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Blogs

Liskow Secures Significant Tax Savings in Louisiana for Kellogg Brown & Root, LLC

November 11, 20252 minute read

Liskow attorneys Caroline Lafourcade and Cheryl Kornick secured a major win for Kellogg Brown & Root, LLC (KBR) at the Louisiana Board of Tax Appeals (BTA) earlier this year in a dispute with a local tax collector regarding the scope of the manufacturing machinery and equipment (MM&E) exclusion from sales tax on materials and equipment used to construct an ammonia manufacturing facility. The case is important as it is only the second time that a Louisiana court has opined on the scope of the MM&E exclusion in Louisiana.

KBR had challenged a $13.6 million parish-level use tax assessment on materials and equipment that it purchased as agent for its customer under an EPC contract.

After KBR prevailed in establishing that the Board of Tax Appeals is a court of original jurisdiction where taxpayers may introduce evidence to refute a local collector’s assessment without first paying the disputed tax under protest, and that a contractor could enjoy its manufacturer customer’s exclusion from local sales and use tax in parishes that adopted the MM&E exclusion which was optional at the local level, the substantive dispute went to trial before BTA Judge Cade Cole in October of 2024.

Construing the MM&E exclusion statute regarding the meaning of “used directly” in the manufacturing process in favor of the taxpayers, the Board held that the manufacturing process began once all three of the raw materials needed to produce ammonia interacted. As a result, some of the materials and equipment such as vessels, piping used to transport raw materials before and after the manufacturing process, water treatment and concrete supports did not qualify for the exclusion as they were found to be used outside of the manufacturing process.

The BTA ultimately found that almost 90% of the materials and equipment at issue qualified for the MM&E exclusion from sales and use tax.

Further underscoring the significance of this opinion for contractors, manufacturers, developers and owners of large industrial projects is the fact that as part of the tax reforms enacted by the Louisiana Legislature during its special session in November of 2024, effective January 1, 2025, the MM&E exclusion is now an exemption from sales and use tax.

Courts in Louisiana must interpret any legal ambiguity in an exclusion from tax in favor of the taxpayer; in contrast, tax exemptions are strictly construed in favor of the State and must be clearly and unequivocally and affirmatively established by the taxpayer. Proper classification of materials and equipment used to construct industrial manufacturing facilities is essential in order to minimize sales and use tax burdens.

A copy of the BTA’s Interim Order with Reasons can be found here.

New Orleans Shareholder Caroline Lafourcade, who was lead attorney for KBR said, “This case highlights the effectiveness of Liskow’s tax litigation capabilities in navigating complex Louisiana state and local tax issues.”

KBR is a global leader in technology and engineering solutions, with a longstanding track record of innovation and excellence in LNG and across the energy sector.

For further questions regarding this case, contact Liskow attorneys Caroline Lafourcade or Cheryl Kornick, or click here to read about Liskow’s Tax litigation experience.

 

Blogs

When “Net Zero” Meets the Courtroom: Energy Companies and the Rise of Greenwashing Litigation

November 10, 20253 minute read

A Landmark Ruling in Paris

In late October 2025, a Paris civil court handed down a decision that could reshape how global energy companies discuss their efforts in climate transition. The court ruled that an energy company misled consumers through a 2021 rebranding campaign where the company promised to be “a major player in the energy transition” and “to achieve carbon neutrality by 2050.”

The plaintiffs—three environmental groups—alleged claims based primarily upon France’s consumer-protection laws, supplemented by the European Parliament’s directives targeted at misleading environmental representations. According to the plaintiffs, the energy company’s sweeping statements about its climate efforts concealed an underlying business model still dominated by oil and gas production. These statements, the plaintiffs argued, were misleading in a market where consumers are increasingly sensitive to a company’s environmental footprint.

