California Climate Disclosure Laws — CARB Finalizes Its Initial Rulemaking, Resets the 2026 Deadline, and Previews the 2027 Framework

California’s climate disclosure regime continues to evolve rapidly, with significant regulatory developments, implementation guidance, and litigation affecting the compliance landscape for companies doing business in California. There have been several important developments regarding implementation of California’s landmark climate-disclosure statutes—SB 253 (the “Climate Corporate Data Accountability Act”) and SB 261 (the “Climate-Related Financial Risk Act”), together the “Climate Accountability Package.”

Mayer Brown has been closely following these developments through a series of Legal Updates. This Legal Update summarizes the latest developments, including the California Air Resources Board’s (“CARB”) revised rulemaking, the extended 2026 reporting timeline, the evolving framework for 2027 and beyond, and recent litigation and enforcement developments.

At a Glance

Since our Legal Update in October, California Climate Disclosure Laws – Countdown to Disclosure: What Companies Need To Know About Reporting Deadlines, CARB Guidance and Ongoing Litigation (“October 2025 Update”), the regulatory landscape has changed in several significant ways:

• CARB approved and then withdrew its Initial Regulations. CARB approved initial implementing regulations on February 26, 2026 (the “Initial Rulemaking”) and submitted the Initial Rulemaking to the California Office of Administrative Law (the “OAL”). CARB subsequently withdrew the Initial Rulemaking.
• 15-day comment period for Modified Regulations. On July 27, 2026, CARB released proposed modifications to the Initial Rulemaking and opened a 15-day period for public comment (the “Modified Regulations”). Comments on the Modified Regulations are due August 11, 2026.
• First SB 253 deadline was further delayed from August 10 to November 10, 2026. CARB’s proposed Modified Regulations formalize a three-month deferral of the initial Scope 1 and Scope 2 reporting deadline to November 10 to provide additional time for covered entities to prepare.
• No Scope 3 in 2026. CARB announced that Scope 3 reporting is expressly not required for the 2026 reporting year; a limited, five-category Scope 3 approach is proposed to begin in the 2027 cycle.
• SB 261 enforcement paused. On November 18, 2025, the Ninth Circuit granted a preliminary injunction pending appeal with respect to SB 261 only. As a result of the preliminary injunction, CARB confirmed it would not enforce the statutory January 1, 2026 deadline and will set an alternate date after the appeal resolves. SB 253 is unaffected by the preliminary injunction and remains in effect.
• Sector-Specific Listening Sessions Announced: On July 29, 2026, CARB announced it will hold six sector-specific virtual listening sessions to hear sector-specific concerns and challenges related to SB 253 compliance from reporting entities, stakeholders and interested parties. The first of those sessions, which was targeted to data users and public interest stakeholders, was held on August 5, 2026.
• The 2027 framework is taking shape. CARB used a July 21, 2026 public workshop (the “July 2026 Workshop”) to preview a much broader regulatory framework for 2027 and beyond (the “Subsequent Rulemaking”). CARB previewed limited third-party assurance for Scope 1 and Scope 2, the end of the proposed insurance-company exemption for SB 253, and refined applicability and revenue definitions—all still in pre-proposal form.

We summarize these developments and their practical implications below.

Recap: The Climate Accountability Package

As a reminder, SB 253 and SB 261—each amended by SB 219 (2024)—impose the following core obligations on US companies (public and private) “doing business” in California, measured by total global (not California-only) annual revenue:

• SB 253 applies to companies with annual revenue over $1 billion and requires annual disclosure of Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions beginning in 2026, and Scope 3 GHG emissions beginning in 2027.
• SB 261 applies to companies with annual revenue over $500 million and requires biennial disclosure of climate-related financial risks and the measures taken to mitigate and adapt to them. Regulated insurance companies are expressly exempt from SB 261.

Our October 2025 Update covered CARB’s early guidance—the FAQs Guide, the SB 261 compliance checklist, the preliminary list of potentially covered entities, and the draft Scope 1/Scope 2 reporting template—along with the state of the litigation as of that date. This update carries the story forward.

