Dive Brief:
- The California Air Resources Board on Tuesday proposed regulatory text for the state’s two climate disclosure laws, Senate Bills 253 and 261, and set a hearing on their final approval in late February.
- Entities covered by SB 253 — which mandates emissions reporting from companies generating over $1 billion in revenue — will need to submit their scope 1 and scope 2 emissions by Aug. 10, 2026, according to the proposed rule.
- CARB initially expected to release the proposed regulations in October, before delaying their release until the first quarter of 2026. Following a preliminary injunction on SB 261 — which requires entities with over $500 million in revenue to disclose climate-related financial risks — the agency recently issued an enforcement notice that it wouldn’t enforce the law against entities that fail to report by the Jan. 1, 2026 statutory deadline.
Dive Insight:
California Gov. Gavin Newsom first signed SBs 253 and 261 — also known as the Climate Corporate Data Accountability Act and the Climate-related Financial Risk Act, respectively — in October 2023. However, the governor signed a bill amending the climate rules a year later, giving CARB additional time and flexibility to propose and adopt the regulations. The agency ultimately blew past the July 1, 2025, deadline contained in those amendments to propose SB 253.
The proposed regulation was posted to an agency page dedicated to the disclosures along with a notice of public hearing and a staff report explaining the agency’s rationale for the proposal. CARB has sent the proposal to the state’s Administrative Law Agency and expects the rule to be published for public comment on Dec. 26. That will open a 45-day public comment period ending Feb. 9, 2026.
A public hearing for the board to consider final approval is scheduled for Feb. 26, with the possibility of a continuation on Feb. 27, according to the hearing notice. The hearing will also include a remote attendance option. The agency said on its website that it was providing additional time for public review of the proposed materials, “given the holiday season and the strong interest in this program.”
The regulation aligns its definition of revenue with that of “gross receipts,” or sales, under California’s tax code and determines the amount using the lesser amount of an entity’s previous two fiscal years.
CARB said it proposed the definition of revenue using sales, rather than one that deducts operating costs or other business expenses, because it’s a “more appropriate metric for identifying companies that may potentially have large operations and associated carbon footprints,” according to a Tuesday staff report explaining the regulation’s rationale.
The agency’s staff said in the report that it proposed rules applicable based on the lesser of the previous two fiscal years to account for entities experiencing large year-to-year swings from selling property or assets, the staff report said.
The proposed regulations will not apply to nonprofits or tax-exempt charitable organizations; insurance companies; federal, state and local government entities or those majority-owned by government entities; businesses whose only business in the state are wholesale electricity purchases; or entities whose only business in the state is paying teleworking employees.
The U.S. Chamber of Commerce and other business groups have long challenged both regulations, arguing they run afoul of the First Amendment. A federal district court denied a motion for summary judgment against the laws last year and declined to issue a preliminary injunction against the laws in August.
The U.S. Ninth Circuit Court of Appeals temporarily halted enforcement of SB 261 last month, after the Chamber of Commerce submitted an emergency request to the Supreme Court. ExxonMobil also filed a suit to stop the laws in October, alleging free speech violations.
CARB issued an enforcement notice last year announcing it wouldn’t take enforcement action for incomplete reporting and asking entities to “make a good faith effort.” Following the Ninth Circuit Appeals Court’s pause on SB 261, the agency said this month it would not take enforcement action against entities that do not submit reports by Jan. 1. The agency also opened a public docket for companies who wish to voluntarily report under SB 261.
CARB released a preliminary list of thousands of entities expected to comply with the two laws in September.