The court agreed in part. Viewing the statements through the lens of a consumer, the court found that the energy company engaged in “misleading commercial practices” through its statements which could be perceived as deceptive about the scope of its environmental commitments given the company’s continued investment in oil and gas exploration and production. The company was ordered to remove the misleading statements from its website and post a link to the judgment or face fines of up to €20,000 per day. The judges dismissed, however, a separate allegation concerning statements about fossil gas and biofuels, finding those remarks informational with no connection to marketing products to consumers.

This is the first major European court decision to hold a fossil-fuel company legally responsible for “greenwashing” in its consumer advertising. It signals a new willingness, at least in Europe, to treat corporate messaging about climate efforts as factual representations subject to verification.

While the Paris decision is subject to appeal, it is anticipated that its impacts will be felt around the world. In the United States, similar challenges have emerged—but with less decisive results. Plaintiffs and state attorneys general have filed a growing number of suits alleging that fossil-fuel producers have overstated their climate credentials, yet few of these lawsuits have survived the early stages of litigation.

In January 2025, in City of New York v. Exxon Mobil Corporation, et al, a New York State judge dismissed the City of New York’s lawsuit against Exxon Mobil, BP, and Shell, which alleged that the companies misled consumers about the environmental impacts of their fossil fuel products and their commitment to renewable energy. There, the court held that the link between fossil-fuel use and climate change was common knowledge, making deception implausible. The court also identified comments regarding clean and alternative energy as aspirational and lacking a nexus to the sale of fossil fuel products to consumers.

Other greenwashing lawsuits have survived the pleading stage. Following the denial of motions to dismiss, the District of Columbia’s attorney general continues to pursue a consumer-protection case accusing major oil companies for misrepresenting their role in climate change through decades of advertising in District of Columbia v. Exxon Mobil Corporation, et al. Similar actions in Massachusetts, Minnesota, and several other municipalities are pending, each testing whether traditional false-advertising and consumer protection laws can meaningfully police climate-related claims.

The ruling issued by the Paris court is potentially a pivotal moment in corporate climate-communications law. For the first time, a major fossil-fuel company was found liable for its net-zero messaging when that messaging was found to be at odds with its investments. Recent trends suggest that certain jurisdictions in the United States may not be far behind.

For more information, contact Liskow attorneys Kelly Becker, Jamie Rhymes, James Lapeze, and Andrew Hughes, and visit Liskow’s Energy – Litigation practice page.

Blogs

When “Net Zero” Meets the Courtroom: Energy Companies and the Rise of Greenwashing Litigation

November 10, 20253 minute read

Featured Image

 

A Landmark Ruling in Paris

In late October 2025, a Paris civil court handed down a decision that could reshape how global energy companies discuss their efforts in climate transition. The court ruled that an energy company misled consumers through a 2021 rebranding campaign where the company promised to be “a major player in the energy transition” and “to achieve carbon neutrality by 2050.”

The plaintiffs—three environmental groups—alleged claims based primarily upon France’s consumer-protection laws, supplemented by the European Parliament’s directives targeted at misleading environmental representations. According to the plaintiffs, the energy company’s sweeping statements about its climate efforts concealed an underlying business model still dominated by oil and gas production. These statements, the plaintiffs argued, were misleading in a market where consumers are increasingly sensitive to a company’s environmental footprint.

The court agreed in part. Viewing the statements through the lens of a consumer, the court found that the energy company engaged in “misleading commercial practices” through its statements which could be perceived as deceptive about the scope of its environmental commitments given the company’s continued investment in oil and gas exploration and production. The company was ordered to remove the misleading statements from its website and post a link to the judgment or face fines of up to €20,000 per day. The judges dismissed, however, a separate allegation concerning statements about fossil gas and biofuels, finding those remarks informational with no connection to marketing products to consumers.

This is the first major European court decision to hold a fossil-fuel company legally responsible for “greenwashing” in its consumer advertising. It signals a new willingness, at least in Europe, to treat corporate messaging about climate efforts as factual representations subject to verification.