CARB’s Initial Rulemaking: Adoption, Withdrawal, and Proposed 15-Day Changes

Adoption and OAL Submission

CARB published its proposed Initial Rulemaking—proposed sections 96070–96077 of Title 17 of the California Code of Regulations—on December 23, 2025, and opened the required 45-day comment period, which commenced from December 26, 2025 when the Initial Rulemaking was published by the OAL. The proposed Initial Rulemaking established a fee program, a first-year SB 253 reporting deadline, proposed entity exceptions, and the key definitions used to determine whether an entity is subject to Health and Safety Code sections 38532 (SB 253) and 38533 (SB 261). At its February 26, 2026 hearing, the Board approved the Initial Rulemaking for adoption and directed staff to make any appropriate conforming modifications available for further public comment. CARB submitted the Initial Rulemaking package to OAL on May 20, 2026.

Withdrawal and the Reset of the 2026 Deadline

On June 24, 2026, CARB withdrew the Initial Rulemaking package from the OAL to make limited clarifying changes. The most consequential of these—confirmed in the Modified Regulations—is a three-month deferral of the first SB 253 reporting deadline for Scope 1 and Scope 2 emissions, from August 10, 2026 to November 10, 2026. The deferral gives reporting entities additional lead time following formal adoption of the rules and it aligns the fee-determination and payment schedule with the revised reporting date.

The Modified Regulations (Released July 27, 2026)

CARB released its Modified Regulations for public comment for a period of 15 days after their release. Written comments are due August 11, 2026, and CARB will consider only comments directed at these modifications before finalizing the package and returning it to the OAL. The principal changes of interest to covered entities are:

• Reporting deadline. The initial Scope 1 and Scope 2 reporting deadline moves to November 10, 2026, and the deadline for CARB to issue a written fee-determination notice moves from September 10 to December 10, 2026.
• Scope 3 deferred for 2026. Consistent with the language of SB 253, reports due in 2026 need only satisfy the Scope 1 and Scope 2 requirements of Health and Safety Code section 38532; Scope 3 reporting is not required for the 2026 reporting year.
• Wholesale-electricity carve-out. Entities whose only California activity consists of wholesale electricity transactions occurring in interstate commerce are excluded from applicability and from the California-sales analysis, consistent with the stated legislative intent of Senators Wiener and Stern.
• Parent-level consolidation. Both reports and fee payments may be consolidated at the parent-company level for a qualifying subsidiary that is itself a reporting or covered entity.
• “Doing business” clarified. The definition for purposes of the Climate Accountability Package’s provisions, ties to Revenue and Taxation Code (RTC) section 23101(b), with “taxpayer” read as “business entity,” and with the analysis performed at the individual-entity level. This confirms that, for purposes of the Climate Accountability Package, a parent would not also be deemed to be included merely because a subsidiary is covered.
• Revenue clarified. Intercompany transactions between entities of the same combined reporting group are excluded when determining revenue, consistent with California combined-reporting principles, and revenue is likewise evaluated at the individual-entity level.
• Subsidiary definition. “Subsidiary” now references the direct corporate-association control indicia in California Code of Regulations section 95833 (excluding the indirect-association and shared-contractor subsections), resolving stakeholder confusion without changing which entities may file a consolidated report.
• Erroneous penalty cross-reference removed. The cross-reference to Health and Safety Code section 38580 is struck because the enabling statutes provide that section 38580 does not apply to violations of sections 38532 and 38533.
• First-year enforcement. The modifications describe how CARB will approach enforcement for the 2026 reporting year, consistent with its December 5, 2024 Enforcement Notice—reinforcing a good-faith, best-available-data posture for the first Scope 1 and Scope 2 reports.

Because these are proposed modifications, the November 10, 2026 deadline remains contingent on the outcome of the comment period and OAL’s subsequent approval.

The Fee Program

Each reporting entity and covered entity is required to pay an annual fee, first assessed for calendar year 2026 and each calendar year thereafter. Under the Modified Regulations, CARB will issue a written fee-determination notice (now by December 10, 2026), with payment due within 60 calendar days of the fee-determination-notice date. Consistent with the reporting-consolidation approach, fee payments may be consolidated at the parent-company level for qualifying subsidiaries. Entities should confirm their fee exposure and payment logistics alongside their reporting preparations.

The July 2026 Workshop and the Subsequent Rulemaking (2027 and Beyond)

On July 21, 2026, CARB held its fifth public workshop on the climate-disclosure program—its second pre-proposal session for the “Subsequent Rulemaking” that will govern SB 253 reporting beginning in 2027. CARB expects to release a draft of the Subsequent Rulemaking later in 2026, followed by a 45-day comment period and formal Board consideration. CARB also announced a series of sector-specific listening sessions in August and September 2026 to gather feedback. Nothing previewed at the workshop has been adopted; the concepts below remain subject to change through the formal rulemaking process.

