Breaking news: California’s mandatory climate-related financial risk reporting law (SB 261) stayed

The Ninth Circuit's order comes mere months after the Central District Court of California denied a motion in August of 2025 for a preliminary injunction to enjoin SB 261 and SB 253.  The challenge—which was filed in January 2024 by a business coalition led by the U.S. Chamber of Commerce—originally alleged that SB 253 and 261 as passed by the legislature chalked up numerous violations of the United States Constitution, including pursuant to the First Amendment, the Supremacy Clause, and the Dormant Commerce Clause.  However, after the district court dismissed the coalition's Supremacy and Dormant Commerce Clause claims against SB 261 (with prejudice) and SB 253 (without prejudice), the coalition appealed the district court's denial of a preliminary injunction to the Ninth Circuit and filed a motion seeking an injunction halting the disclosure requirements pending appeal.

In denying the coalition's motion in August (see our prior summary of that decision here), the district court found that the plaintiffs did not have a likelihood of success on the merits of their challenge to SB 261.  Yesterday's order suggests the Ninth Circuit may disagree.  The coalition also filed an emergency request with the Supreme Court of the United States, on November 14, to block SB 261 and SB 253.  That application was withdrawn yesterday, citing the Ninth Circuit's order and the expedited January 9 hearing as an explanation.

Implications for covered entities

Yesterday's order presses pause on SB 261 compliance and enforcement until the Ninth Circuit can evaluate whether a preliminary injunction should issue as to SB 261 and/or SB 253.  The case is scheduled for oral argument on January 9, 2026—after the January 1, 2026, compliance deadline for SB 261.  Thus, absent intervening events that could expedite the court's decision (e.g., rescheduling the hearing to an earlier date or deciding the merits on the briefs) or exceptional circumstances (e.g., an en banc reconsideration of the stay), companies otherwise subject to SB 261 disclosure requirements will not be required to prepare their inaugural reports by January 1, 2026.

Simply put, the order provides a temporary respite from SB 261 reporting obligations. However, companies face considerable uncertainty about how much lead time may be provided to file reports following the Ninth Circuit's ruling in the case.  California Air Resources Board (CARB) staff indicated during a public workshop yesterday that they are reviewing the order; it remains unclear whether staff will issue updated SB 261 guidance or how CARB will ultimately react to the court's ruling.  As a result, we recommend that companies remain diligent and consider whether further preparation of a draft report is warranted so that prompt disclosure can be achieved if ultimately required following a decision from the Ninth Circuit.

Key takeaways

• The immediate January 1, 2026, deadline for companies to disclose climate-related financial risks pursuant to SB 261 is suspended pending the outcome of the appeal before the Ninth Circuit.  Significant uncertainty remains regarding how (and when) SB 261 compliance could be reinitiated if the Ninth Circuit affirms the district court's denial of the preliminary injunction.
• Implementation of SB 253 is not impacted by yesterday's order.  According to CARB, implementing regulations for SB 253 are still expected to be finalized during the first quarter of 2026.  CARB announced during yesterday's public workshop that it is now targeting an initial compliance deadline for SB 253 of August 10, 2026.  We can expect, however, that there will likely be further litigation challenging SB 253 before we reach any 2026 reporting deadline.

The broad range of expertise at Hogan Lovells US LLP – including the Environment and Natural Resources, Litigation/Consumer Products, Sustainable Finance and Investment, Corporate and Finance, and Infrastructure, Energy, Resources and Projects teams – are available to assist clients with complying with California's climate-related financial risk and GHG emissions disclosure requirements and can help you understand interactions with other relevant sustainability-related reporting regimes required globally.

Authored by Tom Boer and Maia Jorgensen.