The California Air Resources Board (CARB) recently finalized a narrowly crafted, initial set of implementing regulations (Regulations) for California’s climate‑reporting statutes (i.e., SB 253 greenhouse gas (GHG) emissions reporting) and SB 261 (climate‑related financial risk disclosures).1 As adopted, the Regulations largely mirror the proposal issued in December 2025, without material changes. The Regulations provide a limited set of foundational compliance mechanics, but defer many consequential issues to future rulemaking initiatives, particularly in relation to how Scope 3 GHG emissions are to be reported under SB 253.
What Changed from the December 2025 Proposal?
Very little. CARB adopted the December package, which we analyzed here, essentially as proposed, intentionally keeping the Regulations narrow, focusing on fee structure, reporting timelines and key definitions.
That said, the Regulations include one notable addition: CARB signaled that insurance companies ultimately may qualify for an exemption from compliance with SB 253 (SB 261 already excludes insurers). Specifically, in response to feedback from commenters, CARB acknowledged that insurers already submit emissions‑related information to the California Department of Insurance (CDI) under its climate‑risk survey framework, although those submissions are voluntary and do not cover Scope 3 emissions. CARB indicated it will coordinate with CDI to identify potential reporting gaps and reduce duplicative requirements.
Key Elements of the Finalized Rules
- SB 253 Reporting Deadline. Notwithstanding the ongoing legal challenges, CARB confirmed that the initial reporting deadline of August 10, 2026 for Scope 1 and Scope 2 emissions remains operative for now. Reporting entities are expected to satisfy reporting obligations in reliance on fiscal‑year data aligned with their fiscal‑year end date. CARB reemphasized that it intends to extend enforcement discretion for companies that demonstrate good‑faith efforts during the first reporting cycle. In practice, good faith could include submitting the most complete Scope 1–2 data the company already possesses or is collecting for the prior fiscal year, documenting efforts to work toward full compliance and explaining any remaining gaps along with a plan to close them.
- SB 261 Uncertainty. CARB reiterated that it is not enforcing SB 261 due to an injunction prohibiting enforcement issued by the U.S. Court of Appeals for the 9th Circuit. Prior to that injunction being issued, SB 261 required covered entities to submit climate‑related financial risk reports by January 1, 2026. While reporting is no longer mandatory pending resolution of legal challenges, more than 120 reports already have been posted to CARB’s public docket.
- Revenue Threshold Definition. CARB confirmed that “revenue” for both statutes is defined by reference to the definition of “gross receipts” as set forth in California Revenue and Taxation Code § 25120(f)(2).
- Fee Structure. CARB approved a flat‑rate fee structure to fund both programs and ensure ongoing administration of SB 253 and SB 261.
- Future Rulemakings. Market watchers anticipate a more expansive rulemaking to follow later in 2026 to address Scope 3 greenhouse gas emissions reporting under SB 253, assurance requirements and compliance timelines for future years. CARB noted that it does not plan additional rulemaking to interpret SB 261’s substantive requirements, stating that, as enacted, the statute’s requirements are self‑executing.
Litigation Update
Litigation challenging SB 253 and SB 261 remains pending before the U.S. Court of Appeals for the 9th Circuit. The court heard oral argument on January 9, 2026 on petitioners’ motion for an injunction pending appeal. The court has not yet issued a decision on that application. During argument, the three-judge panel focused heavily on SB 253’s Scope 3 emissions‑reporting mandate and SB 261’s narrative climate‑risk disclosures. You can read our analysis here and here.
We will continue to monitor and provide updates regarding developments to California’s climate reporting statutes and legal challenges thereto. Please contact a member of our team with questions about reporting and compliance obligations.
1 SB 253 is codified at Cal. Health & Safety Code § 38532. SB 261 is codified at Cal. Health & Safety Code § 38533.
