California’s climate disclosure laws continue to present novel challenges and twists and turns to regulated businesses, and the past month is no exception. Since our last blog post on this topic, there have been significant developments regarding the implementation of SB 261 and SB 253. On November 18, 2025, the Ninth Circuit Court of Appeals enjoined the California Air Resources Board (CARB) from enforcing SB 261, which requires companies to disclose climate-related financial risks. Importantly, the injunction was issued prior to the January 1 deadline for companies to publish their climate-related financial risk report pursuant to SB 261. On December 1, 2025, CARB issued an Enforcement Advisory confirming it would not enforce against companies for failure to post a climate-related financial risk report on January 1, 2026. Then, on December 9, 2025, CARB posted proposed regulations applicable to SB 253 and SB 261. Further details and considerations are discussed in this blog post.
Ninth Circuit Enjoins Enforcement of SB 261:
On November 18, 2025, the Ninth Circuit Court of Appeals issued a decision enjoining CARB from enforcing SB 261, including the January 1, 2026 statutory deadline for submitting climate-related financial risk reports, pending the Ninth Circuit’s resolution of the lower court’s decision not to issue an injunction. Oral arguments before the Ninth Circuit are scheduled for January 9, 2026. In response to the injunction, CARB issued a December 1, 2025 Enforcement Advisory confirming it will not take enforcement action against companies who do not post and submit climate-related financial risk reports by the January 1, 2026 statutory deadline. Further, the advisory states that “CARB will provide further information – including an alternate date for reporting, as appropriate – after the appeal is resolved.”
The underlying litigation dates back to January 2024, when Plaintiffs, including the U.S. Chamber of Commerce, challenged SB 253 and SB 261 in California federal district court as violative of the First Amendment. The district court denied Plaintiffs’ request for a preliminary injunction to pause enforcement of SB 253 and SB 261 during the litigation. Plaintiffs appealed this decision to the Ninth Circuit Court of Appeals and requested the Court enjoin CARB from applying or taking any action to enforce the laws pending appeal. Plaintiffs also submitted an emergency request for injunction to the United States Supreme Court on November 10, 2025. In the emergency request, Plaintiffs emphasized the irreparable financial and constitutional harms that have already and would result if companies were compelled to speak by publishing climate-related financial risk reports and reporting GHG emissions.
The Ninth Circuit’s one-paragraph decision on November 18, 2025 granted Plaintiffs’ request for an injunction pending appeal for SB 261 but denied the requested injunction for SB 253. Specifically, the Court granted the motion for injunction “as to the enforcement of” SB 261. As a result, Plaintiffs withdrew their request before the U.S. Supreme Court.
The next step will be for the Ninth Circuit to decide whether to uphold the district court’s denial of the preliminary injunction during the resolution of the underlying First Amendment challenge. Oral argument before the Ninth Circuit is scheduled for January 9, 2026. If the Ninth Circuit rules in favor of a preliminary injunction pending the underlying district court challenge on the merits, then the laws may be on hold – depending on the scope of the ruling – until the district court’s decision. If the Ninth Circuit upholds the district court’s denial of a preliminary injunction, the November 18 injunction of SB 261 enforcement could be lifted. In that case, covered entities would look to the court or CARB for further guidance as to next steps.
CARB Issues Proposed Regulations:
CARB posted draft regulations implementing SB 253 and SB 261 on December 9, 2025. The regulations cover Applicability, Definitions, Fees, and an initial reporting deadline for SB 253. Key takeaways from the proposed regulations are as follows:
Key Proposals for SB 253:
- The regulations include a reporting deadline of August 10, 2026 for the first reporting deadline under SB 253, requiring Scope 1 and Scope 2 emissions reporting.
- There are no data assurance requirements for the first report under SB 253. Subsequent rulemaking for SB 253 will establish data assurance requirements and a recurring reporting deadline beyond 2026.
Key Proposals for SB 261:
- As discussed above, the statute sets a January 1, 2026 reporting deadline, though enforcement by CARB is currently subject to injunction by the Ninth Circuit.
- CARB opened a public docket on December 1, 2025, which it has indicated will remain open until July 1, 2026, during which time companies must submit a link to their risk report to the public docket.
Key Proposed Definitions Applicable to Both SB 253 and SB 261:
- CARB proposed to define “revenue” by reference to Revenue and Taxation Code (RTC) § 25120(f)(2), which refers to the gross amount of income received from a transaction as it would be recognized by the IRS.
- “Doing business in California” is defined by reference to RTC § 23101, omitting certain language relating to property holdings and payroll. The intent is that regulated entities should have a significant economic nexus to the state.
Program fees will be assessed for reporting entities and covered entities beginning in FY 2026.
CARB also posted a Staff Report: Initial Statement of Reasons regarding the proposed regulations. CARB anticipates that the California Office of Administrative Law will publish the Notice on December 26, 2025, commencing a 45-day public comment period that will end on February 9, 2026.
Please get in touch with the authors or your SPB contact if you have questions or need assistance drafting a public comment.