On Wednesday, August 13, 2025, the U.S. District Court for the Central District of California issued an order denying plaintiffs’ motion for a preliminary injunction to enjoin California’s Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261) (each bill as amended by Senate Bill 219).

The motion for preliminary injunction is part of a larger lawsuit filed by the U.S. Chamber of Commerce, the California Chamber of Commerce, American Farm Bureau Federation, Los Angeles County Business Federation, Central Valley Business Federation, and Western Growers Association in January 2024 challenging the constitutionality of SB 253 and SB 261. The plaintiffs have alleged that these climate laws violate the First Amendment; the Supremacy Clause; and limitations on extraterritorial regulation, including the Dormant Commerce Clause.

In November 2024, the district court denied plaintiffs’ motion for summary judgment on First Amendment grounds, and in February 2025, the district court issued an order granting the California Air Resources Board’s (CARB) motion to dismiss the two remaining counts. The district court dismissed the challenges to SB 253 without prejudice, finding that plaintiffs’ Supremacy Clause and extraterritoriality challenges were not yet ripe for review because the plaintiffs had failed to show a concrete plan to violate SB 253. With respect to SB 261, the court dismissed the Supremacy Clause challenge with prejudice, finding that the plaintiffs had failed to identify language in either the U.S. Constitution or federal Clean Air Act that would preempt SB 261, and dismissed the extraterritoriality claims without prejudice, finding that plaintiffs had failed to allege a significant burden on interstate commerce. The court did not, however, dismiss the First Amendment claims.

In February of this year, plaintiffs filed a motion for preliminary injunction, asking the court to preliminary enjoin SB 253 and 261 on First Amendment grounds. A hearing was held on July 1, 2025, and yesterday the court issued its order denying plaintiffs’ motion for a preliminary injunction to enjoin the climate laws.

While the district court found that the climate laws were ripe for review (despite the fact that no implementing regulations have been issued by CARB) and regulate commercial speech, thereby triggering First Amendment scrutiny, the district court ultimately concluded that the plaintiffs did not show a likelihood of success on the merits as to their facial First Amendment challenges to SB 253 and 261. 

With respect to SB 253, the district court found that plaintiffs did not show a likelihood of success on the merits based on California's dual interests in providing investors with reliable information on which to make investment decisions and in reducing emissions (while acknowledging that California's interest in providing reliable information to investors may not be justified to the extent the law compels disclosure form companies that have no California investors). 

With respect to SB 261, the district court found that California made a sufficient showing as to benefits of investors’ desire for the specific disclosures required by SB 261 to achieve the legislature’s objective in reliable information that enables investors to make informed judgments about the impact of climate-related risks on their economic choices.

The district court also found that the plaintiffs had not shown irreparable harm (due to their failure to show how the climate laws violate the First Amendment) and that “the balance of equities favors denial of plaintiffs’ motion,” primarily because “enjoining SB 253 and 261 would delay the State from advancing the public interests for which it adopted the laws.”

So, for now, the litigation will continue as the deadlines for reporting under the climate laws draw closer. 

As a reminder, SB 261 requires in-scope companies (U.S. companies doing business in California with total annual revenues exceeding $500 million) to publish their first climate-related financial risk report by January 1, 2026. SB 253 requires in-scope companies (U.S. companies doing business in California with total annual revenues exceeding $1 billion) to publicly report their greenhouse gas emissions, beginning sometime in 2026 (to be announced by CARB) with respect to Scopes 1 and 2 emissions for fiscal year 2025 (with Scope 3 emissions to follow in 2027).