California Scope 3 Disclosure Rules Face Legal Setback as Ninth Circuit Targets SB 253 and SB 261

The Ninth Circuit ruled that California's Scope 3 reporting requirements under SB 253 likely violate the First Amendment, while leaving Scope 1 and Scope 2 disclosures intact. The same decision also reversed a lower court ruling on SB 261, which requires climate-related financial risk reporting. The case now returns to the district court to decide whether Scope 3 can be separated from the rest of SB 253. For companies operating in California, the immediate impact is uncertainty. Direct emissions and purchased energy reporting still stand, but value chain emissions reporting is on hold. The ruling also widens the gap between US and EU disclosure requirements, since European rules still demand extensive Scope 3 data. Expect more litigation and a patchwork of state and federal standards while the legal process plays out.