A U.S. federal appeals court has temporarily halted the implementation of California’s climate-risk disclosure law, SB 261, marking a significant development in the legal battle over the state’s sweeping corporate climate reporting requirements.
In a brief order issued on 18 November, the Ninth Circuit Court of Appeals granted an injunction preventing the state from enforcing SB 261 while an appeal is underway. The law requires companies with more than USD 500 million in annual revenue and operating in California to publicly disclose their climate-related financial risks and the measures they are taking to address them.
The ruling follows an emergency application filed last week with the U.S. Supreme Court by the U.S. Chamber of Commerce and several business groups. Although the Chamber sought to block both SB 261 and SB 253 — California’s companion law requiring large companies to report greenhouse gas emissions — the Ninth Circuit allowed SB 253 to proceed as planned. The court did not provide an explanation for its split decision.
The U.S. Chamber of Commerce, joined by the California Chamber of Commerce, the American Farm Bureau Federation, the Los Angeles County Business Federation, the Central Valley Business Federation and the Western Growers Association, argued that the laws impose “unconstitutional” burdens and costly compliance requirements.
In a statement on Tuesday, the Chamber welcomed the injunction, saying it aimed to secure a halt to both laws. “One state should not have the ability to impose this kind of burden on the entire country,” the group said.
The decision was issued as the California Air Resources Board (CARB) held a public workshop to discuss implementation of the new disclosure rules. Under SB 261, companies are required to submit their first climate-risk reports by 1 January 2026 as part of the state’s broader Climate Accountability Package.
SB 253 — the Climate Corporate Data Accountability Act — remains unaffected by the court’s order. It requires firms with more than USD 1 billion in annual revenue to disclose their Scope 1 and 2 emissions from June 2026, and Scope 3 emissions from 2027.
Both laws were signed by Governor Gavin Newsom in October 2023. CARB in September published a preliminary list identifying more than 3,100 companies that may fall under one or both statutes, while noting that the list is incomplete and companies remain responsible for complying regardless of whether they appear on it.
