SB 253 and SB 261 Lawsuits: Ninth Circuit Injunction and ExxonMobil Suit

The lawsuits challenging California’s SB 253 and SB 261, the state’s corporate climate disclosure laws, are pending before the Ninth Circuit Court of Appeals, which in November 2025 blocked enforcement of SB 261 while allowing SB 253 to move forward. A three-judge panel heard oral arguments on January 9, 2026, and as of April 2026 had not ruled.¹ Companies covered by SB 253 still face an August 10, 2026, deadline for their first Scope 1 and Scope 2 emissions reports; SB 261 biennial climate risk reports are on hold until the court rules and the California Air Resources Board (CARB) sets a new date.²

What the Two Laws Require

SB 253, the Climate Corporate Data Accountability Act, applies to U.S.-formed entities doing business in California with annual revenue over $1 billion. Those companies must publicly disclose Scope 1 and Scope 2 greenhouse gas emissions starting in 2026 and Scope 3 emissions starting in 2027, following the Greenhouse Gas Protocol and subject to third-party verification. Penalties reach $500,000 per year, with a good-faith safe harbor for Scope 3 figures.³

SB 261, the Climate-Related Financial Risk Act, reaches companies with $500 million in revenue and requires biennial reports on climate-related financial risks and the company’s mitigation and adaptation measures, using the TCFD framework or an equivalent such as the IFRS Sustainability Disclosure Standards.⁴⁵ The maximum penalty is $50,000 per reporting year. CARB estimates roughly 2,600 companies fall within SB 253’s threshold and about 4,100 within SB 261’s.⁶ Both laws reach out-of-state companies that meet California’s “doing business” tax standard.⁷

The Chamber of Commerce Challenge

The U.S. Chamber of Commerce and a coalition of business groups sued in the Central District of California, in Chamber of Commerce of the United States of America v. California Air Resources Board, No. 2:24-cv-00801.⁸ The coalition raised three theories: that both laws violate the First Amendment as compelled speech, that they are preempted by federal environmental law, and that they impermissibly regulate conduct outside California.

The compelled-speech theory is the heart of the case. The plaintiffs argue the required disclosures are not routine commercial speech tied to a product or transaction, so they are not entitled to the deferential review courts apply to ordinary consumer disclosures. On SB 261, the Chamber contends the law forces companies to voice “opinions, judgments, and predictions” about climate risks and scenario analyses, effectively adopting a state-preferred policy view. On SB 253, the Chamber argues that ordering companies to report third-party Scope 3 emissions as their own is not a purely factual disclosure and cannot survive First Amendment scrutiny.⁹ The Chamber further argues California’s real aim is to pressure companies to conform to its climate policies rather than to inform consumers or prevent deception.¹⁰

How the District Court Narrowed the Case

U.S. District Judge Otis Wright II ruled in November 2024 that the record was “not sufficiently developed” to resolve the First Amendment claim on summary judgment.¹¹ Then, on February 3, 2025, he dismissed the Supremacy Clause and extraterritoriality claims.¹² The court held that the SB 253 preemption challenge was unripe because CARB had not yet finalized its rules, and that SB 261’s disclosure obligations did not amount to the kind of regulatory scheme the Clean Air Act preempts. In the court’s view, the laws regulate speech, not emissions.

Judge Wright also denied a preliminary injunction. That set up the appeal to the Ninth Circuit with only the First Amendment claim still alive.

The Ninth Circuit’s Split Injunction

On November 18, 2025, the Ninth Circuit issued a two-sentence order granting an injunction pending appeal for SB 261 while denying it for SB 253.¹³ The court gave no reasoning and did not explain why it treated the two laws differently.¹⁰

The order made SB 261’s January 1, 2026, reporting deadline unenforceable. Although the Chamber had asked that the stay apply only to its own members, the order contained no such limit, and analysts read it as halting enforcement across all covered entities.¹³ CARB confirmed in a December 1, 2025, advisory that it would not enforce SB 261 while the appeal is pending and until a new reporting date is set.² CARB did open a voluntary docket for companies that still want to submit reports.¹⁴

A panel of Judges Jacqueline Nguyen, Mark Bennett, and Kiyo Matsumoto heard oral argument on January 9, 2026, but did not rule from the bench. After the Ninth Circuit decides the appeal, the case is expected to return to the district court for summary judgment briefing scheduled for summer 2026.¹⁵

ExxonMobil’s Separate Suit

On October 24, 2025, ExxonMobil filed its own challenge in the Eastern District of California, Exxon Mobil Corp. v. Sanchez, No. 2:25-cv-03104.¹⁶ Unlike the Chamber’s broad facial attack, ExxonMobil frames its First Amendment claim as an as-applied challenge tied to the company’s own circumstances.¹⁷ The complaint alleges the laws force it “to speak in service of a state-preferred viewpoint blaming them for climate change” and that the mandated frameworks are “misleading and counterproductive.”

