Ninth Circuit Pauses Enforcement of California Climate Risk Disclosure Law

Key Takeaways

• Ninth Circuit Pauses SB 261: The appellate court halted enforcement of California’s climate-risk disclosure law pending appeal.
• SB 253 Still Moving Forward: The court allowed California’s greenhouse-gas emissions reporting law to proceed on its original timeline.
• No Reasoning Provided: The Ninth Circuit issued a one-page order with no explanation for its decision.
• Business Groups Challenge Both Laws: The U.S. Chamber of Commerce and several industry groups petitioned to pause both SB 261 and SB 253 and welcomed the pause on SB 261.
• Reporting Deadlines Approach: SB 261 requires climate-risk reports by January 1, 2026, while SB 253 requires emissions disclosures beginning in 2026 and 2027.

Deep Dive

The Ninth Circuit Court of Appeals has put a temporary hold on California’s Climate-related Financial Risk Act, SB 261, granting an injunction that pauses enforcement while the law faces an ongoing legal challenge. The court’s brief, one-page order did not explain its reasoning, but it drew a clear line between the state’s two major climate disclosure laws. First, SB 261 is paused for now, and second, SB 253 will continue moving forward as planned.

The emergency application, filed Friday and directed to the U.S. Supreme Court, asked for enforcement of both laws to be halted while an appeal plays out in the Ninth Circuit. The court granted that request only for SB 261.

The petition was led by the U.S. Chamber of Commerce, joined by the California Chamber of Commerce, American Farm Bureau Federation, Los Angeles County Business Federation, Central Valley Business Federation, and Western Growers Association. Following Tuesday’s order, the Chamber applauded the pause on SB 261 in a public statement, calling the law “unconstitutional” and pointing to the compliance costs it says the requirements would impose on companies nationwide.

“We look forward to continuing our appeal and securing an injunction of both climate disclosure laws,” the Chamber said, adding that no single state should be able to place such obligations on businesses across the country.

The timing of the decision overlapped with a California Air Resources Board (CARB) public workshop held Tuesday, where the agency continued developing the enforcement framework for both laws.

SB 261, part of the broader California Climate Accountability Package signed in October 2023, requires large companies operating in the state to report their climate-related financial risks beginning January 1, 2026. Its companion law, SB 253, the Climate Corporate Data Accountability Act, requires companies with at least $1 billion in annual revenue to disclose their greenhouse-gas emissions each year. Covered companies must submit scope 1 and scope 2 emissions by June 30, 2026, with scope 3 reporting beginning in 2027.

In September, CARB issued a preliminary list of more than 3,100 companies that may fall under one or both climate disclosure laws. The agency emphasized that the list is not exhaustive, and that companies remain responsible for determining whether the rules apply to them even if they do not appear on the preliminary list.

For now, SB 253 continues on its original timeline, while the future of SB 261 awaits the outcome of the Chamber’s appeal.

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