CORPORATE GOVERNANCE | 2026-09-15

CARB Extends SB 253 Climate Disclosure Deadline to November 10, 2026 for California-Doing-Business Companies

The California Air Resources Board's June 2026 decision to push back the first Climate Corporate Data Accountability Act reporting deadline gives thousands of large companies three additional months — but the underlying $1 billion revenue threshold, $500,000 penalty exposure, and Ninth Circuit litigation risk remain firmly in place.

The California Air Resources Board has moved the first-year Scope 1 and Scope 2 greenhouse gas reporting deadline under Senate Bill 253 from August 10, 2026 to November 10, 2026, giving in-scope companies additional runway while CARB finalizes its implementing regulation. The extension does not change who must report, how much revenue triggers coverage, or the administrative penalties at stake — it only resets the clock while an expedited rulemaking and parallel First Amendment litigation play o

A New Deadline for California's Landmark Climate Disclosure Law

California's Climate Corporate Data Accountability Act — better known by its bill number, SB 253 — has been the subject of nearly two years of regulatory back-and-forth, and the summer of 2026 brought another significant development. The California Air Resources Board (CARB) announced on June 24, 2026 that it intends to extend the deadline for the first greenhouse gas (GHG) emissions reports required under California's Climate Corporate Data Accountability Act (SB 253) from August 10, 2026, to November 10, 2026. For general counsel, chief sustainability officers, and boards of directors overseeing compliance at companies doing business in California, the extension is welcome — but it is not a reprieve from the underlying obligation.

Why the Extension Matters Now

The three-month shift matters because it lands squarely in the middle of fiscal-year-end reporting cycles for many calendar-year companies, and because it is tied directly to the pace of CARB's own rulemaking. The extension is being implemented through an expedited rulemaking process, which also includes a 15-day public comment period. In practice, that means the November 10 date is not simply an administrative courtesy; it is calibrated to give reporting entities time to comply once CARB's revised regulatory text is formally adopted.

A Pattern of Delay, Not Retreat

This is not the first time the reporting timeline has moved. CARB had already pushed the original mid-2026 target to August 10, 2026 before this latest three-month deferral, and industry counsel have repeatedly cautioned that each delay reflects CARB's effort to finish its rulemaking — not a softening of the statute's substantive requirements. The $1B "doing business in California" threshold and the underlying obligation are intact; only timing and clarifying language are moving. Companies that treat the extension as license to slow-walk emissions data collection risk being caught short when the November deadline — or whatever date OAL ultimately approves — arrives.

What This Article Covers

This article walks through the statutory framework behind SB 253, the mechanics of CARB's June 2026 announcement, the regulatory citations governing implementation, the parallel First Amendment litigation shaping enforcement, who must comply, and the practical steps California-facing companies should be taking now.

The Statutory Foundation: SB 253 and the Climate Corporate Data Accountability Act

SB 253 did not emerge in a vacuum; it built on California's decades-long tradition of using the Air Resources Board as a climate regulator. The bill added Section 38532 to the Health and Safety Code, relating to greenhouse gases, and was approved by the Governor on October 7, 2023. That single statutory section now anchors one of the most consequential corporate climate disclosure mandates in the United States.

The Core Obligation

SB 253 adds a new Section 38532 to the California Health & Safety Code, requiring the California Air Resources Board to develop regulations regarding disclosure by "Reporting Entities" — U.S. companies with annual sales greater than $1 billion (globally) that do business in California — of their annual greenhouse gas emissions. A Reporting Entity must annually disclose its "Scope 1" and "Scope 2" emissions starting in 2026, and its "Scope 3" emissions starting in 2027. Emissions must be measured using an internationally recognized protocol rather than a bespoke California methodology, which has helped multinational companies align California reporting with existing sustainability disclosure practices.

Statutory Text on Penalties

The statute itself, not just CARB guidance, sets the outer boundary of enforcement risk. The state board must adopt regulations authorizing it to seek administrative penalties for nonfiling, late filing, or other failure to meet the requirements of the section, imposed and recovered through administrative hearings, and the administrative penalties imposed on a reporting entity shall not exceed five hundred thousand dollars ($500,000) in a reporting year. Notably, the statute builds in some leniency for the hardest part of the mandate: penalties assessed on Scope 3 reporting, between 2027 and 2030, shall only occur for nonfiling.

