The CCDAA and CRFRA impose climate-related disclosure requirements, including requiring the annual disclosure of Scope 1, 2, and 3 greenhouse gas (“GHG”) emissions, on public and private entities that “do business” in California and have annual revenues above certain thresholds. California Governor Gavin Newsom signed both the CCDAA and CRFRA into law on October 7, 2023, but the implementation of these laws has already faced several hurdles. Upon signing the laws, Governor Newsom sent letters to the state senate pushing back on several features of the laws, including their implementation deadlines, and noted that his administration would seek to work with the authors of the legislation to address these issues. Additionally, on January 10, 2024, Governor Newsom released a budget proposal that featured cuts to the overall funding of the California Air Resources Board (“CARB”) and paused funding for the implementation of all newly signed laws, including the CCDAA and CRFRA, until May 2024. These first-of-their-kind laws1 have also been subjected to public scrutiny and concern from many in the business community, but the plaintiffs’ lawsuit marks the first legal challenge against the laws, and potentially signals what may await the Security and Exchange Commission’s climate-related disclosure rules once adopted.
