In September 2023, the California Legislature passed its climate accountability package, including Senate Bill 253 (Climate Corporate Data Accountability Act) and Senate Bill 261 (Climate Financial Risks Act). These new laws imposed significant climate-related reporting and disclosure requirements on thousands of public and private companies doing business in California. We previously summarized the main provisions of these laws after their adoption in late 2023 in our briefing here.

One year later, on September 27, 2024, California Governor Gavin Newsom signed Senate Bill 219 into law, amending SB 253 and SB 261. Below we examine how these amendments will affect businesses subject to the requirements of California climate reporting.

Amendments to SB 253

SB 253 (Cal. Health & Saf. Code § 38532) establishes the most stringent corporate emissions disclosure requirements in the United States. Under the law, all companies (public and private) with more than $1 billion in annual revenue (not limited to state revenue) that “do business” in California must prepare an annual declaration of their GHG emissions from all their activities (whether activities or activities). occur in California or not). The California Air Resources Board (“CARB”) is responsible for adopting regulations implementing the requirements of SB 253, including establishing a specific deadline for required disclosures.

SB 219 amends SB 253 as follows:

1. Extends the date by which CARB is required to adopt implementing regulations by six months: from January 1, 2025 until July 1, 2025. There is no material change in the schedule regarding reporting of Scope 1 and Scope 2 emissions which will begin for covered entities in 2026 on or on a date determined by CARB. Implementing regulations will likely address the specific deadline for filing Scope 1 and Scope 2 emissions reports.

2. Scope 3 emissions information is required beginning in 2027 in accordance with a specific CARB schedule, rather than being due no later than 180 days after an entity’s scope 1 and 2 emissions are disclosed.

3. Explicitly authorizes consolidation of required information reporting at the parent company level (similar to SB 261).

4. Separates the payment of the annual contribution from the annual filing of the declaration.

5. Authorizes, rather than requires, CARB to contract with an emissions reporting organization to develop a reporting program to receive and make public certain required information.

Critically, CARB has expressed concerns about meeting the July 1, 2025 deadline to finalize its implementing regulations. CARB officials indicated that a two-year extension is more realistic to complete the regulatory process because of the public comment deadlines provided in the State Administrative Procedure Act, under which regulations are adopted, coordination with the Office of Administrative Law and statutory requirements. Bagley-Keene Open Meeting Act, to which CARB is subject (see August 31, 2024 Senate analyzes for SB 219).

Governor Newsom, in fact, proposed legislation in late June 2024 – through a budget bill – that would have delayed CARB’s rulemaking deadline to implement SB 253 by two years ( until January 1, 2027). However, the Legislature failed to vote on the governor’s proposal before the end of the 2024 legislative session. This demonstrates the legislature’s resistance to extending the CARB rulemaking deadline beyond the six months granted in SB 219.

Nevertheless, CARB has indicated that it is able to hire staff in fall/winter 2024 to implement SB 219 and plans to begin informal workshops with stakeholders, to develop the required regulations, early to mid-2025 (see Senate analyzes from August 31, 2024). for BS 219).

The regulatory process is essential to the law because SB 253 is not self-enforcing: CARB must adopt rules before the reporting requirements under SB 253 are triggered. And there is no certainty about the precise deadline for reporting required climate emissions information, except that it will be around 2026 for Scopes 1 and 2, as determined by CARB.

Nonetheless, knowing that the initial reporting deadline could be set by CARB as early as January 2026, businesses should begin planning how to comply with the requirements of SB 253 if they are a covered entity. Regulated entities should also evaluate whether the issues raised by SB 253 (e.g., what constitutes “doing business” in California) warrant comment during the CARB rulemaking process.

Amendments to SB 261

SB 261 (Cal. Health & Saf. Code § 38533) requires that covered entities – which include public and private businesses with more than $500 million in annual revenue (not limited to state revenue) that “do “business” in California (except insurance companies) – to publicly disclose climate-related financial risks and steps taken to reduce and adapt to risks on its website. Further details are discussed here.

SB 219’s changes to SB 261 are minimal and do not affect the original timing. The first reports submitted to SB 261 must be due “no later than January 1, 2026, and every two years thereafter.” SB 219 does not change this date and it seems unlikely that there will be a future change to the deadline.

Minor changes to SB 261, through the adoption of SB 219, include:

1. Allow, rather than require, CARB to contract with a climate reporting organization to compile and summarize information reported by regulated entities.

2. Decoupling of the payment of the annual contribution from the annual filing of the report.