A federal appeals court has blocked key parts of California’s first-in-the-nation climate disclosure laws, ruling that they likely violate companies’ free speech rights. The decision came Monday, just one day before large companies faced their first deadline under the part of the law that survived.
The ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco splits the two laws. Rules requiring big companies to report the pollution from their own operations stay in place. But rules requiring them to report emissions across their supply chains, and to describe their climate-related financial risks, are expected to be put on hold.
What the two laws require
Gov. Gavin Newsom signed both laws in 2023, making California the first U.S. state to require these kinds of disclosures, Reuters reported.
- SB 253, the Climate Corporate Data Accountability Act, applies to companies with more than $1 billion in yearly revenue. It requires them to report greenhouse gas emissions from their own operations and from the energy they buy, known as Scope 1 and Scope 2. It also calls for reporting emissions from suppliers and customers, known as Scope 3, starting in 2027.
- SB 261, the Climate-Related Financial Risk Act, applies to companies with more than $500 million in yearly revenue. It requires them to disclose climate-related financial risks every two years.
What the court decided
The panel unanimously found that SB 261 would likely fail under the First Amendment. According to Reuters, the judges reasoned that the law forced companies to share value-laden judgments on a politically charged topic, not just facts. Judge Jacqueline Nguyen, who wrote the opinion, said the First Amendment “limits the government’s ability to compel speech.”
The court also found the Scope 3 supply-chain reporting rule went too far in serving California’s goals of informing investors, cutting emissions and preventing misleading claims. It suggested the state could instead publish existing disclosures or offer companies incentives. Judge Mark Bennett partly dissented and would have blocked both laws entirely. Judge Kiyo Matsumoto, who normally sits in Brooklyn, was the third member of the panel.
The appeals court had already paused enforcement of SB 261 in November 2025 while the case was pending, so that part of the ruling largely keeps things as they were, according to an analysis by the law firm Foley & Lardner published in the National Law Review.
Tuesday’s deadline still stands
Because the court left the Scope 1 and Scope 2 rules in place, covered companies still had to submit those emissions figures to the California Air Resources Board by Tuesday, Nov. 10, according to a client alert from the law firm Bass, Berry & Sims. Legal analysts noted that the ruling deals only with temporary relief and is not a final decision on the merits.
How each side responded
The lawsuit was brought by the U.S. Chamber of Commerce, the American Farm Bureau Federation and several California business groups. Daryl Joseffer of the U.S. Chamber Litigation Center called the ruling an important win against the laws’ most burdensome requirements, and the Chamber said it will seek permanent injunctions. Travis Cushman of the Farm Bureau said large companies would otherwise pressure small and mid-sized farms for emissions data.
California Attorney General Rob Bonta’s office said it is weighing next steps. It said it was pleased that part of the emissions law can be enforced and remains committed to protecting Californians’ access to climate data, Reuters reported.
The ruling lands as world leaders gather for the COP31 climate summit in Türkiye, where corporate and government climate pledges are a central topic. California has often set national trends; the state’s courts and leaders have been in the news lately, including Newsom’s plan to commute all of the state’s death sentences.
Why it matters for families
Supporters of the laws say public emissions data helps consumers and investors understand the companies they buy from. Opponents, including farm groups, say supply-chain reporting rules can push costs and paperwork onto small businesses and family farms that sell to big companies. The case is also a test of how far states can go in requiring businesses to speak on public issues, a question that could reach well beyond climate.
What to watch next
The parties have 14 days to ask the 9th Circuit to rehear the case, and either side could seek Supreme Court review. Otherwise, the case returns to U.S. District Judge Otis Wright in Los Angeles, who is expected to enter an injunction in line with the ruling and decide whether the Scope 3 rules can be separated from the rest of SB 253. Upstormed News will follow the case.
Read more: Voters Rejected Data Centers in Nearly Every Local Ballot Measure This Election
Should large companies be required to publicly report their greenhouse gas emissions, or should it be voluntary?
Sources: Reuters via GV Wire, “Court Blocks California From Enforcing Climate Disclosure Laws” (November 10, 2026); National Law Review (Foley & Lardner), “California Climate Disclosure Laws: Ninth Circuit Ruling” (November 9, 2026); Bass, Berry & Sims, “Ninth Circuit Partially Blocks California Climate Disclosure Laws Under SB 253 and SB 261” (November 9, 2026)
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