CARB Releases Preliminary List of Covered Entities Under SB 253 and SB 261

Publication of the list is consistent with CARB’s commitment, at its August 21, 2025, workshop, to provide the regulated community with compliance assistance in advance of the anticipated 2026 reporting and disclosure deadlines pursuant to SB 261 and SB 253. CARB also indicated that generation of a list would “support development of the fee regulation” – by estimating the number of regulated entities that are anticipated to be subject to the reporting and disclosure requirements (and thereby allowing for estimation of the regulatory burden of overseeing the new program).

Generation of this type of list was undertaken voluntarily by CARB and is not mandated by either statute. Critically, the list is not a determinative statement of whether entities are subject to either law. As a result, the list does not alter the need for regulated community to independently assess whether they meet the thresholds triggering reporting and disclosure requirements pursuant to each law. Entities on the list may not, in fact, be subject to the reporting and disclosure requirements in these laws. And, conversely, entities that are not on the list may very well end up subject to these requirements and risk enforcement if they fail to reasonably and independently evaluate their compliance status.

While the list may provide the regulated community some insight into whether they may be subject to SB 253 and SB 261, there are several serious limitations that should be recognized when reviewing the list:

1. CARB has been transparent regarding the methods used to generate the list, which are not particularly robust. For example, a slide used in CARB’s August workshop indicates that the list would be generated by cross-referencing public databases, to determine whether companies may meet the relevant financial threshold, with filings maintained by the California Secretary of State showing whether entities are registered as “active” in California. This method has a number of potential limitations, including (i) mismatches in entity nomenclature between databases that may have erroneously excluded entities from the list, and (ii) potentially erroneous data (particularly given the thousands of entities being evaluated through what was presumably an automated process).
2. There is also a temporal mismatch that could have significant ramifications for entities that have revenue near the $500 million (for SB 261) or $1 billion (for SB 253) thresholds or have recently started operations in California. The public datasets that CARB used to generate the list does not include the up-to-date information on revenue; rather the data is likely from 2024 or earlier. Likewise, the Secretary of State dataset only included information up-to-date as of 2022. However, the new laws require evaluation of whether an entity meets the revenue threshold criteria by looking to the most recent fiscal year. For example, SB 261 provides that “[a]pplicability shall be determined based on the business entity’s revenue for the prior fiscal year.” With reporting beginning January 1, 2026, entities must use revenues from FY2025.
3. It appears that CARB used the databases as a proxy for two important unsettled issues impacting the laws’ implementation: how revenues are calculated and what it means to “do business” in California. CARB is still considering how an entity’s “revenues” should be calculated for purposes of determining whether an entity meets the financial thresholds. It will not be known, until a final rule is promulgated, whether the definition of revenue will ultimately align with the revenue reported in the public databases to generate the list. More critically, CARB has not yet provided clarity regarding the specific factors it will use in defining what it means to “do business in California” under SB 253 (and, potentially SB 261). Given the complexity of the issue, it seems unlikely that whatever definition is promulgated by CARB in its upcoming rulemaking will align 100% with the screening criteria it used to generate the list from the Secretary of State dataset.

Our cursory review of the list identifies the need for continued, significant validation. For example, the list includes a substantial number of rows – in the range of 1,000 – that appear to be duplicates. More confusing, some of the duplicate entries indicate coverage by only SB 261 in certain rows, but both SB 261 and SB 253 in other rows. The list also appears to omit a number of entities that we would otherwise have expected to trigger the reporting thresholds in the laws. Given these limitations, it remains unclear the extent to which the list includes entities that will not be required to report or the number of entities that will be required to report but were missed by CARB in generating the list.

Key takeaways:

• Entities should independently analyze whether they are subject to reporting under SB 253 or SB 261. An entity that concludes it falls within scope of SB 253 or SB 261 because it meets the applicable revenue thresholds and does business in California should not change course or conclude that it is not required to report merely because the entity was not included on the list. Conversely, an entity that is included on the list that does not meet the threshold criteria will not be required to report, but should be prepared to explain why it is not covered to CARB. Entities on the list that do not believe they should be included can also submit feedback to CARB here.
• Regardless of whether an entity is included on the list, potentially-covered entities must continue to assess additional guidance, regulations, and related developments as they are issued and the reporting deadlines approach. CARB is actively developing implementing regulations with a proposed rule anticipated by October 14, 2025. That rulemaking will address key threshold criteria for applicability of SB 253 (and likely SB 261), including how revenue is calculated and the definition for “doing business in California.”

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 submitting feedback to CARB during its rulemaking process and complying with GHG emissions disclosures and climate-related financial risk reports pursuant to SB 253 and 261, and can help you understand interactions with other relevant sustainability-related reporting regimes required globally.

Authored by Tom Boer, Misty Howell, and Olivia Molodanof.