While the Paris decision is subject to appeal, it is anticipated that its impacts will be felt around the world. In the United States, similar challenges have emerged—but with less decisive results. Plaintiffs and state attorneys general have filed a growing number of suits alleging that fossil-fuel producers have overstated their climate credentials, yet few of these lawsuits have survived the early stages of litigation.

In January 2025, in City of New York v. Exxon Mobil Corporation, et al, a New York State judge dismissed the City of New York’s lawsuit against Exxon Mobil, BP, and Shell, which alleged that the companies misled consumers about the environmental impacts of their fossil fuel products and their commitment to renewable energy. There, the court held that the link between fossil-fuel use and climate change was common knowledge, making deception implausible. The court also identified comments regarding clean and alternative energy as aspirational and lacking a nexus to the sale of fossil fuel products to consumers.

Other greenwashing lawsuits have survived the pleading stage. Following the denial of motions to dismiss, the District of Columbia’s attorney general continues to pursue a consumer-protection case accusing major oil companies for misrepresenting their role in climate change through decades of advertising in District of Columbia v. Exxon Mobil Corporation, et al. Similar actions in Massachusetts, Minnesota, and several other municipalities are pending, each testing whether traditional false-advertising and consumer protection laws can meaningfully police climate-related claims.

The ruling issued by the Paris court is potentially a pivotal moment in corporate climate-communications law. For the first time, a major fossil-fuel company was found liable for its net-zero messaging when that messaging was found to be at odds with its investments. Recent trends suggest that certain jurisdictions in the United States may not be far behind.

For more information, contact Liskow attorneys Kelly Becker, Jamie Rhymes, James Lapeze, and Andrew Hughes, and visit Liskow’s Energy – Litigation practice page.

 

Blogs

Big Beautiful Gulf 1 Lease Sale to Offer 80 Million Acres for Leasing at 12.5% Royalty Rate

November 10, 20252 minute read

BOEM’s Final Notice of Sale (FNOS) for Big Beautiful Gulf 1 (BBG1), to be published in the Federal Register on November 10, 2025, will offer for leasing approximately 15,083 unleased OCS blocks located across the Gulf of America (GOA) – all, regardless of water depth, at the lowest allowable federal offshore royalty rate of 12.5%. BBG1 will be held on December 10, 2025, and is the first of 30 federal offshore lease sales mandated by the One Big Beautiful Bill Act (OBBBA), Pub. L. No. 119-21, which was signed into law on July 4, 2025.

The FNOS contains details regarding lease terms and conditions for BBG1. Pursuant to the OBBBA, BBG1 is legislatively required to offer at least 80 million acres (or all unleased GOA OCS lands not subject to a prohibition against or restricted from leasing). The OBBBA also legislatively mandates that leases in water depths of 800 meters or greater have a 10-year initial term. The FNOS incorporates these requirements, as well as the Form BOEM 2005 (February 2017) lease form and most stipulations from Lease Sale 254 held in 2020, which were also legislatively mandated for BBG1 and future lease sales occurring pursuant to the OBBBA.

With respect to the Rice’s whale, an endangered species with its exclusive habitat in the GOA, the Lease Sale 254 Protected Species Stipulation applicable to BBG1 contains no provisions specific to protecting the Rice’s whale. However, the Information to Lessees document provided as part of the BBG1 FNOS package notifies potential bidders of the National Marine Fisheries Service’s (NMFS) recent programmatic Biological Opinion, issued on May 20, 2025, (2025 NMFS BiOp) and notes that “the 2025 NMFS BiOp includes a jeopardy finding for the Rice’s whale, and a reasonable and prudent alternative (2025 RPA) that is currently under review and discussion at the Department, Bureaus, and NMFS.” While the 2025 NMFS BiOp is not mentioned in the stipulation, BOEM advises bidders that “under the 2025 NMFS BiOp, certain post-lease approvals (e.g., for activities involving new and unusual technologies, certain tiers of seismic surveys, including certain ancillary geological and geophysical [G&G] surveys), will require an ESA [Endangered Species Act] review by BOEM, and applicable protocols and/or COAs [Conditions of Approval] will be applied per the 2025 NMFS BiOp, subject to additional mitigations to protect ESA-listed species.” BOEM further advises that amendments to the 2025 NMFS BiOp and related permit conditions will be binding on future lease actions for leases issued pursuant to BBG1.

