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California May Put Its Historic Climate Disclosure Laws on Hold

In an update to the Environmental Law Monitor’s continuing coverage of California’s historic climate disclosure laws, California State Sen. Scott Weiner put forth on August 13 proposals to Senate Bill 219 that would delay the effective date of the Golden State’s 2023 emissions and climate-related financial risk corporate disclosure laws.

As our readers may remember, signed into law back in November 2023, the legislation at issue were SB 253 and SB 261, which created landmark greenhouse gas emission and climate-related financial risk reporting requirements for companies operating within California. SB 253 requires the affected companies to report annually their carbon emissions at certain levels. Those companies, as defined by SB 253 as “reporting entities,” include (a) partnerships, corporations, limited liability companies, or other business entities formed under the laws of California or any other U.S. State or District of Columbia, or under an act of the U.S. Congress, (b) with total annual revenues in excess of $1 billion (based on revenue for the prior fiscal year), and (c) that do business in California.

Introduced by California Sen. Henry Stern, SB 261 mandates that the affected entities create and disclose a climate-related financial risk report. These disclosure requirements were to apply to so-defined “covered entities” which include (a) partnerships, corporations, limited liability companies, or other business entities formed under the laws of California or any other U.S. state or District of Columbia, or under an act of the U.S. Congress, (b) with total annual revenues in excess of $500 million (again based on revenues for the prior fiscal year, including revenues generated outside of California), and (c) that do business in California.

SB 253, incidentally, also charged the California Air Resources Board (CARB) with creating regulations to implement SB 253’s emissions disclosures program initially starting on January 1, 2025.

However, as currently proposed by Sen. Weiner, SB 219 would give CARB an additional six months to finalize its regulations under SB 253 and push the starting date from January to July 1, 2025. SB 219 also proposes doing away with the filing fee requirements for affected companies reporting their greenhouse gas emissions. SB 219 would also give CARB the option to contract with an outside organization to create a program to make these required disclosures available for the public to access. And finally, SB 219 would allow any corporate disclosures to be consolidated at the parent company level.

And it’s not just SB 253 that would get amended under SB 219.

SB 261 also faces changes. SB 219 proposes amending the filing fee for the disclosures as well giving CARB the option to also use an outside agency to prepare a report on the disclosures.

The proposed amendments comes on the heels of a federal lawsuit (also covered by the Environmental Law Monitor back in February) filed earlier this year in the U.S. District Court, Central District of California. The lawsuit, filed by industry groups that include the U.S. Chamber of Commerce and California Chamber of Commerce, challenges the two laws’ constitutionality. The Central District is scheduled to hear dispositive motions from both plaintiffs and defendants this month. Depending on how the court rules on these motions, California climate disclosure laws may be further paused.

Even with these attempts to clarify and streamline the reporting requirements, there may be more proposed amendments in the coming legislative sessions, especially depending on the outcome of the federal case. However, given the push on both a state and federal level to increase transparency and reporting on greenhouse gas emissions, all companies doing business in California, including those that sell products to entities subject to these requirements and which may be required to provide information pursuant to these laws, may wish to monitor these developments and consider creating action plans to comply with California and federal requirements if and when they take effect.