A federal appeals court has blocked California from enforcing its first-of-its-kind climate disclosure laws, dealing a significant setback to the state’s attempt to force large companies to reveal how climate change affects their businesses and how much greenhouse gas their supply chains produce.
Monday’s decision by a three-judge panel of the 9th US Circuit Court of Appeals in San Francisco is a partial victory for the US Chamber of Commerce, the American Farm Bureau Federation and several California business groups that sued to block the two laws.
The panel said California could still enforce parts of one law requiring large companies to report their own greenhouse gas emissions and the emissions from energy they buy and consume. But it blocked the state from requiring companies to disclose climate-related financial risks and the “indirect” emissions produced by their suppliers, customers and others in their value chains.
Democratic Governor Gavin Newsom signed both laws in 2023, making California the first US state to require such disclosures. Opponents argued the laws would impose massive costs on public and private businesses and violated the free speech protections of the US Constitution’s First Amendment.
The court unanimously found that the Climate-Related Financial Risk Act, known as Senate Bill 261, would likely fail, because it forced companies with more than $500 million of annual revenue to share “value-laden” judgments on a “politically fraught” subject rather than simply providing factual information.
It also ruled that the Climate Corporate Data Accountability Act, or Senate Bill 253, went too far. That law required businesses with more than $1 billion of annual revenue to report emissions across their value chains each year. The panel said the measure went further than needed to serve California’s interests in helping investors, reducing emissions and preventing misleading speech, adding that the state could instead have published existing disclosures or offered companies incentives to disclose or cut emissions voluntarily.
“Climate change will increasingly affect human activity in the years ahead, forcing social, economic, and political systems to adapt to changing environmental conditions,” Circuit Judge Jacqueline Nguyen, an appointee of former Democratic President Barack Obama, wrote for the court. “The First Amendment, however, limits the government’s ability to compel speech.”
The defendants included officials of the California Air Resources Board and California Attorney General Rob Bonta, who enforces the state’s laws. Neither office immediately responded to requests for comment.
Daryl Joseffer, president of the US Chamber Litigation Center, called the decision an “important victory” that halted the “most onerous” disclosure requirements, and said the Chamber would seek permanent injunctions.
Circuit Judge Mark Bennett, an appointee of Republican President Donald Trump, partially dissented and would have blocked both laws. The panel also included US District Judge Kiyo Matsumoto, an appointee of former Republican President George W. Bush who normally sits in Brooklyn, New York.
The case now returns to US District Judge Otis Wright in Los Angeles, who had allowed California to enforce both laws. The appeals court had last November stayed enforcement of the financial risk law pending the appeal.
Sources: Reuters — “Court blocks California from enforcing climate disclosure laws”, https://www.reuters.com/legal/litigation/court-blocks-california-enforcing-climate-disclosure-laws-2026-11-09/
