ARTICLE
20 November 2024

New California Greenhouse Gas Emissions Reporting Requirements Carry Substantial Potential Fines, Penalties

LB
Lewis Brisbois Bisgaard & Smith LLP

Contributor

Founded in 1979 by seven lawyers from a premier Los Angeles firm, Lewis Brisbois has grown to include nearly 1,400 attorneys in 50 offices in 27 states, and dedicates itself to more than 40 legal practice areas for clients of all sizes in every major industry.
Sacramento, Calif. (October 14, 2024) - On September 27, 2024, California Governor Newsom signed into law Senate Bill 219, which effects important new requirements on U.S. companies "doing business".
United States California Environment

Sacramento, Calif. (October 14, 2024) - On September 27, 2024, California Governor Newsom signed into law Senate Bill 219, which effects important new requirements on U.S. companies "doing business" in California to report on a wide range of greenhouse gas (GHG)-related emissions. While these amendments adjust deadlines for the new reporting requirements, they further establish fines of up to $550,000 per year for larger companies "doing business" in California for failing to submit detailed GHG emissions data on all factors of a companies' operations to the California Air Resources Board (CARB) Sacramento Office.

The new bill, which amends California's 2023 Climate Corporate Data Accountability Act (SB 253) and Climate‐Related Financial Risk Act (SB 261), requires CARB to promulgate regulations implementing these bills by July 1 2025.

SB 253 is the first state law in the U.S. mandating that companies report to state agencies their Scope 1 (direct GHG emissions from sources owned or controlled by a company), Scope 2 (indirect emissions from purchased electricity, heat, and cooling etc.), and Scope 3 (all other emissions associated with a company's activities) air emissions. The accompanying bill SB 261 requires businesses to prepare a climate-related financial risk report disclosing the entity's climate-related financial risk and measures adopted to reduce and adapt to climate-related financial risk.

The 2023 Acts require "reporting entities" (to be defined in the CARB rulemaking) to file reports for the 2026 and/or 2027 fiscal year for certain data. Failure to comply with SB 253 could result in fines and penalties of $500,000 and for SB 261 of $50,000 per entity, per year and would be reported on a state database. Accordingly, potential fines for non-compliance could result in multi-million dollar penalties each year and public exposure of such non-compliance.

Key Takeaways for Businesses

  1. Confirm whether business entity has over $1B (SB 253) or over $500M in U.S. sales (SB 261) and has any sales into California;
  2. Engage in the CARB rulemaking process in order to mitigate the regulations to the greatest degree possible; and
  3. Begin assessment of reporting data needed and its availability across all business operations for 2025 fiscal year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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