Key facts
- The panel blocked the Climate-Related Financial Risk Act, which applied to companies with more than $500 million in annual revenue.
- California may still enforce parts of the Climate Corporate Data Accountability Act requiring companies to report their own emissions and emissions from energy they buy and consume.
- The blocked value-chain provision would have required companies with more than $1 billion in annual revenue to report supplier and customer emissions annually.
- Circuit Judge Jacqueline Nguyen wrote that the First Amendment limits the government's ability to compel speech.
- US Chamber Litigation Center president Daryl Joseffer called the ruling an important victory and said the Chamber will seek permanent injunctions.
- Circuit Judge Mark Bennett partially dissented and would have blocked both laws.
A three-judge panel of the 9th US Circuit Court of Appeals in San Francisco ruled on November 9 that California cannot enforce its climate-related financial risk disclosure law and part of a second law covering emissions reporting. The unanimous decision is a partial victory for the US Chamber of Commerce, the American Farm Bureau Federation and several California business groups that sued to block the two statutes.
The panel said the Climate-Related Financial Risk Act, known as Senate Bill 261, would likely fail because it forced companies with more than $500 million in annual revenue to share value-laden judgments on a politically fraught subject rather than simply provide factual information. It also blocked the part of the Climate Corporate Data Accountability Act, Senate Bill 253, that required businesses with more than $1 billion in annual revenue to report emissions by suppliers, customers and others in their value chains.
California may still enforce provisions of the second law requiring large companies to report their own greenhouse emissions and emissions from energy they buy and consume. The panel said the state could instead disseminate existing disclosures or give companies incentives to disclose or cut emissions on their own.
"Climate change will increasingly affect human activity in the years ahead, forcing social, economic, and political systems to adapt to changing environmental conditions," Circuit Judge Jacqueline Nguyen wrote for the court. "The First Amendment, however, limits the government's ability to compel speech."
Governor Gavin Newsom, a Democrat, signed both laws in 2023, making California the first US state to require the disclosures. Opponents said the laws would impose large costs on public and private businesses and violated the First Amendment.
Defendants included officials of the California Air Resources Board and California Attorney General Rob Bonta, whose office enforces the state's laws. Neither office immediately responded to requests for comment. Daryl Joseffer, president of the US Chamber Litigation Center, called the decision an important victory that halted the most onerous disclosure requirements and said the Chamber will seek permanent injunctions.
The case returns to US District Judge Otis Wright in Los Angeles, who had let California enforce both laws. Circuit Judge Mark Bennett, an appointee of Republican President Donald Trump, partially dissented and would have blocked both laws. The panel also included US District Judge Kiyo Matsumoto, an appointee of former Republican President George W. Bush who normally sits in Brooklyn, New York.