Legislative Intent

The Legislature was explicit about why it imposed such a sweeping mandate on companies with no other nexus to California beyond doing business there. Lawmakers found that mandating annual, full-scope GHG emissions data reporting for all United States companies with total annual revenues in excess of $1,000,000,000 that do business in California, and ensuring public access to that data, would inform investors, empower consumers, and activate companies to improve risk management toward a net-zero economy. That legislative purpose is central to the First Amendment litigation discussed later in this article, since California's compelled-speech defense rests heavily on characterizing the disclosures as factual, non-ideological business information rather than a policy statement the state is forcing companies to make.

Inside CARB's June 2026 Announcement and the Expedited Rulemaking Process

CARB's June 24, 2026 announcement was notable both for what it changed and for what it left alone. The agency was careful to frame the extension as a technical accommodation tied to the pace of its own regulatory process, not a substantive retreat from the mandate.

The Mechanics of the Deferral

The three-month deferral was proposed as part of a forthcoming package of limited regulatory changes that CARB intended to release for a 15-day public comment period. Law firms tracking the rulemaking cautioned clients not to treat the new date as final until the process concluded: the proposed deadline still had to clear the 15-day comment period and Office of Administrative Law (OAL) approval before becoming final, so companies were advised to treat it as a working target rather than a settled deadline.

What CARB Actually Filed

CARB followed through on its June announcement with formal action a month later. CARB delayed the initial 2026 Scope 1 and 2 reporting deadline from August 10 to November 10, 2026, and on July 27, 2026, released updated draft regulations and opened a public comment period through August 11, 2026. That short comment window is consistent with an "expedited" or "15-day" rulemaking track under California's Administrative Procedure Act, which allows agencies to move faster than the standard 45-day comment process for limited, clarifying changes.

Substance Was Not the Target

Practitioners were consistent in emphasizing that the deferral was about timing, not substance. The substance of the rule did not change: first-year disclosures in 2026 still address Scope 1 and Scope 2 emissions, with Scope 3 beginning in 2027. CARB separately indicated it would use the same rulemaking vehicle to tidy up open interpretive questions. In its announcement, CARB stated that it would be proposing "limited changes to the [Regulation] to clarify certain requirements." Those clarifications reportedly touch on consolidated parent-company reporting, first-year flexibility, and scope-of-coverage questions that had generated confusion among affected companies. The modifications provide additional time and flexibility within the first program year, allow parent companies to submit consolidated reports, and clarify how companies should assess whether they are covered.

A Companion Preview for 2027

CARB used the same window to signal what comes after the first reporting cycle. On July 21, 2026, CARB previewed proposed SB 253 regulations for the 2027 reporting cycle, including phased-in Scope 3 emissions disclosure and third-party assurance requirements for Scope 1 and 2 emissions. Formal proposed regulations for that later phase are expected in the fall of 2026. Companies should not assume the November 10, 2026 deadline is the last moving target; the 2027 rulemaking track is a separate, ongoing process.

The Regulatory Architecture: Title 17 and CARB's Initial Regulation

Understanding SB 253 compliance requires understanding not just the statute but the regulation CARB has built underneath it, because the regulation — not the bare statutory text — supplies most of the operational detail companies need.

Where the Regulation Lives

The three-month deferral gives reporting entities additional time following the formal adoption of the Proposed California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation (the "Initial Regulation"). This regulation is the one practitioners should track directly on the OAL and CARB rulemaking dockets for the authoritative, current text.

How the Regulation Defines "Doing Business"

One of the most consequential regulatory choices CARB made was how broadly to define the jurisdictional trigger. CARB adopted regulatory definitions aligned with California Revenue & Taxation Code §23101(a), under which an entity is doing business in California if it engages in any transaction in the state for financial or pecuniary gain and either is organized or commercially domiciled in California, or has California sales in excess of $500,000 (inflation-adjusted to $735,019 for 2024 and $757,070 for 2025). Notably, CARB chose not to import every prong of the tax code test. Because it considered the thresholds too low, CARB excluded the property and payroll-based thresholds found in Revenue & Taxation Code §23101(b)(3)-(4) from the definition of "doing business in California," which may narrow the scope of the definition relative to state tax rules.

Recordkeeping and Revenue Determinations

The regulation also fixes how "revenue" is measured for threshold purposes. The Regulations define "revenue" based on the definition of "gross receipts" in Section 25120(f)(2) of the California Revenue and Taxation Code, and the revenue threshold is determined by the lesser of the entity's two previous fiscal years of revenue. Entities are separately required to document their own applicability determination. The Regulations require all in-scope entities to maintain records demonstrating that they meet the "revenue" and "doing business in California" definitions under SB 253 and SB 261.

