Business Groups Ask Supreme Court to Pause California’s Sweeping Climate-Disclosure Laws
A coalition led by the U.S. Chamber of Commerce has filed an emergency application asking the Supreme Court to halt California’s landmark climate‑disclosure statutes (SB 253 and SB 261) before key requirements begin on January 1, 2026—setting up a high‑stakes clash over compelled commercial speech, state regulatory authority, and the future of climate transparency in U.S. markets. [1]
Lower courts declined to block the laws and the Ninth Circuit has fast‑tracked arguments for January, but the business groups now want the High Court—through the Circuit Justice for the Ninth Circuit—to enjoin enforcement while appeals proceed. California says the laws simply require neutral, decision‑useful disclosures. [2]
What’s at stake
- SB 261 requires companies with more than $500 million in annual revenue doing business in California to publish climate‑related financial risk reports starting January 1, 2026. [3]
- SB 253 requires companies with more than $1 billion in revenue to disclose Scope 1 and Scope 2 greenhouse‑gas emissions beginning in 2026 (on a date set by CARB) and Scope 3 in 2027, using the Greenhouse Gas Protocol and third‑party assurance. [4]
- California’s Air Resources Board (CARB) has delayed formal rulemaking into early 2026 but says statutory deadlines still govern—so first SB 261 risk reports are due Jan. 1, 2026, with enforcement discretion as guidance rolls out. [5]
The new move: An emergency application to the Supreme Court
On Friday, November 15, business groups led by the U.S. Chamber of Commerce asked the Supreme Court to pause California’s climate‑disclosure laws. The application follows the Ninth Circuit’s decision to deny interim relief but expedite January arguments; the Chamber says immediate relief is needed to avert compliance burdens and alleged First Amendment harms. [6]
- SB 261’s first biennial risk reports are due Jan. 1, 2026; SB 253 emissions reporting begins in 2026 (Scope 1 and 2) and 2027 (Scope 3). [7]
- The district court denied a preliminary injunction; the Ninth Circuit declined to pause enforcement before January but set an accelerated calendar. [8]
- The Chamber’s litigation site lists the Ninth Circuit and Supreme Court dockets, confirming the emergency application filed this month. [9]
How we got here: The legal path so far
District court and Ninth Circuit
A federal district court in California rejected the Chamber’s bid for a preliminary injunction in August, narrowing the case to a First Amendment challenge and finding the state’s disclosure interests substantial. The Ninth Circuit later fast‑tracked the appeal but did not stay the laws, leaving the January 1, 2026 SB 261 deadline in place. [10]
Parallel lawsuits (including ExxonMobil)
ExxonMobil separately sued to block SB 253 and SB 261, framing them as unconstitutional compelled speech that interferes with existing federal securities frameworks; California says the laws provide neutral, public‑interest disclosures. [11]
The arguments: Compelled speech vs. commercial disclosure
Business groups’ case
California’s response
The legal test the Court will weigh
The outcome may hinge on how the Court characterizes the disclosures:
- If viewed as “purely factual and uncontroversial” commercial disclosures, the Court could apply the more deferential Zauderer framework. [16]
- If deemed to compel “ideological” or controversial speech—or to extend beyond traditional consumer‑protection aims—the Court could apply heightened scrutiny as in NIFLA v. Becerra. [17]
“Zauderer permits compelled commercial disclosures that are purely factual and uncontroversial… but the Court has cautioned against mandates that carry ideological freight.” (Analysis based on Zauderer and NIFLA precedent.) [18]
Policy backdrop: A fragmented U.S. disclosure landscape
| Regime | Coverage | Status | Notes |
|---|---|---|---|
| California SB 253 (emissions) | >$1B revenue; Scope 1–3 over time | Effective 2026/2027; rulemaking delayed to early 2026; enforcement discretion expected initially | Third‑party assurance required; uses GHG Protocol. [19] |
| California SB 261 (risk) | >$500M revenue | Reports due Jan. 1, 2026; central public docket opens Dec. 1, 2025 | Aligns with TCFD‑style reporting; biennial cadence. [20] |
| SEC Climate Rule | Public companies (federal) | Stayed; SEC withdrew defense; case held in abeyance | Creates a vacuum at federal level; investors still expect material risk disclosure. [21] |
Who’s affected now
Covered companies
Analysts estimate 5,000–8,000 companies could fall under SB 253/261 through “doing business in CA,” including many headquartered outside the state. [22]
Reporting timelines
Ongoing litigation
ExxonMobil’s challenge filed Oct. 25; the Chamber’s case is pending at the Ninth Circuit and now on the Supreme Court’s emergency docket. [25]
Perspectives and political reaction
- Supporters (environmental groups, some multinationals) say the laws deliver consistent, decision‑useful data in the absence of a functioning federal standard after the SEC stepped back from defending its rule. [26]
- Opponents (U.S. Chamber, farm and industry groups) call the mandates costly and unconstitutional, predicting nationwide spillovers via California’s market size. [27]
What to watch next ⚖️
Emergency relief decision
If the Circuit Justice (for the Ninth Circuit) grants an injunction pending appeal, California’s reporting requirements could be paused ahead of Jan. 1, 2026. If not, covered firms must continue preparing to comply on schedule. [28]
Standard of review
The Court’s treatment of the disclosures—as “purely factual and uncontroversial” under Zauderer or as controversial compelled speech akin to NIFLA—will shape future state and federal ESG rules. [29]
Spillover effects
With the SEC rule stayed and in limbo, a Supreme Court pause or greenlight for California could either entrench a state‑led model or chill state climate‑risk disclosures nationwide. [30]
Bottom line 📊
Today’s emergency application puts California’s climate‑disclosure regime on a collision course with the Supreme Court’s evolving First Amendment jurisprudence. A pre‑January ruling could determine whether the nation’s most ambitious emissions and climate‑risk reporting mandates take effect on time—or stall amid a broader retrenchment of environmental disclosure rules at the federal level. [31]
References
- Associated Press: Business groups ask Supreme Court to pause California climate reporting laws (Nov. 15, 2025). [32]
- CARB bill pages and summaries for SB 261 and SB 253 (statutory thresholds, timelines). [33]
- LegiScan texts: SB 253; SB 261 (enrolled). [34]
- Ninth Circuit scheduling orders and analyses (Fenwick, Jones Day; Oct. 29 calendar). [35]
- U.S. Chamber case pages (district, Ninth Circuit, Supreme Court dockets). [36]
- Reuters/AP coverage of ExxonMobil lawsuit (Oct. 25, 2025). [37]
- SEC actions on federal climate‑disclosure rule; litigation in abeyance. [38]
- Compelled‑speech precedents: Zauderer; NIFLA v. Becerra. [39]
Comments
0 commentsJoin the discussion below.