Leases issued in BBG 1 may include Royalty Suspension Volumes (RSVs), which are designed to promote development, increase production, or encourage production of marginal resources on certain leases or categories of leases. Details relating to eligibility and implementation of RSVs are located at 30 CFR part 203.

Bid opening for BBG1 will be available for public viewing on BOEM’s website at https://www.boem.gov/Sale-BBG1 via live-streaming video beginning at 9:00 a.m. on December 10th.

For more information, contact Liskow attorneys Jana Grauberger and Kathleen Doody, and visit Liskow’s Energy-Regulatory practice page.

Blogs

Big Beautiful Gulf 1 Lease Sale to Offer 80 Million Acres for Leasing at 12.5% Royalty Rate

November 10, 20252 minute read

Featured Image

 

BOEM’s Final Notice of Sale (FNOS) for Big Beautiful Gulf 1 (BBG1), to be published in the Federal Register on November 10, 2025, will offer for leasing approximately 15,083 unleased OCS blocks located across the Gulf of America (GOA) – all, regardless of water depth, at the lowest allowable federal offshore royalty rate of 12.5%. BBG1 will be held on December 10, 2025, and is the first of 30 federal offshore lease sales mandated by the One Big Beautiful Bill Act (OBBBA), Pub. L. No. 119-21, which was signed into law on July 4, 2025.

The FNOS contains details regarding lease terms and conditions for BBG1. Pursuant to the OBBBA, BBG1 is legislatively required to offer at least 80 million acres (or all unleased GOA OCS lands not subject to a prohibition against or restricted from leasing). The OBBBA also legislatively mandates that leases in water depths of 800 meters or greater have a 10-year initial term. The FNOS incorporates these requirements, as well as the Form BOEM 2005 (February 2017) lease form and most stipulations from Lease Sale 254 held in 2020, which were also legislatively mandated for BBG1 and future lease sales occurring pursuant to the OBBBA.

With respect to the Rice’s whale, an endangered species with its exclusive habitat in the GOA, the Lease Sale 254 Protected Species Stipulation applicable to BBG1 contains no provisions specific to protecting the Rice’s whale. However, the Information to Lessees document provided as part of the BBG1 FNOS package notifies potential bidders of the National Marine Fisheries Service’s (NMFS) recent programmatic Biological Opinion, issued on May 20, 2025, (2025 NMFS BiOp) and notes that “the 2025 NMFS BiOp includes a jeopardy finding for the Rice’s whale, and a reasonable and prudent alternative (2025 RPA) that is currently under review and discussion at the Department, Bureaus, and NMFS.” While the 2025 NMFS BiOp is not mentioned in the stipulation, BOEM advises bidders that “under the 2025 NMFS BiOp, certain post-lease approvals (e.g., for activities involving new and unusual technologies, certain tiers of seismic surveys, including certain ancillary geological and geophysical [G&G] surveys), will require an ESA [Endangered Species Act] review by BOEM, and applicable protocols and/or COAs [Conditions of Approval] will be applied per the 2025 NMFS BiOp, subject to additional mitigations to protect ESA-listed species.” BOEM further advises that amendments to the 2025 NMFS BiOp and related permit conditions will be binding on future lease actions for leases issued pursuant to BBG1.

Leases issued in BBG 1 may include Royalty Suspension Volumes (RSVs), which are designed to promote development, increase production, or encourage production of marginal resources on certain leases or categories of leases. Details relating to eligibility and implementation of RSVs are located at 30 CFR part 203.

