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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.