Soon after California passed far-reaching climate legislation last year (referred to herein as SB 253 and SB 261; see our earlier blog post here and here for background), it was challenged in the U.S. District Court for the Central District of California (the district court). In Chamber of Commerce of the United States of America et al. v. California Air Resources Board et al., No. 2:24-cv-00801 (C.D. Cal. 2024), the plaintiffs claimed that SB 253 and 261 violated the First Amendment, among other constitutional challenges.
The plaintiffs moved for summary judgment prior to discovery on the First Amendment matter, claiming that strict scrutiny applies and that SB 253 and SB 261 fail any level of First Amendment scrutiny. The defendants moved to deny or defer the plaintiffs' Motion for Summary Judgment, claiming that the First Amendment does not apply to SB 253 and SB 261 and that even if it did, they would withstand strict or intermediate scrutiny.
On November 5th, the district court granted the defendants' motion and denied plaintiffs' Motion for Summary Judgment with leave to re-file.
In denying the plaintiffs' Motion for Summary Judgment, the district court noted that "[t]o determine what level of scrutiny to apply, the Court needs a record on whether SBs 253 and 261 regulate a substantial number of companies that do not make potentially misleading environmental claims." The district court noted it did not yet have the requisite information to perform "fact-driven" First Amendment analysis.
Additionally, in a challenge to the defendants, the district court noted that the First Amendment does in fact apply to SB 253 and SB 261.
We can expect the court battle to continue for an extended period of time, with discovery and briefing on the merits of each of the plaintiffs' claims. In contrast to the Securities and Exchange Commission (SEC) climate disclosure rules, these rules have not been stayed pending the outcome of the litigation. Companies should continue preparing for the implementation of this legislation as these legal challenges continue.
If you have any questions about how this legislation may impact your business, please contact the author or your Bass, Berry & Sims relationship attorney.
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