Lawsuit Challenges California’s New Greenhouse Gas Emissions and Climate Risk Disclosure Laws

SAN FRANCISCO, California – A lawsuit has been filed challenging California’s new laws that require businesses to disclose their greenhouse gas emissions and climate-related financial risks. The Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act were signed into law recently, mandating annual and biennial disclosures respectively. The U.S. Chamber of Commerce and several other organizations filed the lawsuit, arguing that the laws violate the First Amendment and that federal regulations preempt California’s ability to regulate emissions in other states.

The U.S. Chamber of Commerce, along with the American Farm Bureau Federation, California Chamber of Commerce, Central Valley Business Federation, Los Angeles County Business Federation, and Western Growers Association, filed the lawsuit in federal District Court in California. They claim that the requirement to disclose emissions violates the First Amendment by compelling companies to engage in speech they do not wish to make. The lawsuit also argues that the federal Clean Air Act preempts California’s ability to regulate emissions in other states.

The plaintiffs are seeking a declaration that the laws are null and void and an injunction against their implementation. The lawsuit adds uncertainty to the compliance strategy for climate disclosure, but does not change the near-term requirements for companies as the initial disclosures are not yet due.

This lawsuit also foreshadows the potential challenges that may arise when the SEC’s climate disclosure rules are adopted. It is expected that these rules will also face legal challenges. It’s worth noting that the lawsuit does not contest the Voluntary Carbon Market Disclosures Act, which is another piece of climate disclosure legislation recently adopted by California.

The outcome of this lawsuit will have significant implications for the future of climate disclosure regulations in California and potentially beyond. The arguments put forth by the U.S. Chamber of Commerce and other plaintiffs highlight the tension between environmental regulation and free speech rights.

It remains to be seen how the court will rule on this case, but in the meantime, businesses must navigate the evolving landscape of climate disclosure requirements. Compliance with these laws will continue to be a critical issue for companies as they face increasing scrutiny and pressure to address their environmental impact.

Lawmakers, businesses, and environmental advocates will closely follow this lawsuit as it unfolds, anticipating its consequences for the future of climate disclosure regulations. The legal challenge adds another layer of complexity to the ongoing debate surrounding corporate responsibility and sustainability efforts.