Ninth Circuit Stays Enforcement of California Climate Disclosure Law SB 261 Pending Appeal

On November 18, 2025, the U.S. Court of Appeals for the Ninth Circuit issued an order enjoining enforcement of California Senate Bill 261 (“SB 261”) pending an appeal filed by the U.S. Chamber of Commerce and other business groups (“Plaintiffs”).[1] SB 261, the “Greenhouse gases: climate-related financial risk” law, requires covered entities to prepare a biennial climate-related financial risk report.[2] The appeal relates to securing a longer injunction pending the outcome of ongoing First Amendment litigation[3] challenging SB 261 and related California Senate Bill 253 (“SB 253”), the Climate Corporate Data Accountability Act, requiring reporting entities to report Scope 1, 2, and 3 greenhouse gas emissions later in 2026 and after.[4]

The practical implication of this decision is a near term pause for enforcement of implementation of SB 261, which likely pushes out the January 1, 2026, reporting deadline until January 9, 2026, when oral arguments on the appeal for the longer injunction are scheduled. Accordingly, any longer-term impacts of the Ninth Circuit injunction are still very much uncertain. Because the original January 1, 2026, deadline is mandated by statute, if requests for the longer injunction are denied at oral arguments on January 9 (or sooner), SB 261 will be immediately enforceable, and SB 261 reports will be immediately due for covered entities.As such, the current injunction order effectively only provides a potential implementation extension from January 1 to January 9, 2026, for SB 261. To the extent SB 261 reports are required in January, it is expected that there will be a significant amount of enforcement discretion by the California Air Resources Board (“CARB”) and “good faith” efforts to comply will likely be sufficient.

Key Takeaways

• Enforcement of SB 261 implementation is stayed pending the Ninth Circuit’s decision on a longer injunction
• The Ninth Circuit set oral arguments for January 9, 2026
• The Ninth Circuit schedule indicates that it may make a decision before, or at the time of oral arguments, although a decision may also not be made until sometime after the oral arguments
• Stay tuned for the Ninth Circuit’s decision as implementation of SB 261 may be effective immediately upon entry of that decision
• The Ninth Circuit denied the injunction for SB 253, and at this time, the 2026 reporting deadline is anticipated to be August 10, 2026, according to recent guidance from CARB

Background

SB 261 requires U.S. entities doing business in California with total annual revenues of at least $500 million to prepare and publish a report detailing its “climate-related financial risk” every two years, with the first report due January 1, 2026.[5] CARB has been issuing guidance and hosting workshops (most recently on the morning of the Ninth Circuit’s order) to prepare covered entities for the upcoming SB 261 deadline. 

In January 2024, Plaintiffs filed a complaint in the U.S. District Court for the Central District of California, arguing that the policies in SB 253 and 261 violate the First Amendment, the Supremacy Clause, and limitations on extraterritorial regulation, including the “Dormant Commerce Clause.”  The Supremacy and Commerce clause claims were dismissed, leaving the First Amendment claim to move forward in litigation. The First Amendment claim asserts that the two laws “compel companies to publicly express a speculative, noncommercial, controversial, and politically-charged message that they otherwise would not express.”[6] The U.S. District Court for the Central District of California had previously rejected the Plaintiffs’ preliminary injunction request for both SB 261 and SB 253 in August 2025[7] and again in September 2025.[8] The Plaintiffs appealed the August injunction decision to the Ninth Circuit, which resulted in the November 18th injunction and the scheduling of oral arguments on January 9, 2026.[9] Plaintiffs had also sought emergency relief from the U.S. Supreme Court; however, Plaintiffs withdrew their request once the Ninth Circuit granted the injunction for SB 261.[10]

In its motion with the Ninth Circuit, Plaintiffs asked the court to enjoin enforcement of SB 261 and 253 pending appeal because its “members will be forced to speak on or before January 1, 2026” and “[t]hat compelled speech cannot be undone.”[11]

Ninth Circuit’s Order and Next Steps

The Ninth Circuit’s two-sentence order did not explain the court’s rationale, only stating that the injunction was granted as to SB 261 and denied as to SB 253. The case is set for oral argument on January 9, 2026. With the injunction in place, CARB cannot enforce SB 261 while the appeal moves forward.

Regarding SB 253, the enforcement of which is not enjoined, CARB has recently stated that it will be proposing an August 10, 2026, initial reporting deadline.

If you have questions about SB 261, SB 253, or the Ninth Circuit’s recent order, contact the authors of this article or your Foley & Lardner attorney.