A U.S. district judge denied a motion for a preliminary injunction against California’s two climate reporting laws on First Amendment grounds. The Chamber of Commerce sought to block implementation of SB 253, known as the Climate Corporate Data Accountability Act, and SB 261, known as the Climate-Related Financial Risk Act, while their lawsuit proceeds. The August 13, 2025 decision keeps the laws on schedule for implementation in 2026.
The groups argued that they will be irreparably harmed by implementation of the laws because the laws “compel speech in violation of the First Amendment.” In the ruling, the district judge concluded that the laws regulate commercial speech, which are generally subject to a lesser standard of review. Under this level of scrutiny, the government “’may compel a disclosure of commercial speech only if (1) it directly advances a substantial governmental interest, and (2) the restriction is not more extensive than necessary to serve that interest.’” The court concluded that the laws advance a “substantial government interest” in reducing emissions and providing investors with “accurate information to evaluate climate risks…”
The business groups also argued that the disclosures required under SB 253 are misleading because they require companies to report on emissions that they do not control, from electricity providers and supply chain sources. The court rejected this argument and concluded that these requirements are factual and not misleading. The court concluded that that the law “merely requires companies to report data on emissions. It does not require companies to say whether they are “responsible” for those emissions or advocate for any (or no) policy response to climate change.”
The court concluded that enjoining SB 253 and SB 261 would “delay the State from advancing the public interests for which it adopted the laws.” An in would “injure the public interest in having a free flow of accurate information.”
Ongoing Litigation
The August 13, 2025 ruling is the latest development in an ongoing challenge to California’s climate reporting laws. Governor Gavin Newsom signed both SB 253 and SB 262 into law in October 2023. SB 253 requires companies with revenues of more than $1 billion to report their greenhouse gas (GHG) emissions related to both operations and their supply chain. SB 261 requires companies with annual revenue of more than $500 million and that do business in California to disclose publicly the climate-related financial risks to their company and how they will address them. (see Climate Reporting Laws: Comparison of Key Provisions.)
Challenges to the law came soon after. The U.S. Chamber of Commerce and other business groups filed the lawsuit in January 2024, arguing that the laws violate the First Amendment by compelling speech on a “politically controversial” topic and that the Clean Air Act preempts California’s “de facto regulations of greenhouse-gas emissions nationwide.”
In November 2024, the court denied a motion for summary judgment from the groups on their claim that the laws violate the First Amendment. In February 2025, the court dismissed the claims that the Clean Air Act preempts the two laws and that the laws burden interstate commerce.
The case is scheduled for trial in October 2026 on the remaining claim that the laws compel speech about climate change in violation of the First Amendment.