Ninth Circuit Partially Pauses CARB Enforcement

What the Ninth Circuit Actually Did

The underlying fight centers on two California statutes that became national news the moment they were signed. SB 253 requires certain large U.S. companies doing business in California to disclose greenhouse gas emissions. SB 261 requires certain large companies doing business in California to publish biennial reports on climate-related financial risk and the measures they use to reduce or adapt to those risks.

Business groups challenged both laws, arguing they violate the First Amendment by compelling speech. A federal district court in California refused to block the laws at the preliminary injunction stage in August 2025. Then came the appeal. On November 18, 2025, the Ninth Circuit granted an injunction pending appeal as to SB 261 and denied the request as to SB 253. The court did not provide a detailed explanation in that order, which is the appellate equivalent of raising one eyebrow and walking away.

That silence forced everyone else to do what lawyers and compliance teams do best: read context, compare statutes, and overanalyze every word not written.

Why the Split Between SB 253 and SB 261 Is So Important

SB 253 Looks More Like Data Reporting

SB 253 is the emissions law. It generally applies to U.S.-organized business entities doing business in California with more than $1 billion in annual revenue. The law is aimed at Scope 1, Scope 2, and later Scope 3 greenhouse gas emissions. CARB’s initial 2026 implementation posture focuses on first-year Scope 1 and Scope 2 reporting.

From a legal perspective, SB 253 looks more like compelled disclosure of operational data. That does not make it immune from challenge, but it gives the state a cleaner argument that the law is about factual, standardized reporting rather than ideological messaging. Courts are often more comfortable with that kind of disclosure framework, especially when the state can say it is helping investors, consumers, and markets compare like-for-like information.

SB 261 Looks More Like Narrative Judgment

SB 261, by contrast, generally applies to companies doing business in California with more than $500 million in annual revenue and requires public reports about climate-related financial risk and how those risks are being managed. That sounds simple until you actually have to write one. “Risk” is not just a number on a spreadsheet. It involves assumptions, scenario analysis, materiality judgments, time horizons, and language choices that can sound a lot less like meter readings and a lot more like corporate viewpoint.

That difference helps explain why SB 261 drew the injunction while SB 253 did not. The Ninth Circuit’s later oral argument only reinforced that impression. Judges pressed counsel on whether the laws compel commercial speech, whether the speech is purely factual and uncontroversial, and whether some disclosures cross the line from data into contested interpretation.

Put less formally, one law tells companies to count. The other asks them to characterize. Courts often notice the difference.

CARB’s Response: Not a Retreat, More Like a Re-Routing

CARB did not treat the Ninth Circuit’s order as a reason to put the entire climate disclosure program in a box and label it “maybe later.” Instead, the agency took a narrower approach.

On December 1, 2025, CARB announced that it would not enforce SB 261 against covered entities for missing the statute’s January 1, 2026 reporting deadline. It also said it would provide further information, including an alternate reporting date if appropriate, after the appeal is resolved. For businesses that wanted to report anyway, CARB opened a voluntary docket.

Meanwhile, SB 253 kept moving. CARB continued rulemaking, workshops, and implementation work. On February 26, 2026, the agency approved initial climate disclosure regulations covering SB 253 and SB 261. That may sound odd given the injunction, but it makes sense in practice. Agencies do not like to stop building the runway just because one plane is circling overhead.

The key implementation takeaway is that CARB established August 10, 2026 as SB 253’s first-year reporting deadline for Scope 1 and Scope 2 emissions. It also clarified items such as fee structure and how the relevant revenue threshold would be measured. So while SB 261 remains paused, SB 253 is very much alive, and companies pretending otherwise are basically scheduling future headaches.

The Legal Themes Emerging From the Appeal

The January 9, 2026 oral argument gave the public a better sense of what is bothering the court. The big theme was compelled speech, but the more interesting sub-theme was what kind of compelled speech these statutes create.

