On October 24, 2025, Exxon Mobil Corporation filed a complaint in the U.S. District Court for the Eastern District of California seeking to, among other things, enjoin California’s recently enacted corporate climate disclosure statutes, Senate Bills 253 and 261.
As a reminder:
- SB 253 (the Climate Corporate Data Accountability Act) requires companies with over $1 billion in annual revenues doing business in California to publicly disclose Scope 1, 2, and 3 greenhouse gas emissions in conformance with the Greenhouse Gas (GHG) Protocol, beginning sometime in 2026 with respect to Scope 1 and 2 emissions. The statute requires third-party assurance and provides for administrative penalties for noncompliance.
- SB 261 (the Climate-Related Financial Risk Reporting Law) requires companies with over $500 million in annual revenues doing business in California to publish climate-related financial risk reports, aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework or an equivalent that incorporates it, and to disclose measures for risk mitigation and adaptation.
Exxon’s complaint alleges that the statutes impermissibly compel corporate speech in violation of the First Amendment and that SB 261 is preempted by federal securities law, specifically the National Securities Markets Improvement Act of 1996 (NSMIA). Exxon also alleges federal question jurisdiction.
Exxon’s Core Arguments
(1) First Amendment Argument — Exxon argues both statutes compel it to speak on matters of public controversy, i.e., climate change and its measurement, using state-prescribed frameworks it rejects. According to Exxon:
- SB 253 forces “conformance” to the GHG Protocol, including base-year calculations and the requirement to report the full range of Scope 3 emissions, methods that Exxon contends are inaccurate, result in double-count emissions, penalize scale rather than efficiency, and require unverifiable estimates. Exxon maintains it has deliberately rejected aspects of the GHG Protocol in its own voluntary reporting for these reasons.
- SB 261 compels speculative, forward-looking assessments under the TCFD framework (e.g., scenario analysis and “resilience” of business strategy), which Exxon views as subjective opinions it would not otherwise publish.
- Both laws target a subset of speakers (companies above revenue thresholds), which Exxon characterizes as a speaker-based, viewpoint-discriminatory mandate intended to “embarrass” large corporations viewed as responsible for climate change and to influence public opinion. The complaint argues these goals are impermissible under the First Amendment.
Exxon contends strict scrutiny applies and that California cannot identify a compelling interest served by narrowly tailored means, particularly given the laws’ global reach and the availability of existing anti-fraud tools and federal disclosure regimes.
(2) Not Protected by “Commercial Speech” or “Purely Factual and Uncontroversial” Doctrines — Exxon argues the mandated disclosures are not commercial speech and are neither purely factual nor uncontroversial. Instead, the statutes require Exxon to “implicitly opin[e] on whether and how” those emissions and risks should be described, going beyond product- or transaction-specific disclosures.
(3) NSMIA Preemption (SB 261) — Exxon asserts that SB 261 is expressly preempted by NSMIA because it imposes additional investor-focused disclosure obligations beyond federal requirements for issuers of “covered securities.” Exxon emphasizes it already discloses material climate-related risks in its SEC filings and argues that California may not add parallel, more granular risk-reporting mandates.
(4) Overbreadth and Extraterritorial Effect — The complaint challenges the global scope of the statutes, which require reporting of worldwide GHG emissions and climate-related business risks (not just those stemming from California activities), arguing that California lacks a legitimate interest in compelling such speech to influence out-of-state conduct.
Procedural Posture and Relief Sought
Exxon seeks declaratory judgments that SB 253 and SB 261 violate the First Amendment as applied to Exxon; a declaration that SB 261 is preempted by NSMIA; and injunctions prohibiting the statutes’ implementation, application, or enforcement. The complaint also seeks attorneys’ fees.
Takeaways
While it remains to be seen how the court will rule on this matter, it is notable that up to now, both statutes have survived litigation in the U.S. District Court for the Central District of California (based on similar claims). With the reporting deadlines approaching, and the litigation unlikely to be resolved prior to such deadlines, companies expecting to be in scope of one or both of the new laws should continue to prepare for reporting.