A Limited, Five-Category Scope 3 Phase-In

Responding to stakeholder concerns about cost, data availability, and methodology, CARB proposes that mandatory Scope 3 reporting beginning in the 2027 cycle be limited to five of the fifteen GHG Protocol Scope 3 categories: Category 1 (Purchased Goods and Services), Category 3 (Fuel- and Energy-Related Activities), Category 5 (Waste Generated in Operations), Category 6 (Business Travel), and Category 7 (Employee Commuting). The remaining ten categories would be voluntary for now, with no committed timeline for making them mandatory.

A Fiscal-Year-Based Reporting Reference Date

CARB proposed tying the data year to the entity’s fiscal year to ensure at least six months between fiscal year-end and the reporting deadline. Under the proposal, an entity whose fiscal year ends between January 1 and February 1, 2026 would report data for the fiscal year ending in 2026, while an entity whose fiscal year ends after February 1 would report data for the fiscal year ending in 2025. CARB indicated this approach could become permanent and extend to Scope 3 once mandatory.

Limited Assurance for Scope 1 and Scope 2

Consistent with prior guidance, CARB confirmed that no third-party assurance is required for the 2026 reporting year. Beginning in 2027, reporting entities would be required to obtain limited assurance over Scope 1 and Scope 2 emissions from qualified independent providers, escalating to reasonable assurance by 2030. CARB proposed recognizing several assurance standards—including ISAE 3000 (Revised) and ISAE 3410 for engagements commencing before December 15, 2026; ISSA 5000 for engagements commencing on or after that date; ISO 14064-3:2019 (with accreditation requirements); AICPA standards; and AA1000AS v3. CARB acknowledged that its assurance approach, including engagement scope and the ISO accreditation caveat, is not final.

Insurance Companies Brought Into Scope for 2027

Although the Initial Rulemaking exempted insurance companies from 2026 GHG reporting to avoid duplication with California Department of Insurance (CDI) reporting, CARB indicated at the workshop that CDI reporting, which does not include Scope 3 or assurance, may not satisfy SB 253. CARB therefore proposed that, beginning in 2027, insurance entities can satisfy the SB 253 requirements either through a single report satisfying both CDI and SB 253 or by supplementing their CDI report.

Alignment With Global Frameworks

CARB reiterated that its approach is intended to align closely with the GHG Protocol while maximizing interoperability with other frameworks, including IFRS S2 and the EU Corporate Sustainability Reporting Directive (CSRD). Companies already reporting under those regimes may be able to leverage existing systems, methodologies, and governance. CARB signaled it will likely require inventories prepared under the GHG Protocol’s Corporate Accounting and Reporting Standard, Scope 2 Guidance, and Scope 3 Standard, with California-specific clarifications.

Listening Sessions

CARB announced it will hold six virtual listening sessions to hear and gather sector-specific concerns and challenges related to SB 253 from reporting entities, stakeholders and interested parties. At the listening sessions, CARB will present an overview of the proposed regulations and then take public comments.

The first session, targeted towards data users and public interest stakeholders, was held on August 5, 2026.

The remaining sessions are: 

Manufacturing, Industrial, Fuel & Life Sciences

Date: Wednesday, August 12, 2026
Time: 10 a.m. – 12 p.m. PT
Who: Companies engaged in oil and gas, refining, chemicals, metals, construction materials, mineral processing, automotive, aerospace, pharmaceuticals, biotechnology, and medical devices.
Register Here: Webinar Registration - Zoom

Agriculture, Food, Beverage & Forestry

Date: Wednesday, August 19, 2026
Time: 10 a.m. – 12 p.m. PT
Who: Companies involved in farming, livestock, forestry, food processing, beverages, agricultural products, tobacco, and related processing with significant land sector emissions.
Register Here: Webinar Registration - Zoom

Energy, Utilities, Transportation, Logistics & Waste Management

Date: Wednesday, August 26, 2026
Time: 10 a.m. – 12 p.m. PT
Who: Companies involved in generating electricity, renewable energy, water and gas utilities, transportation, freight, airlines, rail, shipping, and waste management.
Register Here: Webinar Registration - Zoom

