CARB Publishes Proposed Regulations Implementing California's Climate Disclosure Laws

On December 9, the California Air Resources Board (CARB) released long-awaited draft proposed implementing regulations for the Climate Corporate Data Accountability Act (SB 253) and California's Climate‐Related Financial Risk Act (SB 261).

CARB will host a public hearing on the proposed regulations on February 26, 2026.

The proposed regulations cover applicability criteria and exemptions; definitions, calculation, payment, and enforcement of fees; and the reporting deadline for SB 253 (August 10, 2026).

Background

First signed into law by Governor Newsom in October 2023, SB 253 requires any U.S. business entity that "does business in California" and has total global annual revenues of more than $1 billion to report scope 1, 2, and 3 GHG emissions, with the first report due in 2026 (for the entity's "prior fiscal year"). Companion legislation, SB 261, requires any entity with more than $500 million in annual global revenue that "does business in California" to disclose climate-related financial risks. We have analyzed these laws and subsequent amendments in previous alerts.

CARB's proposed regulations to govern SB 261 and SB 253 were published on December 9, 2025, and follow a lengthy public consultation process that will continue into 2026.

A 45-day public comment period on the proposed regulations will begin on December 26, 2025, and conclude on February 9, 2026. A public hearing is scheduled for February 26, 2026. Stakeholders can present comments orally during the hearing, in writing via postal mail, or electronically before and during the hearing. Written comments not submitted during the hearing must be submitted on or after December 26, 2025, and received no later than February 9, 2026. See CARB's Notice of Public Hearing for specific locations for submitting comments.

Litigation challenging SB 253 and SB 261 is proceeding in parallel with CARB's rulemaking process. On November 18, 2025, in connection with the U.S. Chamber of Commerce's challenge to SB 253 and SB 261 on First Amendment grounds, the Ninth Circuit Court of Appeals issued an injunction barring enforcement of SB 261 pending appeal. However, the Court denied the Chamber's request for an injunction to bar enforcement of SB 253. Oral argument in the appeal is currently scheduled for January 9, 2026. The SB 261 reporting deadline remains unclear but will presumably be sometime in 2026 if the Court upholds SB 261. Similarly, a large oil and gas company filed suit challenging SB 253 and SB 261, alleging that both laws violate the First Amendment by compelling certain speech.

Proposed Regulations

The proposed text reflects much of what CARB discussed during its November 18, 2025, public workshop.

Key provisions include:

• Under SB 253, the deadline for reporting Scope 1 and Scope 2 emissions for the applicable preceding fiscal year is August 10, 2025. (Scope 3 reporting is not required until 2027.)
• Under both laws, "doing business in California" is defined by reference to section 23101(a) in the California Revenue and Taxation Code and includes any business entity:
  • 1) organized or commercially domiciled in the state, or 2) with sales in the state exceeding the lesser of $735,019 (2024) (adjusted annually) or 25% of the taxpayer's total sales.
• Exempt entities include:
  • Non-profit or charitable organizations
  • Insurance companies
  • Public entities and entities majority-owned by public entities
  • Entities whose only activity consists of wholesale electricity transactions
  • Entities whose only business in California is employee compensation or payroll expenses, including teleworking employees
• A "parent" entity is an entity that has a 50% ownership interest in or control of another business entity by direct corporate association.
• "Revenue" is defined by reference to "gross receipts" in section 25120(f)(2) of the California Revenue and Taxation Code. By defining "revenue" and "doing business" by reference to section 25120(f)(2), CARB has focused the test for whether an entity is required to report on the entity's gross receipts.
• CARB will send a written fee determination to each reporting entity annually to cover the costs of administering SB 253 and SB 261.
  • CARB will calculate the annual fee for each program by dividing the annual program cost by the number of in-scope entities. CARB has estimated that the annual fee for SB 253 in-scope entities could be $3,106, and the annual fee for SB 261 in-scope entities could be $1,403.
  • Entities must pay fees within 60 days of the fee determination notice date or they will be subject to a late fee.
• Covered entities must maintain records demonstrating that they meet the revenue and doing business in California thresholds for 5 years and provide those records to CARB if requested.

CARB's proposed regulations are likely to generate significant feedback from stakeholders. Stakeholders may also take this opportunity to provide feedback on CARB's updated guidance elaborating on key terms and concepts included in the proposed regulations. Companies subject to SB 253 and SB 261 should consider whether to provide feedback to CARB on the proposed regulations and monitor the ongoing rulemaking process and related litigation.