California Court Narrows Chamber of Commerce Challenge to Climate Disclosure Laws

Mintz reports that Judge Otis D. Wright II of the US District Court for the Central District of California significantly narrowed the US Chamber of Commerce’s lawsuit, Chamber of Commerce of the United States of America v. California Air Resources Board, challenging California’s climate disclosure laws.

The laws in question require large companies to disclose greenhouse gas emissions and climate-related financial risks. The Chamber of Commerce argued that the laws violated the Supremacy Clause and improperly applied extraterritorially.

The court rejected those claims, dismissing key challenges while allowing limited claims to proceed, particularly concerning the First Amendment. The ruling weakens legal arguments often used to oppose state-led climate disclosure regulations, potentially influencing similar legislative efforts nationwide.

The lawsuit stemmed from California’s passage of two climate disclosure laws: SB 253, mandating disclosure of Scope 1, 2, and 3 greenhouse gas emissions for companies with over $1 billion in revenue, and SB 261, requiring disclosure of climate-related financial risks for companies with over $500 million in revenue.

The Chamber of Commerce challenged those laws on multiple grounds, arguing that they violated federal law by imposing undue regulatory burdens beyond state borders and constituted a “de facto regulatory scheme.” The lawsuit also raised First Amendment concerns, alleging that the disclosure requirements amounted to compelled speech.

The court dismissed the Chamber’s Supremacy Clause and extraterritoriality claims, stating that the Chamber failed to plausibly allege a significant burden on interstate commerce.

The ruling also rejected the argument that the laws effectively regulated emissions through third-party pressure. However, the court did not dismiss the First Amendment challenge, allowing the lawsuit to proceed on those grounds. Claims against SB 253 were dismissed as not yet ripe for adjudication, meaning they could be reconsidered later.

The ruling reinforces the legitimacy of state-level disclosure mandates, but attorneys should be aware that First Amendment challenges remain an avenue for contesting such laws.

The decision also suggests that other states may follow California’s lead, making climate disclosure a growing legal and compliance concern for corporations operating across multiple jurisdictions.