On November 18, 2025, the Ninth Circuit issued an order temporarily pausing California’s climate risk reporting law (SB 261). SB 261 requires public and private U.S. companies (excluding insurance companies) doing business in California with total annual revenues exceeding $500 million dollars in the prior fiscal year to biennially disclose climate-related financial risks. Prior to the Ninth Circuit’s recently issued order, SB 261 required public reporting of climate-related financial risks—including disclosure of climate-related governance, strategy, risk management, and metrics/targets—on covered entity websites by January 1, 2026.
What You Need to Know:
- On November 18, 2025, the Ninth Circuit granted Chamber of Commerce’s (“Chamber”) motion for an injunction pending appeal for California’s climate risk reporting law (SB 261).
- The Ninth Circuit order temporarily pauses SB 261 pending the Ninth Circuit’s consideration on whether to reverse the District Court’s August 2025 decision denying the Chamber’s motion based upon First Amendment grounds.
- The Ninth Circuit did not agree to similarly halt the greenhouse gas emissions reporting law (SB 253).
- California’s Air Resources Board (CARB) is reviewing the Ninth Circuit order and may issue updated SB 261 guidance in the immediate future.
On November 18, 2025, the Ninth Circuit issued an order temporarily pausing California’s climate risk reporting law (SB 261). SB 261 requires public and private U.S. companies (excluding insurance companies) doing business in California with total annual revenues exceeding $500 million dollars in the prior fiscal year to biennially disclose climate-related financial risks. Prior to the Ninth Circuit’s recently issued order, SB 261 required public reporting of climate-related financial risks—including disclosure of climate-related governance, strategy, risk management, and metrics/targets—on covered entity websites by January 1, 2026.
The order does not halt the greenhouse gas emissions reporting law (SB 253). This law requires public and private U.S. companies that do business in California with total annual revenue in the prior fiscal year exceeding $1 billion dollars to annually report Scope 1 (direct), Scope 2 (indirect from purchased energy), and Scope 3 (value chain) greenhouse gas (GHG) emissions. For Scope 1 and Scope 2, SB 253 requires reporting with limited assurance[1] beginning in 2026 that covers fiscal year 2025 information. For Scope 3, SB 253 requires reporting with no assurance requirement beginning in 2027 that covers fiscal year 2026 information. At a November 18, 2025, public workshop, California’s Air Resources Board (CARB) proposed an August 10, 2026, reporting deadline for Scope 1 and Scope 2 GHG emissions under SB 253, delaying the initially proposed June 30, 2026, deadline to give the agency additional time to formalize its rulemaking process.
The recently issued order comes a year and a half after the complaint was first filed in the Central District of California by the Chamber of Commerce and other business and trade organizations in January 2024. In Chamber of Commerce of the United States of America et al. v. California Air Resources Board et al., No. 2:24-cv-00801 (C.D. Cal. 2024), Plaintiffs challenged SB 261 and SB 253 on grounds that the laws violate (1) the First Amendment of the US Constitution by impermissibly compelling speech, (2) the Supremacy clause since they are preempted by the Clean Air Act, and (3) constitutional limitations on extraterritorial regulation by regulating interstate commerce in violation of the Dormant Commerce Clause.
In November 2024, the District Court denied Plaintiffs’ motion for summary judgment on the First Amendment claims with leave to refile.
In February 2025, the District Court held that Plaintiffs failed to identify language in the US Constitution or the federal Clean Air Act preempting SB 261 and dismissed Plaintiffs’ Supremacy Clause challenge with prejudice. Additionally, the Plaintiffs’ extraterritoriality claims were dismissed without prejudice on grounds that Plaintiffs failed to plausibly allege a significant burden on interstate commerce.
In August 2025, the District Court denied Plaintiffs’ motion for a preliminary injunction that challenged SB 261 on First Amendment grounds, holding that SB 261’s disclosure requirements are reasonably related to substantial government interests which include providing investors with reliable information. While the District Court found that SB 261 regulates commercial speech and is subject to First Amendment scrutiny, they concluded that Plaintiffs are unlikely to succeed on the merits of their facial First Amendment challenge.
In September 2025, Plaintiffs requested an injunction pending appeal from the Ninth Circuit, citing “imminent and irreparable harm” from SB 261 and SB 253’s rapidly approaching compliance deadlines. As noted above, the Ninth Circuit granted Plaintiffs’ motion for an injunction pending appeal for SB 261. CARB is reviewing the order and may issue updated SB 261 guidance in the immediate future. The case is now scheduled for oral arguments on January 9, 2026.
With the Ninth Circuit’s recently issued order, covered entities under SB 261 are temporarily relieved from that statute’s obligations pending a final ruling on the merits, and at a minimum will have additional time to prepare disclosure reports for their climate-related financial risks. However, the temporary pause does not apply to Scope 1 and Scope 2 GHG reporting for covered entities under SB 253, with reports currently due in August 2026. While litigation is ongoing and may change compliance obligations and deadlines, entities can take proactive steps now to ensure future compliance with SB 261, should the Ninth Circuit lift the temporary stay, and SB 253. These include reviewing CARB’s website for enforcement notices, public workshop information, checklists, templates, a preliminary list of reporting/covered entities, and updated FAQs regarding California’s Climate Disclosure requirements.
The Environmental Group at Saul Ewing will track developments on California’s Climate Disclosure laws as they arise. Please do not hesitate to contact the authors of this alert, or your regular Saul Ewing point(s) of contact, with any questions about the substance of this alert.
[1] Under SB 253, assurance providers must be “third-party, independent, and have significant experience in measuring, analyzing, reporting, or attesting in accordance with professional standards and applicable legal and regulatory requirements.”
