A coalition of business groups filed a lawsuit opposing two California laws that require large businesses to make climate-related disclosures, calling it a fight against illegal and excessive government overreach.
The U.S. Chamber of Commerce, the American Farm Bureau Federation, the California Chamber of Commerce, and several other state business organizations filed the lawsuit Tuesday in U.S. District Court for the Central District of California.
Signed by California Gov. Gavin Newsom in October, the “Climate Corporate Data Accountability Act” (SB 253) will require companies with more than $1 billion in revenue doing business in the state to disclose greenhouse gas (GHG) emissions each year to a reporting organization contracted by California Air Resources Board.
Another law (SB 261), also signed in October, will require California businesses with more than $500 million in annual revenue to develop a report on their climate-related financial risks.
Both laws would require affected businesses to comply in 2026.
The lawsuit claimed the laws’ requirements are a violation of the First Amendment and an overreach by California legislators, as regulation of the environment is covered by federal laws like the Clean Air Act.
“The chamber and its partners will continue to fight back against illegal and excessive government overreach at the state and federal levels, especially micromanagement that undermines responsible efforts by businesses to address climate risks,” said Tom Quaadman, the U.S. Chamber of Commerce’s executive director for capital markets competitiveness, in a press release.
Compelling disclosure of GHG emissions is also a feature of the Securities and Exchange Commission’s (SEC) climate-related disclosure rule that it proposed in March 2022. The rule would force all public companies to quantify, measure, and disclose their effect on the environment. The rule has been delayed, however, as the SEC gauges how to respond to issues raised by thousands of commenters, particularly on whether the disclosures are material and how businesses should disclose their supply chain (Scope 3) emissions.
Unlike the SEC’s proposed rule, the California bills will apply to private companies that fall in scope.