California Finalizes Foundational SB 253 and SB 261 Regulation as First SB 253 Reporting Deadline Nears

On October 12, 2026, the California Office of Administrative Law (OAL) approved the California Corporate Greenhouse Gas Reporting and Climate-Related Financial Risk Disclosure Initial Regulation (Initial Regulation), which implements the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). The California Air Resources Board (CARB) has confirmed that the Initial Regulation took effect the same day. With the first SB 253 emissions reports due November 10, 2026, the approval gives companies the definitions they need to determine whether they are regulated. Significant questions remain, however, for SB 261 and for SB 253 reporting beyond this first cycle.

The Approved Regulation: Key Definitions and Mechanics

CARB approved the Initial Regulation on February 26, 2026. CARB submitted it to OAL in May, withdrew it in June to make clarifying changes and defer the first reporting deadline from August 10 to November 10, issued modified text in July, and resubmitted the package to OAL in September. CARB has made its rulemaking materials available for review.

As a refresher, California’s climate disclosure laws only apply to entities that meet the applicable revenue threshold ($500 million for SB 261; $1 billion for SB 253) and do business in California. The scoping definitions that apply under both statutes include the following:

• “Revenue” is defined by reference to “gross receipts” under California Revenue and Taxation Code section 25120(f)(2), and “doing business in California” is defined by reference to the Revenue and Taxation Code’s doing-business provisions. Importantly, “revenue” is determined from the lesser of the last two fiscal years.
• The revenue and doing-business tests are applied at the individual business-entity level, and intercompany transactions within a combined tax reporting group are excluded from revenue.
• A parent company may submit a consolidated report and pay fees on behalf of qualifying subsidiaries, although revenue continues to be evaluated entity by entity. These clarifications in the final regulations may function to circumscribe applicability and warrant careful attention.

Additional key provisions include a November 10, 2026 deadline for Scope 1 and Scope 2 emissions reports; codified first-year enforcement relief for entities that were not collecting Scope 1 and Scope 2 information as of December 5, 2024; flat annual fees, with determination notices issued December 10 and payment due within 60 days; and a five-year obligation to retain California tax records supporting an entity’s threshold determinations.

CARB Outreach and the Voluntary Reporting Portal

CARB has begun direct outreach to companies that may be covered, including the publication of a mailer. CARB has previously emphasized that companies remain responsible for their own coverage analysis whether or not they receive outreach or appear on its preliminary list of potentially covered entities, which CARB acknowledged may be incomplete. Receiving (or not receiving) a mailer should not govern a company’s analysis.

Since September 1, CARB has offered a voluntary 2026 Report Intake Platform. Entities may use it to provide contact and billing information, submit Scope 1 and Scope 2 reports, or notify CARB that they do not plan to report in 2026. CARB’s September 1 guidance accepts an existing annual report that includes Scope 1 and Scope 2 emissions, existing data reported to another program or voluntary initiative, or CARB’s draft template, and confirms that CARB will accept 2026 submissions whether or not limited assurance has been obtained.

Although use of the portal is voluntary, anything submitted is a communication to a regulator. We recommend that companies carefully review their reporting strategy, particularly for multi-reporting entity submissions, prior to uploading files to the portal.

SB 253: Open Questions for the 2026 Cycle and Beyond

For the upcoming November 10 cycle, several questions remain open.

• Applicability for corporate families. Entity-level tests combined with optional consolidated reporting may raise complex questions about which entities are in scope, how emissions should be allocated among multiple responsible entities, which are responsible for fees, and how foreign-parent and multi-tier structures should be handled.
• First-year relief. Whether an entity was “collecting” Scope 1 and Scope 2 information as of December 5, 2024 may be fact-intensive, and we understand that non-reporting statements may be made publicly accessible. CARB has codified its first-year approach, but it remains tied to good-faith efforts to report.
• Methodology. CARB has built flexibility into 2026 reporting on emission factors, reporting formats, and fiscal-year selection. Companies should not assume that flexibility will carry forward.

Looking to 2027 and beyond, a separate regulation governing reporting from 2027 forward is still in development. At its July 21 workshop, CARB previewed an annual November 10 deadline, a Scope 3 phase-in limited to five commonly reported categories, specified assurance standards, and alignment with a fixed version of the Greenhouse Gas Protocol. None of these concepts have been formally proposed, so regulated parties have time to weigh in on both the concepts and the eventual proposed regulations. Finally, there are multiple pending legal challenges to SB 253, notwithstanding that the Ninth Circuit declined to enjoin law.

SB 261: Scoping Is Clearer, but Timing Remains Uncertain

On November 18, 2025, the Ninth Circuit enjoined enforcement of SB 261 pending appeal in Chamber of Commerce of the United States v. California Air Resources Board. CARB responded with an Enforcement Advisory stating that it will not enforce the statutory January 1, 2026 reporting deadline and will announce an alternate date once the appeal is resolved. CARB also opened a docket for voluntary submissions. Although the Initial Regulation’s definitions apply to SB 261 and help clarify which entities are covered by the law, the pending legal challenge obscures when and whether SB 261 disclosures will be due.

Open questions include: when the Ninth Circuit will rule and on what grounds; whether, if the opinion is favorable to CARB, plaintiffs will seek emergency relief from the U.S. Supreme Court; what alternate deadline CARB will set and how much lead time companies will receive; how CARB’s expectations for report content (TCFD or an equivalent framework) will evolve; whether companies that have already published voluntarily will need to update; and what disclosure and litigation considerations attach to voluntary publication while enforcement is paused.

Practical Steps

Amidst the uncertainty, conducting and documenting a careful applicability analysis under both laws is a prudent step. Companies subject to SB 253 have a variety of decision points around submitting greenhouse gas emissions data collectively at the parent level versus on a regulated entity basis, submitting an existing report, utilizing CARB’s template, or filing a non-reporting statement. Companies should also consider building the data, controls, and assurance readiness that 2027 reporting is likely to demand, and keep SB 261 reporting work in a state of readiness, given how quickly the landscape could change.

The Arnold & Porter team is actively monitoring legal and regulatory developments under both statutes and is available to address questions.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.