California Climate Disclosure Law SB 261 Implementation Halted: Ninth Circuit Grants Injunction Pending Appeal

We know our clients have been following California’s climate-disclosure laws closely – including the timing of effectiveness and the various legal challenges. This update relates to a new Ninth Circuit ruling that has effectively hit “pause” on one key pillar of California’s climate-disclosure package.

On November 18, 2025, the Ninth Circuit Court granted a partial injunction blocking enforcement of California’s climate-related financial risk disclosure law – SB 261. Notably, the green house gas emissions reporting law under SB 253 remains in effect, with CARB, in its most recent presentations to the public, proposing August 10, 2026 as the deadline for initial SB 253 disclosures.

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Ninth Circuit Ruling pausing SB 261, but not SB 253

This ruling comes weeks before the January 1, 2026 compliance deadline for SB 261, and on the back of the emergency motion filed with the US Supreme Court on November 10, 2025, following through on the stated intent of the US Chamber of Commerce and the other plaintiffs to seek higher court intervention absent a ruling on their initial motion for injunction pending appeal by November 3, 2025. Now, as a result of the Ninth Circuit’s November 18 preliminary injunction, CARB is enjoined from enforcing SB 261.

This preliminary injunction pending appeal stems from a constitutional challenge filed by the US Chamber of Commerce and allied business organizations, which we first reported on in our February 2024 Legal Update. In seeking relief, the plaintiffs had argued that both SB 253 and SB 261 violate the First Amendment of the US Constitution by compelling speech on controversial policy matters, among other constitutional defects.

In a statement issued on the date of the Ninth Circuit’s ruling, the US Chamber of Commerce welcomed this decision by the Ninth Circuit. CARB, however, has not provided a public statement regarding if or how it intends to respond to this ruling granting the preliminary injunction pending appeal with respect to SB 261.

What the Ninth Circuit injunction means in the short term

The Ninth Circuit’s decision to enjoin SB 261 provides immediate relief to thousands of companies that would otherwise have been required to publish climate-related financial risk reports by January 1, 2026. The ruling marks a significant development in the ongoing tension between California’s climate policy ambitions and constitutional limits on compelled speech. For now, companies may pause SB 261 compliance efforts while the constitutional challenge in the Ninth Circuit proceeds but should maintain a “ready posture” so they can resume quickly if the injunction is lifted.

And while the practical impact of the ruling on the initial “light-touch” enforcement approach CARB has previously suggested is not yet clear, there is no basis to assume CARB will alter its stance solely because of this decision were the law to survive. And of course, unless there is a ruling that subsequently impacts SB 253, companies should continue to prepare for that, recognizing that a Ninth Circuit decision may arrive before the CARB-proposed August 2026 initial reporting deadline.

Other legal challenges – ExxonMobil’s recent lawsuit

As discussed in our October 2025 blog post, on October 24, 2025, ExxonMobil filed a lawsuit in the Eastern District of California seeking to overturn SB 253 and SB 261, using similar constitutional arguments raised in the US Chamber of Commerce suit and also arguing that SB 261 is preempted by the National Securities Markets Improvement Act (NSMIA).

While that case was proceeding, in light of the Ninth Circuit’s ruling granting a preliminary injunction with respect to SB 261 in the US Chamber of Commerce case, on November 19, 2025, ExxonMobil and California jointly stipulated to vacate all briefing deadlines and the hearing on ExxonMobil’s preliminary injunction motion, acknowledging that “the Ninth Circuit’s November 18 order affords the relief ExxonMobil’s pending motions seek while the Chamber of Commerce appeal is pending.”

The stipulation provides that within seven days of any Ninth Circuit decision or order dissolving the injunction in the US Chamber of Commerce case, the parties will meet and confer to determine next steps in the ExxonMobil litigation, effectively putting that case on hold pending the Ninth Circuit’s resolution of the US Chamber of Commerce appeal.

Application of SB 253 so far unaffected

While these legal challenges add to the regulatory and enforcement uncertainty surrounding the California climate disclosure laws, litigation has so far not invalidated or paused SB 253 —and companies within SB 253’s scope should continue preparing for compliance while monitoring both the appellate litigation and CARB’s ongoing rulemaking process for any further developments.

Where can I find Mayer Brown’s comprehensive updates on these laws so I have them in one place or in a hyper-linked connected manner?

Below are links to our other legal updates (not referred to above) addressing SB 253 and SB 261 and the ongoing litigation:

• Comprehensive October 2025 Legal Update—“California Climate Disclosure Laws – Countdown to Disclosure: What Companies Need to Know About Reporting Deadlines, CARB Guidance and Ongoing Litigation”
• Comprehensive February 2025 Legal Update—“California’s Climate Disclosure Laws: Navigating the Latest Updates”

Shortly, we will issue further guidance addressing CARB’s recent updates that provided, among other things, additional clarity regarding key definitions, including (a) CARB’s revised “California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Programs: Frequently Asked Questions About Regulatory Development and Initial Reports” issued on November 17, 2025; (b) CARB’s revised “Climate Related Financial Risk Disclosures: Checklist” issued on November 17, 2025; and (c) CARB’s virtual public workshop hosted on November 18, 2025 (with the slide presentation from that workshop accessible here).

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