Big news dropped from the Ninth Circuit on November 9, 2026 — and if your business operates in California, you need to pay attention. The ruling in Chamber of Commerce v. Sanchez changes how companies report greenhouse gas emissions and climate-related financial risks. But here’s the thing: not everything changed at once. The court kept the Scope 1 and Scope 2 emissions reporting deadline of November 10, 2026 in effect, while blocking the broader Scope 3 and climate-risk disclosure rules as likely unconstitutional. So what does this actually mean for you? If your company operates in Los Angeles, Orange, San Bernardino, or Riverside County and generates significant revenue in California, you need to know exactly what still applies and what’s been paused. We break it down in plain language below, with practical next steps for business owners across West Covina, Los Angeles, Anaheim, San Bernardino, Riverside, Ontario, and Pomona.
Background: What Happened in Chamber of Commerce v. Sanchez
Let’s back up a bit. California passed two climate disclosure laws in recent years. SB 253, the Climate Corporate Data Accountability Act, requires reporting entities to annually report Scope 1 and 2 greenhouse gas emissions beginning in November 2026 and Scope 3 greenhouse gas emissions beginning in 2027. Then there’s SB 261, the “Greenhouse gases: climate-related financial risk” law, requires covered entities to prepare a biennial climate-related financial risk report. Business groups weren’t going to sit on this quietly. The U.S. Chamber of Commerce and the California Chamber of Commerce sued the state, arguing both laws violate the First Amendment by forcing companies to make speech they don’t want to make. Sound familiar? It’s the kind of fight we see a lot when government mandates run into constitutional limits.
A federal district court looked at this first and refused to block either law. The case didn’t stop there — it went up to the Ninth Circuit. On November 9, 2026, the Ninth Circuit issued its decision, affirming in part and reversing in part the district court’s denial of a preliminary injunction challenging California’s Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261). The judges split on this one. The court held that California’s requirements to disclose Scope 3 greenhouse gas emissions under SB 253 and climate-related financial risks under SB 261 likely violate the First Amendment. Translation: the Scope 1 and 2 reporting survives for now. The rest? Blocked — at least for the time being.
Importantly, the panel treated Scope 1 and Scope 2 reporting very differently. The court held that mandatory disclosure of direct emissions (Scope 1) and emissions from purchased energy (Scope 2) constitutes commercial speech because it compels disclosure of factual emissions data relevant to companies’ operations, investment, and other capital transactions. Because that kind of commercial speech gets a lower level of judicial scrutiny, the court allowed SB 253’s Scope 1 and Scope 2 greenhouse gas emissions reporting to proceed, while holding that SB 253’s Scope 3 requirement and SB 261’s climate-related financial risk reporting are likely unconstitutional, with both expected to be preliminarily enjoined.
By contrast, the court viewed SB 261 as going much further. The Court held that SB 261 compels noncommercial speech because the climate-risk framework it incorporates requires companies to make predictive and normative judgments about how climate change should shape their future operations, a subject the Court described as “politically fraught.” The case is not over. The Ninth Circuit remanded the matter to the district court to determine whether the Scope 3 provisions are severable from the remainder of SB 253 and to enter appropriate preliminary injunctive relief. This is a preliminary-injunction ruling, not a final judgment, and either side may seek rehearing by the full Ninth Circuit within 14 days or petition the U.S. Supreme Court.
How This Affects Southern California Businesses
For companies in West Covina, Pasadena, Newport Beach, and across the Inland Empire that meet SB 253’s revenue threshold, the immediate takeaway is simple: the Scope 1 and 2 reporting obligation has not gone away. The California Air Resources Board’s November 10, 2026, first-year reporting deadline remains in effect, and companies subject to SB 253 should proceed with their planned Scope 1 and 2 submissions. Businesses that already filed on or around November 10 should keep records of their submission, since enforcement guidance could still evolve as the case proceeds.
At the same time, companies can pause work tied solely to the broader rules that were blocked. While the case proceeds, companies can reassess work undertaken solely to comply with California’s Scope 3 and SB 261 disclosure requirements. That includes supply-chain emissions surveys for Scope 3 and the biennial climate-risk report format tied to the TCFD framework under SB 261. SB 261 requires a biennial climate-related financial risk report based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, and because SB 253’s Scope 3 disclosure provisions are therefore likely unconstitutional, the court remanded for the district court to determine in the first instance whether Scope 3 provisions are severable from the other requirements of SB 253. Until the district court rules on severability and the injunction is formally entered, boards and compliance teams should keep internal documentation current but hold off on finalizing new Scope 3 or SB 261 disclosures.
