In a surprise move, on November 18, the Ninth Circuit enjoined the California Air Resources Board’s (CARB’s) enforcement of SB 261 pending further proceedings. The court’s order means that the U.S. Supreme Court will not consider California’s climate disclosure laws for at least several months, if at all.

Litigation Developments

As we previously reported, the U.S. Chamber of Commerce and other groups brought constitutional challenges to California’s two climate disclosure laws, SB 261 and SB 253, in federal court in Los Angeles and sought a preliminary injunction to pause the implementation of the laws. After the district court denied their request, the challengers sought to enjoin the reporting requirements of both laws prior to the January 1 deadline for SB 261 reporting.

The Ninth Circuit initially refused to do so, first deferring the challengers’ motion for intervention to the merits panel and then setting argument on the challenge to the disclosure laws for January 2026—too late to forestall the January 1, 2026, deadline for the first round of SB 261 reporting. The Ninth Circuit’s initial refusal led challengers to file a petition for emergency relief on November 10. At that point, it appeared that SB 261 would take effect absent intervention from the Supreme Court.

But on November 18, the Ninth Circuit entered an injunction “as to the enforcement of Senate Bill 261,” providing no reasoning for its decision. Challengers then withdrew their Supreme Court petition.

As a result of the Ninth Circuit’s injunction, companies are no longer required to report under SB 261 by the January 1, 2026, deadline.

The court’s decision not to enjoin enforcement of SB 253 (the law that requires reporting of greenhouse gas emissions) may be more a function of the longer lead time for initial reporting under SB 253. That law’s first reporting deadline is not until August 10, 2026.

The eventual fate of these two laws remains unclear. Although the Ninth Circuit’s decision to enjoin SB 261 suggests that the court may agree with challengers that the two laws are unconstitutional, it is possible that the court sought only to maintain the status quo during its consideration of the appeal. At any rate, the high-profile nature of the issues means that the U.S. Supreme Court may have the final word on whether these laws are constitutional—giving the Ninth Circuit’s interim view even less predictive value.

Recent CARB Announcements

On November 18, CARB held a public workshop during which it announced significant updates on the implementation of SB 253 and SB 261, which set new climate disclosure and greenhouse gas reporting requirements for entities doing business in California. Highlights from the workshop include the following:

• SB 261 (climate risk reporting): CARB reiterated that reports should address governance, strategy, risk management, and metrics and targets, and may include descriptions of any gaps, limitations, and assumptions identified during the assessment process.
  • Entities in the early stages of evaluating climate-related risks may begin by disclosing how these risks to the company, even if no material risks have yet been identified or actions taken.
  • The Climate Related Financial Risk Disclosures Checklist has been finalized and now includes guidance for early-stage reporters and industry-specific standards.
• SB 253 (greenhouse gas reporting): CARB announced an extension of the deadline to report Scope 1 and Scope 2 greenhouse gas emissions, from June 30, 2026, to August 10, 2026.
  • CARB also announced that it will exercise enforcement discretion for the initial reporting cycle, permitting entities to submit existing data or use CARB’s reporting template. Most notably, CARB clarified that entities that were not collecting emissions data at the time the enforcement notice was issued in December 2024 are not obligated to report in 2026. However, they must provide a formal statement on company letterhead stating that they did not submit a report and indicating that, in accordance with the enforcement notice, the company was not collecting data or planning to collect data at the time the notice was issued.

CARB also provided updated definitions to assist companies in determining whether they are covered by the two laws, both of which apply based on a company’s revenue and whether a company does business in California.

• Revenue is defined according to “gross receipts” under California Revenue & Taxation Code section 25120(f)(2): “The gross amounts realized (the sum of money and the fair market value of other property or services received) on the sale or exchange of property, the performance of services, or the use of property or capital (including rents, royalties, interest, and dividends) in a transaction that produces business income, in which the income, gain, or loss is recognized (or would be recognized if the transaction were in the United States) under the Internal Revenue Code, as applicable for purposes of this part. Amounts realized on the sale or exchange of property shall not be reduced by the cost of goods sold or the basis of property sold.”
  • The revenue threshold is evaluated at the individual company level and is based on that reported in Franchise Tax Board filings. However, if a parent company and its subsidiaries file California taxes as a unitary business, then the revenue of the subsidiaries counts toward the revenue of the parent company as part of its gross receipts.
  • Companies should use the lower of the most recently completed fiscal year revenue totals to determine their eligibility.
• Doing business in California means that an entity is actively engaged in any transaction for the purpose of financial or pecuniary gain or profit and either (1) the entity is organized or commercially domiciled in California, or (2) the entity’s sales in California for the reporting year exceeded $735,019 in 2024 (an inflation-indexed figure) or 25 percent of the company’s total sales.

CARB also announced that nonprofit organizations and businesses whose only California presence is teleworking employees are exempt from reporting, as are government entities and companies regulated by the Department of Insurance.

CARB reiterated that its preliminary list of covered entities is not authoritative. It emphasized that companies are responsible for determining their eligibility under both laws.

Additional details from CARB’s workshop can be found in its November 17, 2025, Frequently Asked Questions.