The U.S. Chamber of Commerce has filed an emergency appeal with the Supreme Court to halt new California laws that would require many companies to report on their emissions and climate-related financial risks. These laws, signed by Governor Gavin Newsom in 2023, are set to begin taking effect early next year.
The Chamber and other business groups argue that the laws violate free-speech rights, claiming they compel companies to make statements they may not agree with. “Without this Court’s immediate intervention, California’s unconstitutional efforts to slant public debate through compelled speech will take effect and inflict irreparable harm on thousands of companies across the country,” the groups stated in their appeal.
Lower courts have so far declined to block the measures, which state officials say are intended to increase transparency and encourage businesses to find ways to reduce emissions.
One law applies to businesses operating in California with annual revenues over $1 billion. Starting in 2026 for direct emissions and 2027 for indirect emissions, these companies must annually disclose carbon output from sources such as fossil fuel use, transportation of goods, and employee travel. The Chamber estimates about 5,000 companies will be affected, while state regulators put the number closer to 2,600.
A second law targets companies making more than $500,000 a year, requiring them every two years to report how climate change could impact their finances. According to the California Air Resources Board, over 4,100 businesses will need to comply.
Failure to comply can result in civil penalties. ExxonMobil is also challenging these regulations in a separate lawsuit filed last month.
California officials argue that commercial speech does not receive full First Amendment protection under the Constitution and that these requirements do not infringe on those rights.
Governor Newsom described the emissions-disclosure law as a significant step: “bold responses to the climate crisis, turning information transparency into climate action.” The environmental group Ceres has said increased disclosure will help consumers decide whether or not to support certain businesses.
Nationally, the U.S. Securities and Exchange Commission adopted a rule last year requiring some public companies to report greenhouse gas emissions and climate risks; however, implementation was paused due to ongoing litigation (https://www.sec.gov/news/press-release/2023-45).
The Supreme Court’s recent record includes skepticism toward environmental regulation. In 2022 it limited the Environmental Protection Agency’s power over carbon dioxide emissions from power plants (https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf), and it recently blocked another EPA rule aimed at reducing air pollution across state lines (https://www.supremecourt.gov/opinions/23pdf/23a349_6khn.pdf).
