Ninth Circuit Limits California's Greenhouse Gas Disclosure Laws
Ninth Circuit restricts California's climate disclosure laws, blocking Scope 3 and financial risk reporting.
Why it matters: This ruling narrows California's compelled speech approach, affecting how companies report emissions and climate risks. It sets constitutional limits on state regulatory mandates for disclosure.
- SB 253 requires companies with $1B+ revenue in California to report Scope 1 and 2 emissions starting Nov 10, 2026.
- Court upheld Scope 1 and 2 emissions reporting but blocked Scope 3 emissions disclosures under SB 253.
- SB 261's requirement for $500M+ revenue companies to report climate-related financial risks was found likely unconstitutional.
- The ruling affects nearly 2,000 companies under SB 253 and about 2,675 companies under SB 261.
- The U.S. Chamber praised the ruling as a protection of First Amendment rights.
On November 9, 2026, the Ninth Circuit issued a significant ruling on California's greenhouse gas (GHG) disclosure laws, Senate Bills (SB) 253 and 261, which aim to increase corporate transparency on climate issues. The court partially upheld and partially curtailed these regulations, siding with business interests represented by the U.S. Chamber of Commerce.
SB 253, known as the Climate Corporate Data Accountability Act, mandates that companies with annual revenues exceeding $1 billion report their Scope 1 (direct) and Scope 2 (indirect) greenhouse gas emissions starting November 10, 2026. The court upheld this requirement, meaning around 1,971 companies must comply shortly. However, the court blocked the provision requiring companies to disclose Scope 3 emissions, which account for emissions from a company’s value chain, ruling it likely unconstitutional under the First Amendment due to overbreadth and insufficient relation to actual emission reductions. This reverses the district court's denial of a preliminary injunction for Scope 3 disclosures.
Similarly, the Ninth Circuit found SB 261, which requires companies with revenues over $500 million to prepare biennial reports on climate-related financial risks, likely unconstitutional for compelling predictive, uncertain speech. About 2,675 companies fall under this law's scope. The court reversed the denial of a preliminary injunction, effectively enjoining enforcement pending further review. Enforcement had already been blocked since November 18, 2025.
The U.S. Chamber Litigation Center hailed the ruling as an "important victory for businesses and the protection of their First Amendment rights." Meanwhile, the California Attorney General's Office expressed support for moving forward with Scope 1 and 2 reporting, emphasizing ongoing commitment to climate data transparency.
This decision shapes compliance responsibilities for many corporations operating in California, limiting some disclosure mandates while affirming others. It highlights ongoing tension between environmental transparency efforts and constitutional speech protections.
By the numbers:
- $1 billion+ — revenue threshold for SB 253 Scope 1 and 2 emissions reporting
- ~1,971 companies — estimated to be affected by SB 253 reporting requirements
- $500 million+ — revenue threshold for SB 261 climate-related financial risk reports
- ~2,675 companies — estimated to be subject to SB 261 disclosures
Yes, but: The court's injunction against Scope 3 and SB 261 disclosures is preliminary; further judicial review could alter enforcement status.
What's next: The district court will enter a preliminary injunction consistent with the Ninth Circuit's ruling; companies are preparing to comply with upheld Scope 1 and 2 reporting requirements starting November 10, 2026.