California Air Resources Board unanimously approves initial climate disclosure regulation recommended by staff

On February 26, the California Air Resources Board (“CARB” or “Board”) held a public hearing to consider adoption of its initial regulation implementing the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). At the conclusion of the hearing, CARB unanimously approved adoption of the regulation (see CARB’s press release here and presentation slides here). The regulation establishes a flat-fee program, defines key terms, and sets August 10, 2026, as the first-year reporting deadline for Scope 1 and 2 emissions under SB 253. CARB will submit the final rulemaking package to the Office of Administrative Law, which must approve the proposed regulation.

Key Takeaways

• CARB unanimously approved its initial regulation, as recommended by staff, for implementation of SB 253 and 261. The regulation will become effective if approved by the Office of Administrative Law.
• Lead author and sponsor of SB 253, Senator Weiner, questioned CARB’s authority to exempt insurance companies from SB 253, prompting a commitment by CARB staff to work with the Department of Insurance to evaluate future regulations.
• CARB will continue to respect the Ninth Circuit’s injunction of SB 261 and, therefore, will not take enforcement action related to the law while the injunction is in place.
• CARB is developing further regulations to implement SB 253 and 261 which are expected to be issued later this year.

During its February 26 public hearing, CARB received nearly 50 oral public comments covering a range of topics. Public feedback focused on three issues in the proposed regulation:

1. SB 253 exemption for insurance companies. Insurance companies are exempt from complying with SB 261 pursuant to statute. CARB’s initial regulation expands this exemption to SB 253. The key legal critique during last week’s hearing—from Senators Weiner and Stern, Dave Jones (former Insurance Commissioner), and several public commenters—was that the legislature explicitly excluded insurance companies from SB 261 but not SB 253. As a result, it was argued that CARB does not have legal authority to implement an exemption for insurers from SB 253 disclosures. CARB staff explained the exemption is an effort to avoid duplication, citing to an existing Department of Insurance (“DOI”) requirement that insurance companies submit a survey about climate risk and greenhouse gas (“GHG”) emissions. The Board directed staff to coordinate with DOI to further evaluate existing requirements to ensure relevant information is provided by insurance companies while avoiding duplication.
2. August 10 first-year reporting deadline for SB 253. Several members of the public expressed concerns with the August 10, 2026 reporting deadline for initial Scope 1 and 2 reporting pursuant to SB 253. Some commenters urged CARB to consider a rolling deadline or an extension to December 31, 2026. CARB staff rejected these requests, explaining that entities would have adequate time—at least six months—to compile and submit the required report by the August 10 deadline. After the Board raised a need for flexibility and encouraged staff to exercise enforcement discretion, staff advised that entities must report available Scope 1 and 2 emissions data by August 10 but can separately reach out to CARB in advance of the deadline to discuss the availability of enforcement discretion if their data falls short of applicable requirements for the inaugural reporting year. Note: While CARB may voluntarily elect not to pursue penalties, entities subject to SB 253 may nonetheless face some risk from non-compliance absent a specific regulatory extension due to potential private plaintiff lawsuits filed under other California laws (e.g., unfair competition).
3. Fee program. The initial regulation includes a formula to calculate the required annual flat fee to cover the costs of implementing SB 253 and 261 (e.g., salaries, benefits, contracting costs). Once calculated, staff will apportion the total fee between SB 253 and 261 based on resource use and assign fees evenly among reporting and covered entities under both laws. CARB staff is currently estimating annual fees of $2,000-$7,000 per in-scope entity depending on whether they must comply with SB 253 or SB 261 (or both). Several commenters criticized including costs of legal defense of the regulation in the fee calculation, although neither the Board nor CARB staff addressed this issue explicitly during the hearing.

See our prior article for details on the initial regulation’s requirements.

As previously stated in its December 1, 2025, Enforcement Advisory (see our previous article here), CARB confirmed it is respecting the Ninth Circuit’s injunction in Chamber of Commerce v. Sanchez (Case No. 25-5327), and will not enforce SB 261 until the case is resolved and/or the injunction is lifted. The Ninth Circuit’s injunction, however, is not codified in the initial regulation; as a result, CARB has failed to provide any specific, concrete guidance about when SB 261 reports will be due when the injunction ends. In the meantime, despite the injunction and staff’s issuance of the Advisory, some entities have decided to voluntarily publish SB 261 reports—to date, more than 120 reports have been published on CARB’s SB 261 Public Docket. This is, however, a small fraction of the more than 4,000 entities that CARB has anticipated will be subject to SB 261.

Looking ahead, CARB indicated its intention to propose additional regulations, later in 2026, that will specify the 2027 compliance deadline for SB 253 and address other requirements set forth in the statutes, including providing additional clarity on the definitions of Scope 1, 2, and 3 emissions under SB 253 and the data assurance requirements applicable to both laws.