Litigation Backdrop: Chamber of Commerce v. California Air Resources Board

No discussion of SB 253 compliance timing is complete without accounting for the constitutional litigation running in parallel to the rulemaking, because that litigation is the reason SB 261 has been paused while SB 253 has continued to move forward.

The Underlying Case

The U.S. Chamber of Commerce and co-plaintiffs allege that Senate Bills 253 and 261 violate the First Amendment, the dormant commerce clause, and are precluded by federal law, seeking declaratory and injunctive relief. The Chamber and five co-plaintiffs representing a coalition of business groups filed the lawsuit in January 2024 challenging the California climate laws. The case is pending in the Central District of California and on appeal before the Ninth Circuit.

The District Court's Ruling

The district court has already rejected the plaintiffs' facial First Amendment challenge at the preliminary-injunction stage. On August 13, 2025, the U.S. District Court for the Central District of California denied a motion for preliminary injunction seeking to halt enforcement of SB 253 and SB 261 on First Amendment grounds. With that ruling, both statutes — currently the only enforceable climate disclosure requirements in the U.S. — remained on track for phased compliance beginning in 2026.

The Ninth Circuit's Split Decision

On appeal, the Ninth Circuit drew a sharp distinction between the two statutes. On November 18, 2025, the Ninth Circuit issued an order enjoining enforcement of SB 261, temporarily halting its biennial climate-risk reporting obligation including the first reports that otherwise would have been due January 1, 2026, but the court declined to enjoin SB 253, leaving its greenhouse gas emissions reporting regime on track for initial implementation in 2026. Oral argument on the merits followed shortly after. On January 9, 2026, a three-judge panel for the Ninth Circuit heard oral arguments relating to the Chamber's challenge of both SB 253 and SB 261, without issuing a decision during the hearing.

Why SB 253 Survived and SB 261 Did Not — For Now

The panel's questioning at oral argument offers a clue to the distinction. The panel's questions mainly revolved around the extensive, potentially controversial disclosures required by SB 261, Scope 3 emissions and in-scope entities' potential need to engage third parties for such data, and whether the laws compel "commercial speech" as defined by First Amendment caselaw. SB 261's narrative climate-risk disclosures were viewed as more susceptible to a compelled-speech challenge than SB 253's more quantitative emissions figures, which is likely why the court preserved the status quo for SB 253 while pausing SB 261. Companies should understand that SB 253 remains fully "live" litigation exposure even though it has not been enjoined — a Ninth Circuit ruling striking the statute down, or the Supreme Court intervening, remains a live possibility that could alter compliance obligations even after the November 10, 2026 deadline passes.

Who Must Comply: California Nexus, Revenue Thresholds, and Sector Impact

The population of companies swept into SB 253's reporting mandate is large, diverse, and not limited to California-headquartered businesses.

The Scale of the Mandate

SB 253 spans nearly every major industry sector with a meaningful footprint in the state. SB 253 mandates disclosure of GHG emissions data — Scopes 1, 2 and 3 — by all U.S. business entities, public or private, with total annual revenues in excess of a billion dollars that "do business in California."

Entity-by-Entity, Not Just Enterprise-Wide

A critical and sometimes overlooked feature of the rule is that coverage is assessed at the entity level, not just at the ultimate parent level. A subsidiary that meets the thresholds is in scope even if its parent is not, and vice versa. This matters enormously for companies with complex corporate structures, including those with logistics, distribution, or import/export subsidiaries that route significant volumes of goods through California's ports and warehousing corridors — entities whose California sales activity alone may cross the $500,000 (inflation-adjusted) threshold even if the broader corporate family is not headquartered in the state.

Exemptions Carved Out by CARB

CARB's regulation does narrow the population somewhat. CARB proposed that the disclosure requirements will not apply to federal, state, and local government entities, companies majority-owned by government entities, nonprofit or charitable organizations that are tax-exempt under the Internal Revenue Code, entities whose only business in California is the presence of teleworking employees, and businesses whose sole activity in California consists of wholesale electricity transactions. Insurers received a temporary reprieve as well: insurance companies are exempt from SB 253 reporting in 2026, though CARB staff have proposed bringing insurers into the program beginning in 2027.