Bid opening for BBG1 will be available for public viewing on BOEM’s website at https://www.boem.gov/Sale-BBG1 via live-streaming video beginning at 9:00 a.m. on December 10th.

For more information, contact Liskow attorneys Jana Grauberger and Kathleen Doody, and visit Liskow’s Energy-Regulatory practice page.

 

Blogs

IRS Offers Relief from Information Reporting Penalty for Tips and Overtime

November 10, 20253 minute read

Featured Image

On November 5th, the Department of the Treasury and the IRS issued guidance to employers and other payors for tax year 2025 regarding new information reporting requirements for the deductions for cash tips and qualified overtime compensation under the One, Big, Beautiful Bill Act (P.L. 119-21, “OBBBA”).

Notice 2025-62 provides penalty relief for tax year 2025 from the new information reporting requirements for cash tips and qualified overtime compensation under the OBBBA to employers and other payors for not filing correct information returns and not providing correct payee statements to employees and other payees.

The new reporting requirements under the OBBBA include:

•            No tax on tips: Certain employees and self-employed individuals who receive qualified tips may deduct qualified tips reported on a Form W-2, Form 1099, or reported directly by the individual on Form 4137. Employers and other payors must file information returns with the IRS, or SSA in the case of Form W-2 and provide statements to taxpayers showing certain cash tips received during the year and the occupation of the tip recipient.

•            No tax on overtime: Certain individuals who receive qualified overtime compensation may deduct the qualified overtime compensation reported on a Form W-2 or Form 1099. Employers and other payors must file information returns with the IRS, or SSA in the case of Form W-2 and provide statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.

Pursuant to the notice, employers and other payors will not face penalties for failing to provide a separate accounting of any amounts reasonably designated as cash tips or the occupation of the person receiving such tips. In addition, employers and other payors will also not face penalties for failing to separately provide the total amount of qualified overtime compensation. The relief is limited to returns and statements filed and furnished for taxable year 2025 and applies only to the extent that the person required to make the return or statement otherwise files and provides a complete and correct return or statement.

The government acknowledged that employers and other payors may not currently have the information required to be reported under the OBBBA, or they may not have the systems or procedures in place to be able to correctly file the additional information with the IRS, or SSA in the case of a Form W-2, and provide it to employees and other payees. In addition, the IRS has announced that it will not update Forms W-2 and 1099 for tax year 2025 to account for the OBBBA-related changes. Therefore, the IRS is treating tax year 2025 as a transition period for enforcement and administration of the new information reporting requirements for cash tips and qualified overtime compensation under the OBBBA.

While not a requirement to receive the penalty relief provided in Notice 2025-62, the IRS encourages employers and other payors to provide employees and payees, particularly those in a tipped occupation, with the occupation codes and separate accountings of cash tips, so the employee or payee can claim the deduction for qualified tips for taxable year 2025. And the IRS encourages employers and payors to provide employees and payees with separate accountings of overtime compensation, so the employee or payee has readily available the information necessary to claim the deduction for qualified overtime compensation for taxable year 2025. Employers and payors can make the information available to their employees and payees through an online portal, additional written statements provided to the employees or payees, other secure methods, or in the case of qualified overtime compensation in Box 14 of the employee’s Form W-2.

For more information, contact Liskow attorneys Caroline Lafourcade, Tommy McGoey, Kevin Naccari, and Ellie George, and visit Liskow’s Tax and Labor & Employment practice pages. 

Notice 2025-62 provides penalty relief for tax year 2025 from the new information reporting requirements for cash tips and qualified overtime compensation under the OBBBA to employers and other payors for not filing correct information returns and not providing correct payee statements to employees and other payees.

Blogs

With the Proliferation of LNG and Industrial Construction in Louisiana, a Private Works Act Refresher is in Order

November 7, 20253 minute read

Louisiana is experiencing significant LNG plant construction activity, with several projects underway or recently approved. Construction projects in Louisiana are governed by a unique statutory framework known as the Louisiana Private Works Act (“LPWA”). The LPWA establishes the rights and responsibilities of all parties involved in construction projects. The primary goal of the LPWA is to protect payment rights for those who contribute labor, materials, or services to a project.

