Tag: Chamber of Commerce v. California Air Resources Board

ESGLitigation

Court denies Chamber’s motion for summary judgment that California climate disclosure laws violate First Amendment

Given the impending change in Administration in D.C.—and all that portends for regulation—the States may, in many ways, take on much larger significance. Case in point: California’s climate disclosure laws and the ongoing litigation challenges there. In January, the U.S. and California Chambers of Commerce, the American Farm Bureau Federation and others filed a complaint (and in February, an amended complaint) against two executives of the California Air Resources Board and the California Attorney General challenging these two California laws. The lawsuit seeks declaratory relief that the two laws are void because they violate the First Amendment, are precluded under the Supremacy Clause by the Clean Air Act, and are invalid under the Constitution’s limitations on extraterritorial regulation, particularly under the dormant Commerce Clause.  The litigation also seeks injunctive relief to prevent CARB from taking any action to enforce these two laws. (See this PubCo post.) California then filed a motion to dismiss the amended complaint for lack of subject matter jurisdiction and failure to state a claim. Interestingly, however, the motion did not seek dismissal of Plaintiffs’ First Amendment claim (except as to the Attorney General, whom the motion seeks to exclude altogether on the basis of sovereign immunity), even though California asserted that Plaintiffs’ First Amendment challenge was “legally flawed.”  The Plaintiffs then moved for summary judgment on the First Amendment claim, and California moved to deny that motion or to defer it, enabling the parties to conduct discovery.  In this Order, issued on election day, the Federal District Court for the Central District of California denied Plaintiffs’ motion to dismiss and granted California’s motion to deny or defer the motion for summary judgment.

/ November 7, 2024
Corporate GovernanceESGLitigation

Is a delay in the cards for California’s climate accountability laws? [SideBar updated 7/27]

You might recall that, in 2023, California Governor Gavin Newsom signed into law two bills related to climate disclosure: Senate Bill 253, the Climate Corporate Data Accountability Act, and SB261, Greenhouse gases: climate-related financial risk. SB 253 mandates disclosure of GHG emissions data—Scopes 1, 2 and 3—by all U.S. business entities (public or private) with total annual revenues in excess of a billion dollars that “do business in California.” SB 253 has been estimated to apply to about 5,300 companies. SB 253 requires disclosure regarding Scopes 1 and 2 GHG emissions beginning in 2026, with Scope 3 (upstream and downstream emissions in a company’s value chain) disclosure in 2027. SB 261, with a lower reporting threshold of total annual revenues in excess of $500 million, requires subject companies to prepare reports disclosing their climate-related financial risk in accordance with the TCFD framework and describing their measures adopted to reduce and adapt to that risk. SB 261 has been estimated to apply to over 10,000 companies. SB 261 requires that preparation and public posting on the company’s own website commence on or before January 1, 2026, and continue biennially thereafter. Notably, the laws exceed the requirements of the SEC’s climate disclosure regulations because, among other things, one of the laws covers Scope 3 emissions, and they both apply to both public and private companies that meet the applicable size tests. (For more information about these two laws, see this PubCo post.) Interestingly, even when Newsom signed the bills, he raised a number of questions. (See this PubCo post.) Specifically, on SB 253, Newsom said “the implementation deadlines in this bill are likely infeasible, and the reporting protocol specified could result in inconsistent reporting across businesses subject to the measure. I am directing my Administration to work with the bill’s author and the Legislature next year to address these issues. Additionally, I am concerned about the overall financial impact of this bill on businesses, so I am instructing CARB to closely monitor the cost impact as it implements this new bill and to make recommendations to streamline the program.” Similarly, on SB261, Newsom said that “the implementation deadlines fall short in providing the California Air Resources Board (CARB) with sufficient time to adequately carry out the requirements in this bill,” and made a similar comment about the overall financial impact of the bill on businesses. So it was fairly predictable that something of a do-over was in the cards. Now, as reported here and here by Politico, Newsom has proposed a delay in the compliance dates for each bill until 2028. A spokesperson for Newsom “said the proposal ‘addresses concerns’ about cost, timeline and the ‘entirely new and significant workload for the state and the entities covered by these new requirements.’”

/ July 15, 2024