For SB 261, the concern appears to be that climate-related financial risk reporting can require companies to go beyond raw facts and into evaluative narrative. A risk report may involve describing transition risks, physical risks, mitigation strategies, governance processes, and long-term business impacts. Even when grounded in established frameworks, that kind of disclosure can sound more like a position paper than a utility bill.

For SB 253, the judges appeared especially interested in Scope 3 emissions, which are notoriously hard to gather because they depend on upstream and downstream value-chain data. That raised a separate issue: even if parts of SB 253 survive, are some parts more vulnerable than others? The panel’s questions suggested that severability could become important. If Scope 3 is constitutionally harder to defend, a court could in theory scrutinize that piece without knocking out the rest of the law.

This is one reason the phrase “partially pauses CARB enforcement” is more than a catchy headline. It captures the larger legal reality. The fight is no longer just about whether California can regulate climate disclosure. It is about which forms of disclosure look like ordinary commercial regulation and which ones look like compelled public messaging.

What This Means for Companies Right Now

1. SB 253 Preparation Should Still Be Moving

Companies over the revenue threshold that do business in California should not read the SB 261 injunction as a hall pass for all California climate disclosure work. SB 253 remains in effect. If a business is still debating whether it needs a greenhouse gas inventory, the answer is no longer philosophical. It is operational.

That means identifying organizational boundaries, confirming legal entity structure, understanding what “doing business in California” means for the company, mapping emissions data owners, and deciding whether internal systems can support auditable reporting. None of that gets easier if you wait until summer.

2. SB 261 Work Is Paused, Not Irrelevant

Companies covered by SB 261 are in a strange but familiar place: they may not have to file on the original deadline, but the disclosure concepts are not going away. Even if the Ninth Circuit ultimately narrows the law, climate risk reporting is already part of how many boards, lenders, insurers, investors, and multinational counterparties evaluate companies.

So the smart move is not to toss every draft into a digital bonfire. It is to treat SB 261 work as reusable analysis. Governance mapping, risk identification, scenario planning, and disclosure controls still have value even while the legal fight continues.

3. Legal, Finance, and Sustainability Need to Work Together

The split ruling also kills the fantasy that one department can own this issue alone. Legal teams are tracking constitutional risk and disclosure wording. Finance teams are thinking about materiality, internal controls, and investor-facing consistency. Sustainability teams are chasing emissions methodology, data quality, and reporting frameworks. When those groups do not speak the same language, the company ends up with elegant climate aspirations and very clumsy footnotes.

Why This Case Matters Beyond California

California is not regulating in a vacuum. Its climate disclosure laws have been watched nationally because California is large enough to function like a market-maker. If a state this big requires public disclosures from companies that do business there, many businesses will build one compliance system rather than fifty customized versions. That is why litigation over SB 253 and SB 261 matters far beyond Sacramento.

The case also lands in a broader debate about whether climate disclosure is simply modern risk reporting or an effort to force companies into contested policy speech. The Ninth Circuit’s split treatment suggests courts may be more receptive to disclosure rules tied to measurable operational facts than to rules requiring broader interpretive narratives. If that approach holds, regulators may keep writing climate rules, but they will likely draft them with extra care around wording, materiality, and the line between data and viewpoint.

In that sense, the Ninth Circuit’s order may shape the next generation of climate regulation even before it produces a final merits ruling. Agencies are now on notice that if a rule sounds too much like an essay prompt, it could face tougher constitutional scrutiny.

Specific Examples of the Practical Stakes

Consider a nationwide manufacturer with more than $1 billion in annual revenue and several California customers. That company still needs to prepare for SB 253 because emissions reporting is not paused. Its biggest challenge may be building a reliable data chain between facilities, procurement teams, and finance controls.

