California’s corporate climate disclosure laws did not rise or fall together. In a November 9 opinion, the U.S. Court of Appeals for the Ninth Circuit distinguished emissions from a company’s own operations and purchased energy from the broader estimates it must make about its value chain.
In United States of America Chamber of Commerce v. Sanchez, the panel upheld the denial of a preliminary injunction for Scope 1 and Scope 2 reporting under SB 253. It reversed the denial for Scope 3 reporting and for SB 261’s climate-related financial risk disclosures. The opinion resolves an appeal about preliminary relief. It does not finally decide the constitutional challenge.
| Requirement | What it covers | November 9 appellate result |
|---|---|---|
| SB 253, Scope 1 | Direct emissions from sources a company owns or controls | Denial of preliminary relief affirmed |
| SB 253, Scope 2 | Emissions associated with purchased energy | Denial of preliminary relief affirmed |
| SB 253, Scope 3 | Indirect emissions across the value chain, including suppliers and customers | Denial reversed; severability goes back to the district court |
| SB 261 | Climate-related financial risk reporting | Denial of preliminary relief reversed |
The majority treated Scope 1 and 2 disclosures as commercial speech and applied intermediate scrutiny. It applied stricter review to Scope 3 and SB 261, finding the challengers likely to succeed on those requirements at this stage. Judge Mark Bennett would have granted broader preliminary relief.
For Canadian companies with California operations, the practical mistake would be to treat the opinion as permission to pause every reporting project. Keep Scope 1 and 2 work on a separate track. Before changing Scope 3 or financial risk reporting plans, check the operative orders and the regulator’s instructions. The remand leaves the district court to determine whether Scope 3 can be severed from the rest of SB 253.
Sources: Ninth Circuit opinion, No. 25-5327 · Reuters, November 9