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California Solicits Input On—and Issues Enforcement Update For—Future Climate Reporting

December 18, 2024 | Posted by Elizabeth A. Ising; Cynthia M. Mabry; Aaron K. Briggs Topic(s): Disclosure; Environmental/Climate Change; ESG

Request for Comments. On December 16, 2024, the California Air Resources Board (“CARB”) issued a request for public feedback and information regarding certain implementing regulations for Senate Bill (“SB”) 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act). As a reminder, SB 253 requires U.S. companies doing business in California with annual revenues over $1 billion to begin reporting Scope 1 and 2 greenhouse gas (“GHG”) emissions in 2026 and Scope 3 GHG emissions in 2027. SB 261 requires U.S. companies doing business in California with annual revenues over $500 million to biennially report on climate-related risks and their steps to mitigate such risks, with the first report due on or before January 1, 2026. Both SB 253 and SB 261 make CARB responsible for the laws’ enforcement and for adopting certain implementing regulations.

CARB seeks feedback regarding several topics, including:

  • general applicability, such as identifying in-scope companies;
  • relevant reporting standards or protocols, such as duplicative disclosure and alignment with evolving standards;
  • data reporting, such as compliance costs and whether CARB should contract out certain of its responsibilities to a third party;
  • SB 253-specific matters, such as identification of assurance providers and standards and common emissions reporting software or practices; and
  • SB 261-specific matters, such as reporting timelines and identifying trends in current climate-related risk reporting.

Comments must be submitted here by February 14, 2025.

Enforcement Notice for SB 253. The request for comments comes less than two weeks after CARB’s recent enforcement notice (the “Notice”), issued December 5. As described in our recent alert, the California Legislature adopted amendments this fall that delayed CARB’s SB 253 rulemaking deadline from January 1, 2025 to July 1, 2025, without a corresponding delay to companies’ reporting obligations.

In the Notice, CARB acknowledged that the 2026 timing for compliance could present challenges for in-scope companies that do not already collect Scope 1 and 2 GHG emissions data. CARB indicated that for the initial emissions submission in 2026, companies can provide Scope 1 and 2 GHG data based on the information they already possess or are collecting as of December 5, 2024 (the date of the Notice). CARB stated it will not take enforcement action against companies for otherwise incomplete reporting in the first year so long as companies show a good faith effort to comply. The Notice goes on to state that additional information will be provided for subsequent reporting years, and that CARB encouraged entities “to move toward full compliance as quickly as possible.”

Legislators Respond to Enforcement Notice. Two authors of SB 253, Senators Scott Weiner (D) and Henry Stern (D), responded to the Notice in a letter expressing  concern about the development. In particular, the Senators called it “unacceptable” for CARB to seemingly require less than full compliance with SB 253 and described their frustration that CARB had not made further progress on implementing the legislation despite an extension to the regulatory deadline and an $8.4 million appropriation. The letter indicated that the Senators would be  monitoring CARB’s progress related to hiring staff and promulgating regulations and could subject CARB leadership to scrutiny at Legislature for Oversight hearings to be held next year.

Potentially in response to the letter, CARB’s request for comments stated that it has begun the process of hiring staff.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any leader or member of the firm’s Environmental, Social and Governance practice group.

We would like to thank Lauren Assaf-Holmes in our Orange County office for her work on this post

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