California Air Resources Board Second Public Workshop on Climate Reporting Under SB 253 and SB 261

On August 21, 2025, the California Air Resources Board (“CARB”) held its second public workshop regarding the development of California’s climate reporting programs under Senate Bill 253 and Senate Bill 261.[1] SB 253 requires U.S. companies with total annual revenues in excess of $1 billion that do business in California to annually disclose Scope 1 and 2 greenhouse gas (“GHG”) emissions beginning in 2026 and Scope 3 GHG emissions beginning in 2027. SB 261 requires U.S. companies (other than insurance companies) with total annual revenues in excess of $500 million that do business in California to publicly disclose their climate-related financial risks on or before January 1, 2026 and biennially thereafter.

During this workshop, CARB staff provided updated guidance on certain key elements of its rulemaking. Topics addressed included:

• Timeline for GHG emissions reporting, proposing a June 30, 2026 deadline for initial Scope 1 and 2 reporting under SB 253;
• Scope of “reporting entities” for SB 253 and “covered entities” for SB 261, proposing definitions of “doing business in California” and “revenue” that deviated from the initial staff concepts proposed at CARB’s initial public workshop (the “Initial Workshop”), and announcing that the staff intends to publish (potentially within the next one or two weeks) a list of companies that are likely to be in-scope based on these definitions;
• Exemptions from reporting for non-profits and companies “whose only business in California is the presence of teleworking employees,” among others;
• Minimum reporting requirements under SB 261, noting that CARB intends to issue additional guidance on such requirements in the coming weeks, and CARB is not expected to require that initial reports due by January 1, 2026 to include GHG emissions metrics or quantitative disclosure of climate scenario analysis; and
• Content of GHG emissions reporting under SB 253, noting that the staff will post draft reporting templates for Scope 1 and 2 reporting by the end of September 2025 for public feedback.

CARB noted that it will open a three-week comment period, ending on September 11, 2025, regarding the concepts discussed at this workshop. Following the comment period, CARB expects to issue a notice of proposed rulemaking on October 14, 2025, which would address the annual fees that reporting companies must pay CARB upon filing their disclosures, and include concepts such as the reporting timeline and the scope of reporting entities (the “Proposed Fee Regulations”). CARB staff stated that it intends to submit the Proposed Fee Regulations to its board (the “Board”) for consideration in December 2025 after a 45-day comment period on its notice of proposed rulemaking.

This workshop represents the continuation of CARB’s public engagement on SB 253 and SB 261. CARB held the Initial Workshop on May 29, 2025,[2] and issued FAQs on these laws on July 9, 2025 (the “FAQs”).[3]

Litigation challenging SB 253 and SB 261 remains pending.[4] On August 13, 2025, the U.S. District Court for the Central District of California denied the plaintiffs’ motion seeking to preliminarily enjoin CARB and the California state attorney from implementing, applying or enforcing these laws. On August 20, 2025, the plaintiffs filed a notice of appeal regarding the district court’s ruling with the U.S. Court of Appeals for the Ninth Circuit. On the same day, the plaintiffs also filed a motion with the district court for an injunction pending appeal to preserve the status quo while the Ninth Circuit considers the appeal. 

This workshop had several hundred more registered attendees than the Initial Workshop, which had over 3,000 attendees. The workshop lasted over three hours, with questions and comments from the public comprising much of the session.

During the workshop, CARB staff provided an update on its rulemaking process and timeline, discussed updated staff concepts for implementing key elements of SB 253 and SB 261, and outlined the fee regulation concept for both laws. CARB staff noted that it had updated some of the initial staff concepts as a result of stakeholder feedback on the Initial Workshop and the FAQs, including concerns about compliance challenges. The staff also emphasized its intention to continue engaging with the public throughout the rulemaking process and encouraged the public to make written submissions during its three-week comment period following this workshop.

A. Timelines

Timeline for Initial Reporting. CARB staff reiterated that initial SB 261 reports must be posted to CARB’s public docket by January 1, 2026. The staff proposed a June 30, 2026 deadline for initial SB 253 Scope 1 and 2 reporting, but stated that it welcomes public feedback on this proposal.

Proposed Fee Regulation Timeline. SB 253 and SB 261 both require reporting entities, upon filing their disclosures, to pay to CARB an annual fee that will be set by CARB. These fees will be used to support CARB’s implementation and administration of the climate reporting programs under SB 253 and SB 261.