Under the LPWA, subcontractors, laborers, material suppliers, lessors, and professional consultants have a personal claim against the property owner and general contractor. The claim against the owner is secured by a legal privilege affecting the immovable property where the work is performed.

Property owners also have safeguards under the LPWA. Owners can limit their potential exposure by requiring the general contractor to file a notice of contract in accordance with La. R.S. 9:4811 and furnish a bond for the price of the work. The notice of contract must be filed before the work begins, as defined in La. R.S. 9:4820. When properly issued, the bond serves as substitute security for unpaid claimants, thereby protecting the property from being directly encumbered.

The LPWA provides valuable protections but also imposes strict deadlines for asserting those rights. Importantly, these deadlines are peremptive, meaning a claimant’s rights are extinguished if not timely asserted, and that period cannot be suspended or interrupted. Louisiana courts strictly construe the LPWA because it creates rights and remedies not found under ordinary contract law.

To preserve LPWA protections, claimants must strictly comply with the precise notice requirements. These requirements vary depending on the type of claimant and whether the owner filed a notice of contract as discussed in La. R.S. 9:4804. The privilege arises and becomes effective against third persons once the notice of contract is filed or once work begins, as defined in La. R.S. 9:4820.

A claimant risks losing all rights under the LPWA if:

  1.  The claimant or holder of the privilege does not preserve it by failing to file a statement of claim and privilege as required by R.S. 9:4822;
  2. The claimant or holder of the privilege does not institute an action against the owner to enforce the claim or privilege within one year after filing the statement of claim or privilege; or
  3. The underlying obligation is extinguished.

Deadlines for filing a statement of claim and privilege depend on when the notice of termination is filed, or if no notice of termination was filed, when the project reaches substantial completion or abandonment. Substantial completion occurs when the last work is performed, materials are delivered, or when the owner accepts the improvement, even if minor matters remain. Abandonment occurs when the owner terminates the work or objectively and in good faith abandons the project. The determination of when substantial completion or abandonment occurred is a question of fact.

Filing a notice of termination creates a clear starting point for these deadlines and can prevent factual disputes about timing. If a claim or privilege is improperly filed or extinguished, the owner can require the claimant to send a written request for cancellation to the recorder of mortgages.

The Louisiana Private Works Act is a fundamental part of construction law in Louisiana. Whether you are a property owner seeking to protect your investments or a contractor or supplier ensuring payment for your work, strict compliance with the LPWA’s notice and timing requirements is crucial.

For further questions regarding the Louisiana Private Works Act or related topics, contact Liskow attorneys Hunter Chauvin and Katelyn Davis.

Blogs

With the Proliferation of LNG and Industrial Construction in Louisiana, a Private Works Act Refresher is in Order

November 7, 20253 minute read

Featured Image

 

Louisiana is experiencing significant LNG plant construction activity, with several projects underway or recently approved. Construction projects in Louisiana are governed by a unique statutory framework known as the Louisiana Private Works Act (“LPWA”). The LPWA establishes the rights and responsibilities of all parties involved in construction projects. The primary goal of the LPWA is to protect payment rights for those who contribute labor, materials, or services to a project.

Under the LPWA, subcontractors, laborers, material suppliers, lessors, and professional consultants have a personal claim against the property owner and general contractor. The claim against the owner is secured by a legal privilege affecting the immovable property where the work is performed.

Property owners also have safeguards under the LPWA. Owners can limit their potential exposure by requiring the general contractor to file a notice of contract in accordance with La. R.S. 9:4811 and furnish a bond for the price of the work. The notice of contract must be filed before the work begins, as defined in La. R.S. 9:4820. When properly issued, the bond serves as substitute security for unpaid claimants, thereby protecting the property from being directly encumbered.