Manufacturers, logistics companies, retailers, and real estate developers with California operations and over $1 billion in annual revenue are the most likely to be covered by SB 253. SB 253 applies to companies doing business in California with annual revenue exceeding $1 billion and requires public disclosure of Scope 1, 2, and 3 emissions. Mid-sized businesses that fall under this threshold are not directly affected by SB 253 but may still face climate-disclosure pressure from lenders, investors, or larger business partners who are covered.
What You Should Do Now
Businesses operating in Southern California should consider the following steps:
- Confirm your Scope 1 and 2 filing status. Companies should continue Scope 1 and Scope 2 compliance, since CARB’s November 10, 2026 reporting deadline for Scope 1 and Scope 2 emissions remains in effect. If you missed the deadline, document the circumstances and seek legal guidance promptly.
- Pause, but do not discard, Scope 3 and SB 261 preparation work. Keep data collection processes in place in case the district court finds the Scope 3 provisions severable and enforceable later.
- Review contracts and disclosures tied to these laws. If your company made representations to lenders, investors, or business partners about upcoming Scope 3 or SB 261 filings, those commitments may need to be revisited in light of the injunction.
- Watch for further court activity. The case may be reviewed by the full Ninth Circuit or the U.S. Supreme Court, and the district court still must rule on severability, so compliance obligations can change again.
- Get tailored legal advice. Every company’s exposure depends on its revenue, structure, and existing contracts, so a one-size-fits-all approach can be risky.
How TEZ Law Firm Can Help
TEZ Law Firm advises Southern California businesses on regulatory compliance questions, including how court rulings like this one may affect reporting obligations, contracts, and investor relations. The firm’s business law practice can review your company’s current climate-disclosure posture and help you understand which filing obligations still apply under business litigation and compliance matters. For publicly traded companies or those preparing to uplist to Nasdaq or the OTC markets, TEZ Law Firm’s public companies practice can help align climate-related disclosures with broader securities and governance obligations.
Frequently Asked Questions
Do I still have to file Scope 1 and 2 emissions reports?
Yes, as of November 12, 2026, the Scope 1 and 2 reporting requirement under SB 253 remains in effect. The Ninth Circuit did not block this part of the law, and the California Air Resources Board’s November 10, 2026 deadline for initial reports stood.
Is SB 261 completely gone?
Not yet. The Ninth Circuit found SB 261 likely unconstitutional and reversed the lower court’s refusal to block it, but this is a preliminary ruling. The law could still be revived depending on further appeals or Supreme Court review.
What happens to Scope 3 reporting requirements?
The Ninth Circuit found Scope 3 disclosures likely unconstitutional and sent the case back to the district court to decide whether Scope 3 can be separated from the rest of SB 253. Scope 3 reporting, originally planned to begin in 2027, remains paused for now.
Could this ruling change again?
Yes. This is a preliminary-injunction decision, not a final judgment. Either side can ask the full Ninth Circuit to rehear the case or ask the U.S. Supreme Court to review it, so businesses should monitor developments closely.
My company is under $1 billion in revenue — does this affect me?
SB 253 generally applies to companies doing business in California with annual revenue over $1 billion. Smaller companies are not directly covered, but they may still feel indirect effects if larger business partners, lenders, or investors ask for climate-related data.
Climate disclosure rules in California are changing quickly, and the legal landscape may shift again as this case moves through the courts. If your business needs help understanding how the Ninth Circuit’s ruling in Chamber of Commerce v. Sanchez applies to your reporting obligations, TEZ Law Firm invites you to schedule a consultation with our business law team. Managing attorney JJ Zhang (California Bar #326666) and the firm’s attorneys are available to discuss your company’s specific situation at TEZ Law Firm’s offices in West Covina, City of Industry, Newport Beach, and Pasadena.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws and agency practices change; contact TEZ Law Firm (West Covina, California) at 626-888-6856 or [email protected] about your situation. Prior results do not guarantee a similar outcome.