CARB staff outlined the following “draft timeline” for its Proposed Fee Regulation. The staff stated that the Proposed Fee Regulation will include proposals for concepts such as the reporting timeline and the scope of reporting entities.

Timeline for Additional Guidance. As further discussed below, CARB staff announced that it expects to publish the following additional guidance on SB 253 and SB 261, and provided the estimated timeframes below for when such guidance may be released:

Overall Rulemaking Timeline. During the Initial Workshop, CARB staff stated that its formal rulemaking process would consist of (1) the release of a Standardized Regulatory Impact Assessment (or an initial economic evaluation), (2) the issuance of the draft regulatory text, an initial staff report and environmental and economic analyses (the public will have a 45-day comment period to respond to the proposed rulemaking, with a possibility of further amendments and associated comment periods) and (3) the adoption of final rules at a Board hearing. By law, CARB has one year to complete the final rule once the initial proposal is published.

B. In-Scope Entities

CARB staff presented its updated proposals for defining and identifying in-scope entities, including definitions of “doing business in California” and “revenue”. CARB also outlined proposed exemptions for several categories of entities.

Definition of “Doing Business in California”

• Update on Definition: During this workshop, CARB staff presented the updated proposal to align the “doing business in California” definition with the entities listed on the California Secretary of State Business Entity database with “Active” status. This database is publicly available and lists any entity with a designated agent for service of process in California.
  Non-California companies are required to register with the California Secretary of State if they meet the requirements under Section 191 of the California General Corporation Law, which, among other provisions, contains an explicit carveout for companies that are merely shareholders of entities that directly “transact business” in the state.
• Difference from Initial Staff Concept: At the Initial Workshop, CARB proposed an initial staff concept for “doing business in California” based on the definition provided in Section 23101 of the California Revenue and Taxation Code (“RTC”).[5] At yesterday’s workshop, CARB staff stated that it considered some of the thresholds under Section 23101 to be too low. The staff also noted that it would face “data availability” challenges when enforcing regulations under the initial staff concept due to limitations on CARB’s use of information from the California Franchise Tax Board.

Definition of “Revenue”

• Update on Definition: CARB staff presented an alternative to its initial concept for defining “revenue”. Under the alternative definition, “revenue” would be defined as “the total global amount of money or sales a company receives from its business activities, such as selling products or providing services.”
• Difference from Initial Staff Concept: CARB’s initial concept was to define “revenue” as “gross receipts” under RTC § 25120(f)(2). The staff stated that the alternative definition introduced at yesterday’s workshop would not deduct operating costs or other business expenses, and would be consistent with metrics used by major data tracking and reporting industries, such as Dunn & Bradstreet, Standard & Poor, and Data Axle.

Preliminary Analysis of Covered Companies

• Number of Potentially In-Scope Companies: CARB staff estimated that, based on the above updated definitions for “revenue” and “doing business in California,” and using a proprietary database, 4,160 companies would be in-scope of SB 261, and 2,596 companies would be in-scope of SB 253. These estimates are meaningfully lower than the estimates included in the 2023 legislative materials for SB 253 and SB 261, which estimated that over 10,000 companies would be in-scope of SB 261, and 5,300 companies would be in-scope of SB 253.
• List of Companies: CARB staff announced that they will be releasing a list of companies that meet the updated proposed definitions, potentially within the next one or two weeks. The staff indicated that the list may not be an exhaustive or final list of the companies that would be in-scope and that it intends to make available a public forum for input on the list of companies. The staff further noted that “companies subject to the regulation will be responsible for compliance, even if not initially included on staff’s list or outreach.”

Exempted Entities. CARB proposed exemptions from SB 253 and SB 261 reporting requirements for (1) non-profits, (2) companies “whose only business in California is the presence of teleworking employees,” (3) government entities, and (4) any California Independent System Operator or “a business entity whose only activity within California consists of wholesale electricity transactions that occur in interstate commerce.” CARB staff noted that these proposed exemptions were based on statutory objectives and stakeholder feedback, and invited the public to provide comments on these and potentially other exemptions.

Parent-Subsidiary Corporate Relationships. CARB staff reiterated its initial concept of leveraging the approach under the state’s cap-and-trade program, proposing to identify subsidiaries through evaluation of commercial databases, cross-referenced with the California Secretary of State database and/or the California Franchise Tax Board database.