The LPWA provides valuable protections but also imposes strict deadlines for asserting those rights. Importantly, these deadlines are peremptive, meaning a claimant’s rights are extinguished if not timely asserted, and that period cannot be suspended or interrupted. Louisiana courts strictly construe the LPWA because it creates rights and remedies not found under ordinary contract law.

To preserve LPWA protections, claimants must strictly comply with the precise notice requirements. These requirements vary depending on the type of claimant and whether the owner filed a notice of contract as discussed in La. R.S. 9:4804. The privilege arises and becomes effective against third persons once the notice of contract is filed or once work begins, as defined in La. R.S. 9:4820.

A claimant risks losing all rights under the LPWA if:

  1.  The claimant or holder of the privilege does not preserve it by failing to file a statement of claim and privilege as required by R.S. 9:4822;
  2. The claimant or holder of the privilege does not institute an action against the owner to enforce the claim or privilege within one year after filing the statement of claim or privilege; or
  3. The underlying obligation is extinguished.

Deadlines for filing a statement of claim and privilege depend on when the notice of termination is filed, or if no notice of termination was filed, when the project reaches substantial completion or abandonment. Substantial completion occurs when the last work is performed, materials are delivered, or when the owner accepts the improvement, even if minor matters remain. Abandonment occurs when the owner terminates the work or objectively and in good faith abandons the project. The determination of when substantial completion or abandonment occurred is a question of fact.

Filing a notice of termination creates a clear starting point for these deadlines and can prevent factual disputes about timing. If a claim or privilege is improperly filed or extinguished, the owner can require the claimant to send a written request for cancellation to the recorder of mortgages.

The Louisiana Private Works Act is a fundamental part of construction law in Louisiana. Whether you are a property owner seeking to protect your investments or a contractor or supplier ensuring payment for your work, strict compliance with the LPWA’s notice and timing requirements is crucial.

For further questions regarding the Louisiana Private Works Act or related topics, contact Liskow attorneys Hunter Chauvin and Katelyn Davis.

Blogs

ExxonMobil Sues California Over Climate Disclosure Laws

November 3, 20252 minute read

In late October 2025, Exxon Mobil Corporation filed a complaint in the United States District Court for the Eastern District of California, launching a major constitutional and regulatory challenge to California’s landmark climate disclosure regime. The company’s lawsuit targets two statutes enacted in 2023: Senate Bill 253—the Climate Corporate Data Accountability Act, and Senate Bill 261—the Climate-Related Financial Risk Act, which together require large companies doing business in California to publicly report greenhouse-gas emissions and climate-related financial risks. ExxonMobil argues that these laws compel speech, force companies to adopt state-approved frameworks they may disagree with and intrude into areas governed by federal securities law.

Under SB 253, every company—public or private—with global annual revenues exceeding $1 billion and “doing business” in California must disclose its greenhouse-gas emissions across three categories. Beginning in 2026, companies must report Scope 1 and Scope 2 emissions, which represent direct emissions and purchased energy. Thereafter in 2027, companies must report Scope 3 emissions, which include the entire value chain both upstream and downstream. Senate Bill 261, applying to companies with more than $500 million in annual revenue, mandates a biennial climate-related financial risk report that mirrors the framework of the Task Force on Climate-Related Financial Disclosures (TCFD).

Before ExxonMobil’s challenge, a coalition led by the U.S. Chamber of Commerce had already sued to block these same statutes, arguing they violated the First Amendment and were preempted by federal law. A California federal court denied a preliminary injunction in August 2025, allowing the rules to take effect while litigation proceeds. ExxonMobil’s new suit, however, is distinct in several ways. It is a direct action by a single regulated entity rather than an industry coalition, and it places particular emphasis on the notion of compelled speech—arguing that California’s requirement to use the GHG Protocol and similar frameworks forces ExxonMobil to “speak” in ideological terms that it otherwise rejects. The complaint also raises a sharper preemption argument, asserting that the financial-risk reporting obligations intrude into an area already occupied by federal securities regulation. The two cases are pending in different venues, potentially leading to divergent rulings.

