Ninth Circuit Grants Motion Requesting that SB 261 Be Enjoined Pending Appeal
On November 18, 2025, the U.S. Court of Appeals for the Ninth Circuit issued a two-sentence order granting a motion to enjoin enforcement of SB 261 (“Climate-Related Financial Risk”). See Chamber of Commerce of the United States of America et al. v. California Air Resources Board et al., Case No. 25-5327 (9th Cir.), Doc. 44. The underlying motion had requested that the Ninth Circuit enjoin CARB from applying or taking any action to enforce SB 261 or SB 253 (“Climate Corporate Data Accountability Act”) against the Chamber’s members and members of the co-plaintiff associations pending appeal. The appeal concerns a lower court order denying injunctive relief during the pendency of plaintiffs’ constitutional challenge to SB 253 and 261. Last month, the Ninth Circuit assigned the motion for junction to a merits panel and scheduled argument for January 9, 2026, causing the plaintiff associations to seek emergency relief from the U.S. Supreme Court in light of the upcoming January 1, 2026, compliance deadline for SB 261.
The Ninth Circuit provided no explanation of the decision to grant the plaintiffs’ motion for injunction as to SB 261, but presumably the upcoming compliance deadline was a consideration. In light of this development, the U.S. Chamber and its co-petitioners withdrew their emergency petition filed last week with the U.S. Supreme Court. Oral argument before the Ninth Circuit is still scheduled for January 9, 2026, where the lower court’s denial of the request to preliminarily enjoin SB 253 and 261 will be at issue.
The Ninth Circuit’s order does not address whether the scope of the injunction is limited to the plaintiffs in the litigation or whether SB 261 enforcement is enjoined more broadly. CARB was asked during the public workshop it held on SB 261 and 253 implementation (summarized below) on the same day of the Court’s order whether it would pursue enforcement of SB 261 as to non-parties to the litigation, in light of the Court’s order. A CARB attorney responded during the workshop that the issue is still under review because the order had just been issued.
CARB Holds Public Workshop on SB 253 and 261 Compliance and Implementation
Also on November 18, 2025 (contemporaneous with the Ninth Circuit order issuance), CARB held a public workshop to present new information on compliance deadlines and substantive obligations under SB 253 and 261. In anticipation of the workshop, CARB posted updated SB 253 and 261 guidance to its resources page, including updated FAQs and a final version of the SB 261 Compliance “Checklist.”
Key takeaways from the workshop and the updated guidance documents are as follows:
- SB 261 Compliance for “Early-Stage” Analysis. The updated Checklist emphasizes that companies in the early stages of evaluating climate-related risks may begin by disclosing how those risks relate or may be relevant, even if no material risks have been identified or actions taken. CARB “encourages” such companies to include in their disclosures a description of gaps, limitations, and assumptions made as part of their assessment of climate-related issues. CARB’s staff stated during the workshop presentation that they do not expect companies to be developing new data or methods for the first reports due January 1, 2026—rather, staff emphasized a “provide what you have” approach to discharging the reporting obligation.
- SB 253 Deadline and Enhanced Enforcement Discretion for Initial Reports. CARB plans to propose an August 10, 2026, deadline for the first reports due under SB 253, covering Scope 1 and 2 emissions (see updated FAQ # 3). CARB also re-enforced the “report what you have” message of its December 2024 enforcement discretion notice but signaled additional leniency—stating in the workshop and its updated FAQs that, if an entity was not collecting data or planning to collect data at the time the enforcement discretion notice was issued, it is not expected to submit Scope 1 and 2 reporting data in 2026. Instead, such entities “should submit a statement on company letterhead to CARB, stating that they did not submit a report, and indicating that in accordance with the Enforcement Notice, the company was not collecting data or planning to collect data at the time the Notice was issued” (see FAQ # 19). Further, CARB stated that it will not require limited assurance for SB 253 data submissions due in 2026 (see FAQ # 20).
- Implementation Fees. CARB expects to issue invoices for the implementation fees authorized under both SB 253 and 261 on September 10, 2026, and emphasized that fees will be assessed on an entity-specific basis. Fees will be equal for all reporting entities, and each covered entity in a corporate family will trigger a separate fee obligation. The first phase of CARB regulations—expected to be published late 2025-early 2026, with Board approval and adoption expected in the first quarter of 2026—will largely be focused on the administration of the fee provisions of the laws, in addition to codifying the SB 253 compliance deadline.
- Applicability. CARB also provided additional guidance on how companies should evaluate whether SB 253 and 261 apply to them, although ultimately such clarifications will not have legal effect until CARB completes its rulemaking process next year. Nonetheless, CARB specified that:
- “Doing business in California” for purposes of SB 253 (and potentially SB 261) will be defined by reference to the “doing business” definition in California Revenue & Tax Code (RTC) § 23101, but only paragraphs (a) and (b)(1) & (2) of that section, meaning that only the in-state sales thresholds would be relevant to determining whether an entity is “doing business,” not the property or payroll thresholds.
- Annual revenue will likely be defined by reference to the RTC § 25120(f)(2) “gross receipts” definition (see FAQ # 4). Thus, annual revenue for purposes of SB 253 and 261 applicability would be verifiable in a company’s FTB tax filings (g., Form 100, Schedule F, Line 1a “gross receipts” for corporations, see Workshop Presentation Slide 21).
- Parent-Subsidiary Relationship. CARB clarified during the workshop that “parent-subsidiary relationships do not determine which entities are regulated” (Workshop Presentation Slide 26), and, where a parent entity has a subsidiary doing business in California, the parent will not be automatically deemed to be doing business in California—rather, “[i]nclusion criteria should be assessed on an individual company basis,” and both the parent and the subsidiary should “assess their own compliance obligations based on the criteria outlined in the statute” and CARB’s proposed definitions summarized above (FAQs # 12-13).
Unfortunately, for most companies, the Ninth Circuit ruling and new CARB guidance come late in the compliance planning process and create much uncertainty about next steps. There is not a uniform answer as to how to proceed, as each company is differently situated in terms of preparation, corporate structure, and other factors.
Hannah Flint contributed to this article