In response to multiple questions requesting clarification on parent-subsidiary relationships, the staff encouraged the public to submit comments and provide examples. The staff also noted that it is seeking input on a process whereby companies may choose to self-report on parent-subsidiary relationships to avoid reporting for multiple entities under the same parent company. However, notwithstanding the ability to use parent company reports under SB 253 and SB 261, CARB staff proposed assessing filing fees separately for each in-scope subsidiary (see below).

C. Guidance on SB 261 Reporting

CARB staff announced that it plans to issue guidance in the coming weeks to outline the minimum reporting requirements under SB 261. The staff provided more details on the reporting periods to be covered in the initial SB 261 report, as well as a preview of some of the information that it expects to include in its forthcoming guidance.

Covered Period. The FAQs stated that companies’ initial SB 261 reports “may cover fiscal years (FY) 2023/2024 or FY 2024/2025, depending on the organization.” In response to questions, CARB staff indicated that it does not intend to require two years of data to be reported by January 1, 2026, noting that a company’s report covering FY 2024 would be sufficient for the first year of SB 261 reporting if it reflects the company’s most recent available data as of January 1, 2026.

Minimum Reporting Requirements

• Disclosure Frameworks: CARB staff outlined that reporting entities may base their SB 261 reports on the final report of the 2017 Recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), the International Financial Reporting Standards (“IFRS”) disclosure standards, or a report developed in accordance with any regulated exchange, national government, or other governmental entity. Each report submitted to CARB should (1) contain a statement on “[w]hich reporting framework is being applied,” (2) “[d]iscuss which recommendations and disclosures have been compiled and which have not,” and (3) “[p]rovide a short summary of the reasons why recommendations/disclosures have not been included as well as discussion of any plans for future disclosures.”
• Governance, Strategy, and Risk Management: CARB staff generally discussed the expectation that companies report in good faith on the governance, strategy and risk management pillars of the TCFD (or similar framework, including IFRS S2). Specifically, the staff noted that it would expect companies to discuss climate-related opportunities as well as risks, consistent with the relevant framework.
• Metrics and Targets: With respect to this pillar of the TCFD (or similar framework), CARB staff stated that GHG emissions metrics are not expected to be included as a minimum reporting requirement for companies’ SB 261 reports due by January 1, 2026. However, CARB staff noted that a company should include such information if it is already reporting GHG emissions metrics and the use of such metrics is material to the company’s management of its climate-related risks. CARB previously stated in the FAQs that the 2017 TCFD recommendations provide that “organizations should determine materiality for climate-related issues consistent with how they determine the materiality of other information included in their financial filings.”
• Climate scenario analysis: Noting feedback that requiring companies to complete and disclose a climate scenario analysis is unduly burdensome, CARB stated that it would expect any discussion of climate scenario analysis included in companies’ initial SB 261 to be qualitative. The staff stated that quantitative disclosure of climate scenario analysis would not be included in its minimum reporting requirements, but that CARB encourages quantitative disclosure where possible.

D. SB 253 Assurance Criteria

Noting that SB 253 requires “[t]he assurance engagement for scope 1 emissions and scope 2 emissions [to] be performed at a limited assurance level beginning in 2026,” CARB staff focused on the importance of impartiality in the third-party assurance process, and noted that CARB already includes conflict of interest disclosures and rotation of verification bodies in other regulatory programs.

CARB staff noted that SB 253 does not impose a requirement for assurance engagements to be performed by a CARB-accredited assurance provider, and CARB does not intend to create its own accreditation program for SB 253 reporting.

When asked about the deadline for the submission of the initial SB 253 assurance report and whether it would be required at the same time as the initial GHG emission reporting, CARB invited the public to submit comments during the comment period.

E. Initial Fee Regulation Concept

Estimated Fee Per In-Scope Entity. Based on the timelines and scope of entities proposed at this workshop as discussed above, CARB staff recommended issuing a “flat” fee per regulated entity. For each law, CARB estimated the annual fee by dividing its estimated total program administration costs by the total estimated number of in-scope companies, arriving at $3,106 for each SB 253 entity and $1,403 for each SB 261 entity, subject to annual adjustments for inflation.[6] Entities that are subject to both SB 253 and SB 261 would be required to pay both fees.

Fees for Companies with Multiple In-Scope Entities. CARB staff specified that each in-scope entity must separately pay its filing fees. For example, filing fees will be assessed separately for each in-scope subsidiary, even if all subsidiaries ultimately use their parent company’s report.