Retail, Consumer Goods, Technology & Commercial Services

Date: Wednesday, September 2, 2026
Time: 10 a.m. – 12 p.m. PT
Who: Companies engaged in retail, apparel, wholesale, e-commerce, software, semiconductors, telecommunications, media, entertainment and gaming, real estate, hospitality, construction services, and professional services.
Register Here: Webinar Registration - Zoom

Banking, Finance & Insurance

Date: Wednesday, September 9, 2026
Time: 10 a.m. – 12 p.m. PT
Who: Companies involved in banking, insurance, asset management, investment, fintech, credit union services, asset management and private equity, capital markets, non-bank financial institutions, and other investors.
Register Here: Webinar Registration - Zoom

Litigation Developments

Our October 2025 Update left the Chamber of Commerce v. Sanchez litigation with a motion for injunction pending appeal still pending in the Ninth Circuit. Two developments since then are material.

Ninth Circuit Enjoins SB 261 (but Not SB 253)

On November 18, 2025, the Ninth Circuit granted an injunction pending appeal halting enforcement of SB 261, while declining to enjoin SB 253. The Court heard oral argument on January 9, 2026 in the Chamber of Commerce appeal, and a merits decision is awaited. As a result, CARB has confirmed it would not enforce SB 261’s statutory January 1, 2026 deadline and will announce an alternate date after the appeal resolves. Importantly, the injunction pauses—but does not invalidate—SB 261; if lifted, compliance obligations could resume quickly. Recall that the district court had earlier dismissed the plaintiffs’ Supremacy Clause/preemption and Dormant Commerce Clause theories, leaving the First Amendment compelled-speech claim as the live issue on appeal.

Separate Challenge

On October 24, 2025, a separate First Amendment challenge to both laws was launched in the U.S. District Court for the Eastern District of California (Exxon Mobil Corp. v. Sanchez). The suit adds a claim not raised in the Chamber of Commerce litigation—that SB 261 is preempted by the federal National Securities Markets Improvement Act (NSMIA), which already governs issuer disclosures. That case is effectively on hold pending the Ninth Circuit’s resolution of the Chamber of Commerce appeal.

The bottom line remains that SB 253 is in effect and companies should continue preparing for the November 10, 2026 deadline, while SB 261 obligations are paused but should be tracked on a separate footing given how quickly they could resume.

Practical Takeaways

The three-month deferral is best understood as time to improve data quality and documentation, not a reprieve from compliance. Potentially covered entities should consider the following near-term steps:

• Confirm applicability under the clarified definitions. Rerun the “doing business” and revenue analyses at the individual-entity level, accounting for the RTC section 23101(b) tie-in, the intercompany-transaction exclusion, and the wholesale-electricity carve-out. Determine whether reporting and fees will be consolidated at the parent level.
• Build a defensible Scope 1 and Scope 2 inventory. Prioritize traceable, entity-specific data and align methodologies with the GHG Protocol. Use the additional time to close data gaps ahead of the currently proposed November 10 deadline.
• Document good-faith efforts. Record data sources, assumptions, gaps, and remediation plans; this is what CARB’s first-year enforcement posture is designed to reward.
• Prepare for the fee program. Confirm fee exposure and the December 10 notice/60-calendar-day payment cycle and plan any parent-level consolidation.
• Look ahead to 2027. Begin scoping the five Scope 3 categories, engage assurance providers early, and—if you are an insurer—assess whether your CDI reporting will need to be supplemented to satisfy SB 253.
• Track SB 261 separately. Maintain a “ready” posture. Consider preparing (or voluntarily filing) a TCFD- or IFRS S2-aligned report so obligations can be met promptly if the injunction is lifted.
• Use the comment window. Evaluate whether to submit comments on the 15-day modifications before the August 11, 2026 deadline, and monitor CARB’s August–September listening sessions on the Subsequent Rulemaking.
• Attend a CARB listening session. As noted above, CARB is hosting several sector-related SB 253 listening sessions over the coming weeks. Attend one of these listening sessions related to your sector and be prepared to comment on challenges posed by SB 253 and the Modified Regulations.

As California’s climate disclosure regime continues to evolve through further rulemaking, industry engagement and ongoing litigation, companies should continue to monitor developments closely and use the additional implementation time to refine their compliance strategies. Mayer Brown continues to follow developments related to the Climate Accountability Package, and publish further Legal Updates for US and non-US clients.