their climate-related financial risk biannually beginning in January 2026. It is currently estimated to affect more than 2,600 companies in the state.

The Chamber first sued the California Air Resources Board in early 2024, joined by multiple other organizations, including the California Chamber of Commerce, the American Farm Bureau Federation, Central Valley Business Federation and others.

The plaintiffs seek a declaration that the California laws are “null, void and with no force or effect” and an injunction preventing the state from enforcing the laws.

The judge in November denied the Chamber’s motion for summary judgment on its claim that the California laws amount to compelled speech and are unconstitutional.

In February, the judge dismissed the Chamber’s claims that the California laws were preempted by federal law and violated the Supremacy Clause of the U.S. Constitution.

Later that month, the Chamber moved for a preliminary injunction on First Amendment grounds. A hearing was held on the matter in early July.

The case is currently scheduled for trial in October 2026.

This case was filed in the Central District of California.