United States: Chamber Of Commerce Sues California Over Climate Disclosure Rules

The U.S. Chamber of Commerce, in combination with a number of other organized business interests, recently filed a lawsuit in federal court seeking to invalidate two of the climate disclosure laws enacted by California last fall. Specifically, the lawsuit claims that these two laws--S.B. 253 and S.B. 261, which require large corporations to disclose their greenhouse gas emissions and measures taken to address climate-related risk--violate the First Amendment by compelling speech, are pre-empted by federal law (i.e., the Clean Air Act), and violate the Dormant Commerce Clause due to their extra-territorial regulatory effect.

Bluntly, this lawsuit was wholly expected. California's climate disclosure laws are the most stringent and far-reaching in the United States and will impose a significant regulatory burden on large companies doing business in California. Perhaps more importantly, California is often considered the vanguard of climate-related legislation and regulation, and the economic and political interests opposed to such initiatives frequently seek to counter-act efforts by California before such efforts spread to other states. This lawsuit also serves as a precursor to the anticipated challenge to the climate disclosure rules expected to be promulgated soon by the SEC.

It is unclear how the courts will respond to this challenge, but the constitutional and political issues raised are unlikely to be fully resolved before federal appellate courts, if not the U.S. Supreme Court, weigh in on these issues. In any event, this lawsuit serves as yet another move on the gameboard in the ongoing chess game between those opposed to and in favor of climate disclosures, which is being played out in the legal, legislative, and regulatory arenas.