An announcement from the Ninth Circuit from November 9, 2026 put a hold only on Scope 3 reporting for now, as the ruling is remanded to the District Court for further deliberation. The court essentially separated the requirement associated with SB 253’s Scope 3 emissions reporting with SB 261, resulting in a continuation of SB 253’s Scope 1 and 2 requirements, but a pause on Scope 3.
The court stated concerns related to the First Amendment, finding that the mandatory disclosures SB 253 would push are not sufficiently tied to a company’s own operations and capital transactions to constitute commercial speech. As a result, mandating reporting of this data may not be constitutional.
It is currently unclear what SB253 reporting will look like in 2027 and beyond. As of right now, Scope 1 and 2 emissions with limited assurance will be required, unless another ruling is made ahead of the reporting deadline. So, at minimum, continuing to work towards an assured Scope 1 and 2 inventory for FY2026 is the least risky option for companies and is currently a better use of resources.
For companies subject to SB253 who have never calculated any Scope 3 emissions, we advise developing an initial 5-category Scope 3 emissions inventory that would meet CARB's current guidelines. This prepares companies for the possibility that the District Court determine the Scope 3 provisions cannot be severed, at a time when then the decision-making timeline is unclear.
Contact us if you’d like to discuss what this means for your company.
Sources:
(1) Sullivan & Crowell. Ninth Circuit Declines to Enjoin Scope 1 and Scope 2 Greenhouse Gas Reporting Under California SB 253.
(2) Ropes & Gray. A Late-Breaking Court Decision on SB 253 and SB 261 – What Now for Compliance?
Cover Photo by Bernd Klutsch on Unsplash