November 10th Disclosure Date Survives Ninth Circuit Challenge to California Climate Disclosure Laws

On November 9, 2026, the U.S. Court of Appeals for the Ninth Circuit issued its long-awaited decision in Chamber of Commerce, et al. v. Sanchez, et al., affirming in part and reversing in part the district court’s denial of a preliminary injunction challenging California’s Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261). The court held that SB 253’s Scope 1 and Scope 2 greenhouse gas emissions disclosure requirements may remain in effect but concluded that SB 253’s Scope 3 disclosure requirements and SB 261’s climate-related financial risk disclosure requirements are likely unconstitutional and should be preliminarily enjoined. The decision represents a significant development in the ongoing litigation surrounding California’s landmark climate disclosure laws and creates a split outcome for regulated companies as immediate compliance obligations continue for certain disclosures while others face potential suspension. Most notably, Scope 1 and Scope 2 emissions disclosures remain subject to a November 10, 2026, compliance deadline.

Key Takeaways from the Ninth Circuit Decision

• Scope 1 and Scope 2 Emissions Reporting Survive Challenge: The Ninth Circuit concluded that SB 253’s Scope 1 and Scope 2 disclosure requirements regulate commercial speech by requiring companies to disclose factual information regarding emissions generated through their operations and purchased energy consumption. The court found that these disclosure requirements advance substantial governmental interests, including providing investors with reliable emissions information and helping address information asymmetries in the marketplace. As a result, the court declined to enjoin the Scope 1 and Scope 2 reporting requirements. Covered entities therefore remain subject to SB 253’s Scope 1 and Scope 2 disclosure obligations.
• Ninth Circuit Finds Scope 3 Disclosures Likely Unconstitutional: The court reached a different conclusion with respect to Scope 3 emissions disclosures, which require reporting entities to collect and disclose emissions information associated with upstream and downstream value chain activities, including those of suppliers, customers, and distributors. Departing from the district court’s analysis, the Ninth Circuit held that the Scope 3 disclosure requirements must satisfy strict scrutiny review, under which the court concluded that the requirements are not narrowly tailored and therefore likely violate the First Amendment. The court further found that the plaintiffs would suffer irreparable harm absent injunctive relief. As such, the Ninth Circuit remanded the matter to the district court to determine whether the Scope 3 provisions are severable from the remainder of SB 253 and to enter appropriate preliminary injunctive relief.
• SB 261 Also Faces Preliminary Injunction: The Ninth Circuit likewise reversed the district court’s refusal to enjoin SB 261. According to the Ninth Circuit, SB 261 requires disclosures that extend beyond commercial speech and may compel companies to provide subjective assessments regarding climate-related risks. Applying strict scrutiny, the court concluded that the law is not narrowly tailored and therefore likely violates the First Amendment. The decision is expected to result in a continued preliminary injunction against enforcement of SB 261 while the litigation proceeds.
• Partial Dissent: Judge Bennett concurred in part and dissented in part, expressing the view that both SB 253 and SB 261 should be preliminarily enjoined in their entirety.

Practical Implications and Looking Ahead

The Ninth Circuit’s decision does not eliminate all California climate disclosure obligations. Most immediately, SB 253’s Scope 1 and Scope 2 reporting requirements remain in effect. In-scope companies should continue to comply with applicable reporting deadlines, including the November 10, 2026, deadline for Scope 1 and Scope 2 emissions disclosures, while continuing to monitor further developments, such as if the parties seek further review through a petition for panel rehearing, rehearing en banc before the Ninth Circuit, or a petition for certiorari to the U.S. Supreme Court.

The decision also substantially increases uncertainty regarding California’s Scope 3 emissions reporting framework. Unless modified by further court action, the district court is anticipated to enter a preliminary injunction applicable to Scope 3 disclosure requirements on remand. Similarly, SB 261’s climate-related financial risk disclosure requirements are expected to remain enjoined.

Clark Hill’s ESG & Sustainability team consists of attorneys and professionals throughout the U.S., Mexico, and Ireland representing a range of primary practice areas intersecting with ESG and sustainability issues. If you have questions or would like to discuss this alert, please contact the authors directly or your usual Clark Hill contact.

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