Ninth Circuit Lets SB 253 Scope 1 & 2 Reporting Proceed

The U.S. Court of Appeals for the Ninth Circuit, after nine months, on November 9, 2026 issued its long-awaited opinion in a case challenging California’s Climate Disclosure Laws (SB 253, SB 261) on First Amendment grounds. The Ninth Circuit allowed California to move forward with SB 253 reporting requirements for Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions, meaning that the November 10 deadline remains in effect.

The timing could not be tighter, with the ruling arriving one day before the SB 253 reporting deadline. Companies subject to SB 253 should proceed with submission of their GHG emissions disclosures.

Background

SB 253 — the California Climate Corporate Data Accountability Act — requires U.S. based companies with over $1 billion in annual revenue “doing business” in California to disclose annually their Scope 1, Scope 2, and Scope 3 GHG emissions. SB 261 — the California Climate-Related Financial Risk Reporting Act — requires companies with more than $500 million in annual revenue “doing business” in California to publish a biennial climate-related financial risk report.

In August 2025, the U.S. District Court for the Central District of California denied a motion for preliminary injunction to enjoin SB 253 and SB 261 in a case bought by the Chamber of Commerce and five co-plaintiffs. The District Court determined that plaintiffs had not shown a likelihood that they would succeed in their First Amendment challenge, applying the lower level of scrutiny required with respect to regulation of commercial speech. Shortly thereafter, the plaintiffs filed an appeal to the Ninth Circuit and, in November 2025, the court ordered a preliminary injunction on the enforcement of SB 261 pending appeal, declining to do the same for SB 253. Following oral argument in January 2026, in the interim silence from the Ninth Circuit, the California Office of Administrative Law approved the California Air Resources Board’s (“CARB”) Initial Regulation (California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation) in October 2026, meaning the November 10, 2026 first year deadline reporting for Scope 1 and Scope 2 GHG emissions remained in effect.

Key Developments

The Ninth Circuit majority considered Scope 1 and Scope 2 GHG emissions disclosures as commercial speech given they require factual and standardized information about an entity’s own operations. The court held that the disclosures are likely to survive intermediate scrutiny (the level of review applicable to commercial speech) given such information advanced California’s substantial interest in mitigating information gaps for investors and the state’s aim to reduce GHG emissions, in each case, without being more extensive than necessary.

With respect to Scope 3, the Ninth Circuit held such disclosures to be noncommercial speech on the bases that they concern third-party conduct in the value chain and are “insufficiently” connected to the reporting company’s own operations. Applying strict scrutiny (the level of review applicable to noncommercial speech), the Ninth Circuit found that SB 253 was not adequately tailored — there was insufficient justification for compelled reporting, only an attenuated connection to the needs of investors, and scarce evidence that mandatory Scope 3 GHG emissions reporting would reduce emissions. SB 253 contains an express severability clause, and the Ninth Circuit remanded to the District Court to determine whether the Scope 3 provisions can be severed.

The Ninth Circuit also applied strict scrutiny to SB 261 and found that the requirements were not narrowly tailored. Specifically, that California could have used less restrictive means than a climate-related financial risk report which compels normative judgments on a “politically fraught subject.” Rather, the state could have less restrictive alternatives, such as directly regulating emissions or encouraging voluntary disclosures. The Ninth Circuit found insufficient evidence that the required reports would reduce emissions.

Judge Bennett concurred in part and dissented in part. Specifically, Judge Bennett argued that both SB 253 and SB 261 compel non-commercial speech and therefore warrant strict scrutiny. As a result, Judge Bennett would have preliminarily enjoined both laws in full.

Takeaways

The Ninth Circuit’s ruling does not disturb the November 10, 2026 deadline for Scope 1 and Scope 2 GHG emissions reporting. Companies subject to SB 253 should, therefore, proceed with submitting such data for 2025 (or, where eligible, a statement of non-reporting) through CARB’s online intake platform or by email.

The Ninth Circuit’s decision supports preliminary relief for both Scope 3 GHG emissions and SB 261, but, as of this writing, neither has been permanently struck down. It is expected that the District Court will ultimately enter a preliminary injunction in accordance with the Ninth Circuit’s opinion that Scope 3 GHG emissions reporting requirements are “likely unconstitutional” under the First Amendment. As to SB 261, the Ninth Circuit’s ruling largely preserves the status quo pursuant to its 2025 injunction pending the appeal. However, it is also expected that the District Court will enter a preliminary injunction in accordance with the Ninth Circuit’s opinion that SB 261 is “likely unconstitutional” under the First Amendment.

Note that the parties involved here have 14 days to file a petition for rehearing or rehearing en banc. The parties could also file a petition for a writ of certiorari with the U.S. Supreme Court. If neither of these steps occurs, the Ninth Circuit will issue its mandate to the District Court following expiration of such deadlines. 

Mind the broader implications here. The Ninth Circuit’s decision may shape future challenges to other states’ climate disclosure proposals and, separately, inform how companies frame their voluntary sustainability disclosures.

We will continue to track developments related to California’s climate reporting laws. Please reach out to your Vinson & Elkins team to discuss these matters and their implications for your business.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.