Tag: SB 261 Greenhouse gases: climate-related financial risk
California Governor signs legislation tweaking requirements of climate disclosure laws
California Governor Gavin Newsom has signed into law Senate Bill 219, a bill that tweaks some of the requirements of California’s climate disclosure bills, SB 253, the Climate Corporate Data Accountability Act, and SB 261, Greenhouse gases: climate-related financial risk. You may recall that, when Newsom signed those two bills into law in 2023, he questioned whether the implementation deadlines in the bills were actually feasible. (See this PubCo post.) So even as the bills were being signed, it looked like they might need a revamp in the near future. In July this year, Newsom proposed, along with several other changes, a delay in the compliance dates for each bill until 2028. (See this PubCo post.) However, one of the bills’ key sponsors opposed the administration’s proposal, telling Politico that the proposal didn’t reflect an agreement with lawmakers: the ”administration really wants additional delays for the disclosures. And we don’t agree on that.” Apparently, Newsom’s proposal did not go anywhere. Then, at the end of August, the California Legislature passed SB 219, introduced by two sponsors of SB 253 and SB 261, which sought to meet the Governor part way. Compared to the changes that the Governor had proposed, the bill may strike some as fairly anemic: while the bill gives the California Air Resources Board, which was charged with writing new implementing regulations, a six-month reprieve in the due date, for reporting entities, there is no compliance delay in commencement of reporting—it’s a big goose egg. Nevertheless, on September 27, the Governor signed the bill. With the SEC’s climate disclosure rules on hold while challenges to those rules are litigated, as this article in the WSJ suggests, these California climate disclosure laws may well be the first—and perhaps the only—game in town, making California a “de facto national climate accounting regulator.” Unless, of course, legal challenges interfere with the application of these California laws also (see below)….
California legislature tinkers with climate disclosure laws
In 2023, when California Governor Gavin Newsom signed into law two bills related to climate disclosure—Senate Bill 253, the Climate Corporate Data Accountability Act, and SB 261, Greenhouse gases: climate-related financial risk—he questioned whether the implementation deadlines in the bills were actually feasible. (See this PubCo post.) So even as the bills were being signed, it looked like they might be in for an overhaul at some point—sooner rather than later. In July this year, Newsom proposed, along with several other changes, a delay in the compliance dates for each bill until 2028. (See this PubCo post.) However, one of the bills’ key sponsors opposed the administration’s proposal, telling Politico that the proposal didn’t reflect an agreement with lawmakers: the “administration really wants additional delays for the disclosures. And we don’t agree on that.” Apparently, Newsom’s proposal did not go anywhere. Then, at the end of August, the California Legislature passed a bill, SB 219, introduced by two sponsors of SB 253 and SB 261, that seeks to meet the Governor part way. But many may view it as pretty weak tea: while the bill gives the California Air Resources Board, which was charged with writing new implementing regulations, a six-month reprieve in the due date, for reporting entities, there is no compliance delay in commencement of reporting—it’s a big goose egg. Newsom has until the end of September to veto or sign the bill; if he does neither, the bill will become law.
California moves to dismiss complaint challenging climate disclosure laws
Since we’ve been preoccupied with the litigation over SEC’s climate disclosure rules, it’s time for a break. Something new and different. How about the litigation over the California climate disclosure rules: Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, Greenhouse gases: climate-related financial risk? (See this PubCo post.) 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.) CARB has just filed a motion to dismiss the amended complaint for lack of subject matter jurisdiction and failure to state a claim. Interestingly, however, the motion does 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 CARB asserts that Plaintiffs’ First Amendment challenge is “legally flawed.” No further explanation is provided.
The Chamber sues California over climate legislation
You remember California’s climate legislation signed into law just last year—Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, Greenhouse gases: climate-related financial risk? (See this PubCo post.) The U.S. and California Chambers of Commerce, the American Farm Bureau Federation and others have just filed a new complaint against the California Air Resources Board challenging these two California laws. The lawsuit seeks declaratory relief that the two laws are void because they violate the First Amendment, are precluded by federal law, 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. These California laws have the potential to affect thousands of companies, including companies domiciled in other states, and many will be alert to see if these laws survive this legal action unscathed. To some extent, the litigation will also function as a dress rehearsal for the litigation that’s likely to surface when the SEC finally adopts its long-awaited climate disclosure rules. What does this litigation augur for the SEC’s anticipated climate disclosure rules? While the dormant Commerce Clause is unlikely to play much of a role in a future challenge to the SEC’s expected climate disclosure regulations, the First Amendment claim is certainly one that we have seen used successfully in the past and are likely to see again. For example, it was raised in connection with challenges to Rule 14a-8 and to the stock repurchase rules, as well as at a recent House Financial Services subcommittee hearing on oversight of the SEC’s proposed climate disclosure, where the contention that the proposal’s compelled speech would violate the First Amendment was a topic of discussion. (See this PubCo post.) Now, we’ll see how well it plays in federal court in California.
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