ExxonMobil’s complaint lands in an environment where other jurisdictions are beginning to contemplate similar statutes. Several states—including New York, Illinois, Colorado, and New Jersey—have introduced bills that would emulate portions of California’s disclosure regime, setting comparable revenue thresholds and mandating climate-risk reports or Scope 1-through-3 emissions disclosures.

For companies subject to these California statutes, the practical reality is that the reporting deadlines are approaching even as the litigation unfolds. ExxonMobil’s suit raises serious constitutional questions about the line between factual disclosure and compelled advocacy, but the existence of pending challenges does not delay implementation. Companies should therefore continue developing systems to prepare the required disclosures in anticipation of enforcement beginning in 2026.

For more information regarding this case, contact Liskow attorneys Kelly Becker, Jamie Rhymes, and James Lapeze.

Blogs

ExxonMobil Sues California Over Climate Disclosure Laws

November 3, 20252 minute read

Featured Image

 

In late October 2025, Exxon Mobil Corporation filed a complaint in the United States District Court for the Eastern District of California, launching a major constitutional and regulatory challenge to California’s landmark climate disclosure regime. The company’s lawsuit targets two statutes enacted in 2023: Senate Bill 253—the Climate Corporate Data Accountability Act, and Senate Bill 261—the Climate-Related Financial Risk Act, which together require large companies doing business in California to publicly report greenhouse-gas emissions and climate-related financial risks. ExxonMobil argues that these laws compel speech, force companies to adopt state-approved frameworks they may disagree with and intrude into areas governed by federal securities law.

Under SB 253, every company—public or private—with global annual revenues exceeding $1 billion and “doing business” in California must disclose its greenhouse-gas emissions across three categories. Beginning in 2026, companies must report Scope 1 and Scope 2 emissions, which represent direct emissions and purchased energy. Thereafter in 2027, companies must report Scope 3 emissions, which include the entire value chain both upstream and downstream. Senate Bill 261, applying to companies with more than $500 million in annual revenue, mandates a biennial climate-related financial risk report that mirrors the framework of the Task Force on Climate-Related Financial Disclosures (TCFD).

Before ExxonMobil’s challenge, a coalition led by the U.S. Chamber of Commerce had already sued to block these same statutes, arguing they violated the First Amendment and were preempted by federal law. A California federal court denied a preliminary injunction in August 2025, allowing the rules to take effect while litigation proceeds. ExxonMobil’s new suit, however, is distinct in several ways. It is a direct action by a single regulated entity rather than an industry coalition, and it places particular emphasis on the notion of compelled speech—arguing that California’s requirement to use the GHG Protocol and similar frameworks forces ExxonMobil to “speak” in ideological terms that it otherwise rejects. The complaint also raises a sharper preemption argument, asserting that the financial-risk reporting obligations intrude into an area already occupied by federal securities regulation. The two cases are pending in different venues, potentially leading to divergent rulings.

ExxonMobil’s complaint lands in an environment where other jurisdictions are beginning to contemplate similar statutes. Several states—including New York, Illinois, Colorado, and New Jersey—have introduced bills that would emulate portions of California’s disclosure regime, setting comparable revenue thresholds and mandating climate-risk reports or Scope 1-through-3 emissions disclosures.

For companies subject to these California statutes, the practical reality is that the reporting deadlines are approaching even as the litigation unfolds. ExxonMobil’s suit raises serious constitutional questions about the line between factual disclosure and compelled advocacy, but the existence of pending challenges does not delay implementation. Companies should therefore continue developing systems to prepare the required disclosures in anticipation of enforcement beginning in 2026.

For more information regarding this case, contact Liskow attorneys Kelly Becker, Jamie Rhymes, and James Lapeze.

 

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