Ninth Circuit Blocks Parts of California Climate Disclosure Laws

A federal appeals court issued a split decision finding two California laws requiring large corporations to disclose greenhouse gas emissions and climate-related financial risks are partly unconstitutional. The Ninth Circuit panel reviewed challenges brought by the U.S. Chamber of Commerce against the state measures.

The panel evaluated the Climate-Related Financial Risk Act, known as SB 261, and the Climate Corporate Data Accountability Act, known as SB 253. While the court blocked enforcement of SB 261 completely, it allowed parts of SB 253 to move forward while halting others.

Appeals Court Rejects Financial Risk Assessments

The court ruled that SB 261 violates First Amendment protections against compelled speech. Judges noted that the law required companies to make subjective predictive judgments about whether climate change poses financial risks to their operations rather than standard commercial speech.

Because the law mandates opinions on politically sensitive topics, it failed strict judicial scrutiny. The panel concluded the state failed to show the measure was narrowly tailored enough to meet its goals of mitigating information asymmetries for investors and reducing emissions.

Split Ruling on Corporate Emissions Reporting

Regarding SB 253, which targets corporations with over $1 billion in annual revenue operating in California, the court split its decision based on types of emissions. Requirements for reporting direct emissions and purchased energy emissions were upheld as commercial speech that advances state interests.

However, the panel blocked the requirement for reporting indirect emissions from a company’s broader value chain, including suppliers and customers. The court determined that diffuse third-party conduct is insufficiently linked to a company’s direct operations to qualify as commercial speech.

What This Means for Affected Businesses

Businesses operating in the state face shifting compliance obligations under the appellate ruling. Companies subject to SB 253 must still prepare for reporting direct and energy-related emissions as parts of that law go into effect, while financial risk and value-chain reporting requirements face judicial roadblocks.

Business owners tracking state mandates should monitor ongoing legal updates to understand exact reporting obligations. Legal compliance steps may change as the state evaluates its next moves following the court’s decision.

Navigating evolving corporate reporting rules and constitutional challenges can present complex compliance hurdles for businesses. Consulting with a qualified legal professional may help companies understand how these appellate rulings impact their specific operations and regulatory duties.

This article is general information based on Courthouse News Service and court or agency records available at publication time. It is not legal advice; laws and deadlines differ by state and by case. Published November 10, 2026.