California-Specific Business Impact

For California businesses and the many out-of-state companies that rely on California distribution networks, retail footprints, and port-adjacent logistics operations, the practical effect is that "doing business in California" is a low bar once the billion-dollar global revenue threshold is met. Retailers, manufacturers, technology firms, agricultural processors, and freight and logistics operators moving goods through California's commercial corridors should not assume that a modest in-state sales presence puts them outside the rule; the regulatory test is deliberately broad, tracking existing state tax nexus principles rather than requiring a large physical footprint.

Practical Compliance Roadmap for In-Scope Companies

With the deadline reset to November 10, 2026, in-scope companies have a defined — if still shifting — window to build out compliant reporting infrastructure.

Step One: Confirm Applicability

Companies should first determine, on an entity-by-entity basis, whether they meet both the $1 billion global revenue threshold and the California nexus test, using the same Franchise Tax Board filings CARB itself references. Entities should refer to their corporate tax filings to verify gross receipts. Where a parent and subsidiaries file as a unitary business, aggregation rules apply. If a parent company and its subsidiaries file taxes as a unitary business in California, the subsidiaries' revenues are aggregated with the parent's gross receipts to determine applicability.

Step Two: Build Scope 1 and 2 Data Infrastructure Now

Even with the extension, companies should not delay data collection. Industry guidance has consistently urged reporting entities to start preparing scope 1 and 2 emissions now rather than waiting for final rule adoption, given the lead time required to gather activity data, apply emissions factors, and reconcile figures across business units. Companies without existing tracking systems should also begin scoping the third-party assurance engagements that will eventually be required for Scope 1 and 2 data.

Step Three: Monitor the Rulemaking Docket Directly

Because the November 10, 2026 date remains formally proposed pending OAL approval, companies should monitor CARB's rulemaking webpage directly rather than relying solely on secondary guidance. The rulemaking documents are made available on CARB's rulemaking webpage. Legal and compliance teams should calendar the close of the current comment period and any subsequent OAL action, since a further shift — in either direction — remains procedurally possible until final adoption.

Step Four: Document Good-Faith Compliance Efforts

Given CARB's stated first-year enforcement posture, companies should contemporaneously document their compliance timeline, data sources, and any gaps, since that record will be relevant if CARB later evaluates whether a "good faith" effort was made. Companies that were not yet collecting emissions data as of CARB's original Enforcement Notice have a distinct, narrower path, described in the enforcement section below, but should not assume it applies without careful analysis of their own facts.

Penalties, Enforcement Discretion, and Risk Management

The financial exposure built into SB 253 is real, even though CARB has signaled meaningful first-year flexibility.

The Statutory Ceiling

The administrative penalties imposed on a reporting entity shall not exceed five hundred thousand dollars ($500,000) in a reporting year. Penalties are not automatic or fixed at that ceiling; the statute requires CARB to weigh circumstances before assessing any fine. In imposing penalties for a violation of this section, the state board shall consider all relevant circumstances, including the violator's past and present compliance with this section.

Enforcement Discretion for the First Reporting Cycle

CARB has repeatedly signaled it will not aggressively enforce against companies making genuine efforts to comply in the inaugural reporting year. Under CARB's Notice and subsequent guidance, reporting entities may report Scope 1 and 2 GHG emissions data in 2026 based on information they were already collecting or possessed as of December 2024; limited assurance for emissions reporting will not be required; in-scope entities that were not collecting such data as of December 2024 will not be expected to submit data for 2026, but should instead submit a statement on company letterhead; and CARB will not take enforcement action against entities making a good-faith effort to comply.

The Narrow Path for Companies Not Yet Collecting Data

For companies that had not begun collecting emissions data before CARB's original notice, the agency has outlined a specific alternative to filing a report. Entities that were not collecting data or were not planning to collect data at the time the Enforcement Notice was issued are not expected to submit Scope 1 and 2 reporting data in 2026, but should submit a statement on company letterhead to CARB stating that they did not submit a report and indicating that the company was not collecting or planning to collect data at the time the Notice was issued. This is a narrow safe harbor, not a blanket exemption, and companies should document carefully whether they qualify.

Fees Separate From Penalties

Beyond penalty exposure, reporting entities should anticipate an administrative cost of participating in the program itself. CARB confirmed that it will collect a flat fee from regulated entities to cover the annual ongoing cost of implementing SB 253 and SB 261. The exact fee schedule has been subject to continued stakeholder feedback and should be confirmed against CARB's current fee guidance before budgeting.

