Posted on Tuesday, November 25, 2025
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by Sarah Katherine Sisk
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4 Comments
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Opponents of a pair of radical California “green” mandates were handed a mixed bag in court last week as the Ninth Circuit Court of Appeals temporarily paused implementation of one state law but allowed another to remain in place for now. The brewing court battle could have serious implications for businesses nationwide – and the entire U.S. economy.
The first law in question, SB 261, titled “the Climate-Related Financial Risk Act,” requires companies operating in California with more than $500 million in annual revenue to publish a report outlining their “climate-related financial risks.” Critics argue that SB 261 effectively compels speech that many businesses may not agree with or may find politically loaded by coercing companies to publicly acknowledge that climate change exists in the first place, and to affirm that their actions may contribute to it. Additionally, SB 261 will impose enormous compliance costs, which will be passed on to consumers.
The law, which Governor Gavin Newsom signed in 2023, was set to go into effect on January 1, 2026. But the Ninth Circuit has nullified that deadline, temporarily staying the law.
The U.S. Chamber of Commerce initiated the lawsuit to challenge SB 261, joined by several business and industry groups. Along with appealing to the Ninth Circuit, the aligned organizations also asked the Supreme Court to weigh in.
Iowa Attorney General Brenna Bird led an amicus brief to the Supreme Court on behalf of 25 Republican state attorneys general, explaining in a news release that SB 261 would “impose nightmarish compliance costs and liability that will cripple companies across the country.” The brief further describes the mandates as “speculative, viewpoint-laden climate disclosures” that go beyond the factual information the government ordinarily requires from companies.
Following the Ninth Circuit ruling, Alliance for Consumers Executive Director O.H. Skinner told AMAC Newsline that he was “thrilled to see California’s attempt to export its disastrous energy policies rebuked by the courts just as voters have repeatedly rejected these green mandates at the ballot box.”
“We applaud the attorneys general for standing up for everyday consumers by fighting Newsom’s tyrannical ‘green’ policies that raise costs and reduce choices at the store,” Skinner added. “Climate disclosure mandates are a boon for Democrat-allied trial lawyers who reap the rewards of woke lawfare, while everyday consumers pay the price. Coastal elites like Gavin Newsom should focus on unwinding the cost-of-living crisis created by their own policies instead of imposing progressive lifestyle choices on the entire nation.”
However, while conservatives can celebrate that SB 261 has been paused – for now – the Ninth Circuit declined to temporarily block another radical California law, SB 253, which is set to take effect next August. The U.S. Chamber of Commerce and aligned groups had asked the Ninth Circuit and the Supreme Court to pause both SB 261 and SB 253.
SB 253, titled “the Climate Corporate Data Accountability Act,” requires disclosures from companies with more than $1 billion in annual revenue about their greenhouse gas emissions. In their amicus brief to the Supreme Court, the Republican attorneys general warn of irreparable economic harm stemming from SB 253, writing that the law will impose “unrecoverable economic burdens, distorted markets, and chilled investment in key industries” by forcing thousands of out-of-state companies to spend millions on reporting emissions and risks “that extend far beyond California’s borders.”
As the attorneys general allude to, the reporting thresholds for both laws appear to apply to revenue that companies earn nationwide, not just in California. Even a company headquartered in another state that brings in only a small portion of its revenue from California would be forced to comply if its national or global revenue exceeded $500 million for SB 261 or $1 billion for SB 253. According to The Washington Post, SB 261 would force compliance from more than 4,100 businesses, while SB 253 would require disclosures from about 2,600 businesses.
This is one of the most powerful arguments that opponents of SB 261 and SB 253 have on their side; specifically, that the laws inflict “sovereign harm” by allowing California to act as a national climate regulator and override other states’ policy choices. As Bird put it, “California has no right to tell Iowa or any other state what to do.”
While the ongoing court battle has raged on largely under the radar, it could gain increased national significance in the months ahead as the battle for the White House in 2028 comes into focus. Newsom has been floated as a top contender for the Democrat nomination, and his actions as governor will be scrutinized as a preview of what voters could expect from him as president.
Ultimately, the fate of both laws will likely be decided at the Supreme Court. But this is one court battle that is worth paying attention to as Democrats, after being rejected at the ballot box last year, attempt to backdoor their radical climate agenda through blue-state mandates with nationwide implications.
Sarah Katherine Sisk is a proud Hillsdale College alumna and a master’s student in economics at George Mason University. You can follow her on X @SKSisk76.
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