ExxonMobil adds a preemption theory the Chamber does not press: that SB 261 is expressly preempted by the National Securities Markets Improvement Act of 1996 (NSMIA) because federal securities law already requires public issuers to disclose material business risks in SEC filings.¹⁸ That argument invokes federal securities law rather than the Clean Air Act theory Judge Wright dismissed. It is sharpened by developments at the federal level: the SEC’s own 2024 climate disclosure rule was stayed, then defended no longer by the agency in 2025, and the Eighth Circuit placed the litigation in indefinite abeyance in September 2025 pending SEC action to either revise or renew defense of the rule.¹⁹

ExxonMobil’s case is effectively paused. On November 19, 2025, the parties jointly stipulated to vacate briefing deadlines, agreeing that the Ninth Circuit’s injunction in the Chamber case already gives ExxonMobil the relief it sought. They will confer within seven days of any order dissolving that injunction.²⁰

What Covered Companies Face Right Now

SB 253 remains enforceable. CARB has set August 10, 2026, as the deadline for first Scope 1 and Scope 2 emissions submissions. For this first cycle CARB is exercising flexibility: the reporting template released in late 2025 is voluntary, companies may submit existing greenhouse gas reports in place of a new filing, and CARB has said it will not pursue enforcement against companies that show good-faith efforts to comply, even if their submissions are incomplete.² The board unanimously approved initial implementing regulations on February 26, 2026, though they still require review by the California Office of Administrative Law before taking legal effect, and that submission had not occurred as of March 2026.²¹ Assurance requirements were deferred to a separate rulemaking for 2027 and beyond.²²

SB 261 obligations are suspended. Companies within its scope have no current reporting deadline, and CARB has committed not to enforce the law until the appeal resolves and a new date is announced.² Voluntary submission remains available.¹⁴

What’s Next in the Litigation

The Ninth Circuit’s decision is the next major event, and its timing is uncertain. The panel took the case under submission after January 2026 argument and had not ruled as of April 2026.¹ Once a ruling issues, the case will likely return to the district court for further proceedings on the First Amendment claim, with summary judgment briefing scheduled for summer 2026.¹⁵ The ExxonMobil case will restart shortly after any order dissolving the SB 261 injunction.²⁰ Given the First Amendment questions and the collapse of a comparable federal rule, either side could seek further review, potentially at the U.S. Supreme Court.

1
CourtListener. Chamber of Commerce v. Randolph Docket
2
PwC. California Climate Disclosure Laws Update
3
LegiScan. SB 253 Bill Text
4
LegiScan. SB 261 Bill Text
5
California Air Resources Board. Climate-Related Financial Risk Report Checklist
6
Akin Gump. CARB Publishes Preliminary List of Companies Potentially Subject to SB 253 and SB 261
7
Baker Tilly. California Climate Disclosure Regulations SB 253 and SB 261
8
Climate Case Chart. Chamber of Commerce v. California Air Resources Board
9
Pillsbury Law. Ninth Circuit Challenge California Climate Disclosures
10
Morrison Foerster. Ninth Circuit Enjoins Enforcement of California Climate Disclosure Law SB 261
11
Courthouse News Service. Judge Dismisses in Part US Chamber of Commerce Lawsuit Over California Climate Laws
12
U.S. Chamber of Commerce. Chamber v. Randolph
13
Skadden. Ninth Circuit Enjoins California
14
Persefoni. California SB 253 SB 261
15
White & Case. California Climate Disclosure Laws Ninth Circuit Hears Oral Argument No Ruling Yet
16
Climate Case Chart. Exxon Mobil Corp. v. Sanchez
17
BCLP Law. ExxonMobil Takes Its Turn Challenging California Climate Disclosure Laws
18
Fenwick. ExxonMobil Challenges California Climate Disclosure Laws Federal Court
19
DLA Piper. Eighth Circuit Pauses SEC Climate Rules Litigation Pending SEC Action
20
Eye on ESG. California Climate Disclosure Law SB 261 Implementation Halted
21
Hunton Andrews Kurth. CARB Board Approves Climate Disclosure Initial Regulations
22
Terrascope. SB 253 Compliance Roadmap