SB 261's Separate Track: Climate-Related Financial Risk Reporting

Because SB 253 and SB 261 are frequently discussed together, companies sometimes conflate their timelines and enforcement status — a mistake that can create real compliance risk given how differently the two laws are currently being treated.

What SB 261 Requires

SB 261 adds a new Section 38533 to the Health and Safety Code, providing for biennial disclosure, starting in 2026, of climate-related risks to a "Covered Entity," including risks to raw materials and supply chain. SB 261 requires businesses with annual revenue over $500 million that conduct business in California to prepare a report that includes climate-related financial risks faced by the business.

Why SB 261 Is Currently Unenforceable

Unlike SB 253, SB 261 enforcement has been formally paused pending the Ninth Circuit appeal. On December 1, 2025, CARB issued an Enforcement Advisory providing guidance that it will not be enforcing SB 261 pending a decision on the injunction, and will provide further information, including an alternate reporting date, after the appeal is resolved. As of mid-2026, that pause remained in effect. As of June 2026, enforcement of SB 261 remains stayed pursuant to a Ninth Circuit injunction pending an ongoing appeal being considered by the court.

SB 261's Penalty Structure

SB 261 carries a lower — but still material — penalty ceiling than SB 253. The penalty for failure to comply with SB 253's regulations is a fine of up to $500,000 in a reporting year, while SB 261, codified at new Health and Safety Code Section 38533, provides for biennial disclosure starting in 2026 of climate-related risks. Separately, guidance confirms the SB 261-specific cap: the penalty for noncompliance with SB 261 is $50,000 per annum.

Practical Guidance: Don't Let the Pause Create Complacency

Companies subject to SB 261 should treat the current non-enforcement posture as temporary rather than permanent. If the Ninth Circuit lifts the injunction or rules against the Chamber on the merits, CARB has indicated it will announce a new compliance date rather than immediately reinstating the original January 1, 2026 deadline — but companies with $500 million or more in global revenue and a California nexus should keep climate-risk reporting infrastructure warm rather than dismantling it.

Looking Ahead: 2027 Scope 3 Requirements and Governance Takeaways

The November 10, 2026 deadline is best understood as the first of several compliance milestones, not the last, and boards should treat SB 253 as an ongoing governance workstream rather than a one-time filing exercise.

Scope 3 and Assurance on the Horizon

The heavier lift under SB 253 is still ahead. Impacts to 2027 reporting and beyond — including Scope 3 disclosure and assurance requirements — are the subject of separate, ongoing CARB rulemaking, distinct from the initial 2026 reporting mechanics. Limited assurance is required for Scope 1 and 2 emissions until 2030, at which time reasonable assurance is required for Scope 1 and 2, with assurance requirements to be considered for Scope 3 emissions.

Governance Implications for Boards and Audit Committees

Because SB 253 disclosures will be public, audit committees and boards should treat the underlying emissions data with the same rigor applied to financial reporting controls. The statute's escalating assurance requirements — moving from no assurance, to limited assurance, to reasonable assurance by 2030 — mirror the trajectory of financial statement audits and suggest that internal controls over emissions data should be built now rather than retrofitted later. General counsel should also ensure that public disclosures required under SB 253 are consistent with any climate-related statements made in SEC filings, sustainability reports, or investor communications, since inconsistencies across disclosure regimes can create securities-law exposure independent of CARB penalties.

Watching the Litigation Calendar

Finally, companies should track the Ninth Circuit's eventual merits ruling closely. A decision striking down SB 253 — even partially — could moot compliance obligations that companies have already invested significant resources to meet, while a decision affirming the district court could remove any remaining uncertainty and potentially accelerate SB 261's return to active enforcement. Given the stakes on both sides, in-house legal teams should maintain a compliance posture that would satisfy the statute as written while staying attuned to how the litigation might reshape enforcement in 2027 and beyond.

Bottom Line for California-Facing Companies

The shift to a November 10, 2026 deadline buys time, not certainty. Companies meeting the $1 billion revenue threshold and California nexus test should use the additional months to finalize Scope 1 and 2 data, confirm their applicability analysis against current Franchise Tax Board filings, document good-faith compliance efforts, and stay closely engaged with both CARB's rulemaking docket and the Ninth Circuit's pending decision in Chamber of Commerce v. California Air Resources Board.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

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