Now consider a private consumer brand with roughly $700 million in annual revenue and a substantial California footprint. That business may fall below SB 253 but still within SB 261 territory. For that company, the injunction buys time. It does not erase the underlying pressure, though, because lenders, boards, and business partners may still expect climate risk analysis that resembles what SB 261 would have required.

Or think about a company hovering around the revenue threshold and trying to determine whether California’s rules apply at all. That is where CARB’s definitional clarifications matter. Threshold questions are not glamorous, but they are the front door to the entire compliance project. If you get that wrong, everything else is just expensive guesswork in a nicer font.

The Bottom Line

The Ninth Circuit did not blow up California climate disclosure law. It did something more precise and, in some ways, more revealing. It paused enforcement of SB 261 while leaving SB 253 standing, which strongly suggests the court sees a meaningful legal difference between emissions disclosure and climate-risk narrative reporting.

For CARB, the message is clear: keep implementing where the law still stands, but do not enforce what the court has temporarily put on ice. For companies, the message is even clearer: do not confuse a partial pause with a general pardon. SB 253 preparation remains urgent, SB 261 analysis remains useful, and the broader constitutional fight is far from over.

So yes, the Ninth Circuit partially paused CARB enforcement. But the bigger story is what that partial pause reveals. In climate disclosure law, the future may belong to rules that look more like accounting and less like ideology. For businesses trying to prepare, that is not a trivial distinction. It is the distinction between building a reporting process and writing a manifesto.

Experiences From the Field: What Companies Are Dealing With Right Now

One of the most useful ways to understand the Ninth Circuit’s partial pause is to look at the kind of real-world compliance experience it creates. Not courtroom drama. Calendar drama. Spreadsheet drama. Internal email chain drama. The glamorous stuff.

At many large companies, the immediate reaction to the SB 261 injunction was relief followed almost instantly by confusion. General counsel offices heard “pause” and asked how broad it was. Sustainability teams heard “pause” and asked whether they should keep drafting risk reports anyway. Investor relations teams heard “pause” and asked whether earnings call language now needed to change. The answer, maddeningly, was different for each group. That is exactly why this issue feels so operational on the ground.

A common experience has been the split-speed problem. Emissions reporting under SB 253 still requires project plans, data owners, methodology decisions, and leadership attention. But climate-risk reporting under SB 261 now sits in a holding pattern. Companies are learning that it is surprisingly hard to run one workstream at full speed while telling the other workstream to stay warm but not overcook. Compliance teams do not love half-pauses because half-pauses still require whole meetings.

Another common experience is governance fatigue. Boards and audit committees do not want to hear that the legal answer is “sort of yes, sort of no, and definitely maybe.” Yet that is close to the current reality. Many directors are now asking management to separate three questions that were previously bundled together: what the law currently requires, what the company can practically measure, and what the company may still want to disclose voluntarily for investor or reputational reasons. That is a healthier conversation, but it is also a heavier one.

Companies are also discovering that data readiness and narrative readiness are not the same skill. A business may be reasonably good at collecting fuel, electricity, and facility data for Scope 1 and Scope 2 reporting, while still being far less confident in describing long-term transition risk, resilience planning, or governance oversight in public-facing language. The Ninth Circuit’s split effectively shines a spotlight on that difference. It tells companies that the harder legal questions may arise exactly where the disclosures become more interpretive and less mechanical.

Perhaps the biggest experience of all is strategic uncertainty. A number of businesses are treating SB 261 work like an insurance policy: not required today, but worth keeping updated in case the injunction lifts or the law returns in narrowed form. Others are using the pause to improve internal controls before saying more publicly. That may be the quiet lesson of this moment. Even when enforcement is paused, preparation rarely is.

So the lived experience of “Ninth Circuit partially pauses CARB enforcement” is not a dramatic stop sign. It is a fork in the road. One path, SB 253, still demands motion. The other, SB 261, invites caution but not complacency. And for the people inside companies trying to turn law into process, that is the kind of distinction that shapes budgets, systems, staffing, and sleep.