Key Highlights:
A federal judge has decided not to stop California’s climate disclosure laws from being enforced, despite a legal challenge from the U.S. Chamber of Commerce and other business groups. They argue that the laws violate their First Amendment rights by forcing them to express messages they do not agree with.
In a ruling made on November 5, U.S. District Judge Otis Wright II rejected the motion for summary judgment filed by the plaintiffs. He stated that the court needs more details and evidence to assess whether the climate disclosure legislation, specifically Senate Bills 253 and 261, qualifies as compelled speech, which may make it unconstitutional.
While the judge’s ruling permits California’s carbon emissions disclosure requirements to continue for now, the plaintiffs can submit another request for summary judgment. The Judge acknowledged that the First Amendment is applicable to these laws.
Background Insight:
The lawsuit against the California Air Resources Board (CARB) was initiated by the U.S. Chamber of Commerce and several business organizations in January. They claim that California’s climate laws breach the First Amendment, suggest limitations on federal regulation, and allege that the state is overreaching by acting as a national emissions regulator.
Senate Bill 253 mandates that businesses in California with annual revenues exceeding $1 billion must report their greenhouse gas emissions each year. In addition, Senate Bill 261 requires businesses with revenues over $500 million to disclose the financial risks related to climate change and their strategies to address these risks.
The Chamber’s suit is supported by various organizations, including the California Chamber of Commerce and the American Farm Bureau Federation.
On the defense side, CARB and other officials argue that the First Amendment does not apply to these laws. Even if it did, they believe the laws would still meet legal scrutiny.
Judge Wright’s recent ruling confirmed that both climate bills do invoke the First Amendment, stating there is little doubt these laws are intended to compel businesses to disclose information. However, to choose the correct level of scrutiny, he indicated the court requires more information about how many companies are affected by the laws before making a final judgment.
This ruling follows recent legislative actions, including Governor Gavin Newsom’s signing of Senate Bill 219 into law, which amended the original Senate Bills 253 and 261. These laws are aimed at increasing transparency about carbon emissions from large companies operating in California. Companies are expected to start making these disclosures as early as 2026.