Climate Reporting Update – California Reporting Deadline Looms; Federal Requirements Wane

On September 11, 2025, the US District Court for the Central District of California denied a request by the Chamber of Commerce of the United States of America and other business groups to enjoin the implementation and enforcement of California’s new climate disclosure laws. The court’s ruling leaves in place the laws’ 2026 reporting deadlines. As more fully explained below, US Securities and Exchange Commission has withdrawn its defense of the comparable federal climate disclosure rule in pending litigation before the Eight Circuit Court of Appeals. The Environmental Protection Agency also has proposed to eliminate federal greenhouse gas emissions reporting requirements.

California

In January 2024, the Chamber of Commerce of the United States of America and other business groups filed a lawsuit in the US District Court for the Central District of California challenging the constitutionality of California’s Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261). In February 2025, the court dismissed two out of the plaintiffs’ three claims, leaving only the claim that SB 253 and SB 261 violate the First Amendment.

In August 2025, the District Court denied the business groups’ request for a preliminary injunction while their Constitutional claims are adjudicated. The business groups appealed the District Court’s decision denying a preliminary injunction to the Ninth Circuit Court of Appeals and requested that the District Court issue an injunction to allow time for the Ninth Circuit to rule on the appeal. On September 11, 2025, the District Court denied the request, finding that the business groups failed to provide any grounds for it to reconsider its prior determination that the business groups would not suffer irreparable harm if required to comply with the laws. The business groups’ motion for injunctive relief is still pending before the Ninth Circuit.

On September 2, 2025, the California Air Resources Board (CARB) released a “Draft Checklist” to assist companies in preparing their first report on climate-related financial risk and measures adopted to reduce and adapt to climate-related financial risk (Risk Reports) required by SB 261. The Draft Checklist provides high-level guidance on the following requirements.

• Reporting framework – Risk Reports may be prepared in conformance with (1) the Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures, (2) the International Financial Reporting Standards Sustainability Disclosure Standards, as issued by the International Sustainability Standards Board, or (3) a report developed in accordance with any regulated exchange, national government, or other governmental entity.
• Governance – Risk Reports should describe the company’s governance structure, if any, for identifying, assessing, and managing climate-related financial risks.
• Strategy – Risk Reports should describe material actual and potential impacts of climate-related risks and opportunities on the company’s operations, strategy and financial planning. The Draft Checklist clarifies that reporting entities are not required to include quantitative climate scenario analyses in their Risk Reports, but that qualitative scenario-based assessments should be included where feasible and relevant.
• Risk Management – Risk Reports should describe how the company identifies, assesses, and manages climate-related risks.
• Metrics and Targets – Risk Reports should disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities adopted to reduce and adapt to climate-related risk, where such information is material. The Draft Checklist clarifies that emissions data does not need to be included in SB 261 reports for the initial reporting period.

We discussed the revenue thresholds and reporting obligations established by SB 253 and SB 261 in an earlier client alert. We also issued a separate client alert discussing CARB’s guidance on how it intends to enforce SB 253’s initial reporting requirements.

Federal

On September 12, 2025, the Eighth Circuit Court of Appeals rejected the request of the US Securities and Exchange Commission (SEC) that the court proceed with the litigation challenging the SEC’s final rule regarding the Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Rule”). The litigation over the Rule has been held in abeyance since April 2025 following the SEC’s withdrawal of its defense of the Rule in February 2025.

The Rule, which was adopted by the SEC on March 26, 2024, would require public companies to make certain climate-related disclosures, including disclosures relating to climate-related risks and greenhouse gas emissions. The SEC’s authority to adopt the Rule was immediately challenged in multiple cases that have been consolidated and transferred to the Eighth Circuit. In April 2024, the SEC voluntarily stayed implementation of the Rule pending completion of the ongoing litigation challenging the Rule. The litigation was fully briefed before the Eight Circuit in October 2024 prior to the SEC withdrawing its defense of Rule.

Following the Eighth Circuit’s ruling, the petitions for review will be held in abeyance until such time as the SEC reconsiders the Rule by notice-and comment rulemaking or renews its defense of the Rule. The court further stressed that the SEC is responsible for determining whether the Rule will be rescinded, repealed, modified, or defended in litigation.

Separately, on September 12, 2025, the Environmental Protection Agency (EPA) proposed to end the agency’s Greenhouse Gas Reporting Program (GHGRP). The GHGRP requires approximately 8,000 large greenhouse gas (GHG) emission sources, fuel and industrial gas suppliers, and CO2 injection sites to report their GHG emissions annually. In March 2025, the EPA announced that it was reconsidering the GHGRP. The EPA stated that the current proposal, if finalized, will save up to $2.4 billion in regulatory costs.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Shelly Heyduk, an O'Melveny partner licensed to practice law in California; Eric Rothenberg, an O'Melveny of counsel licensed to practice law in New York and Missouri; John D. Renneisen, an O’Melveny senior counsel licensed to practice law in the District of Columbia; Chris Bowman, an O’Melveny counsel licensed to practice law in California; and Aliza Cohen, an O’Melveny resource attorney licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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