California's long-brewing corporate climate disclosure rules are no longer theoretical. The state's Office of Administrative Law gave final approval on October 12 to regulations implementing Senate Bills 253 and 261, setting a November 10 deadline for the first wave of emissions reports from the state's largest companies. Now, federal banking regulators are warning that the rules could end up pushing some banks out of California altogether.
The approval, confirmed by law firm Farella Braun + Martel, means the initial regulation took effect the same day it was signed off on. SB 253, known as the Climate Corporate Data Accountability Act, requires U.S.-organized businesses with more than $1 billion in annual revenue that do business in California to report their greenhouse gas emissions to the California Air Resources Board every year, according to Thompson Hine LLP. The first Scope 1 and Scope 2 reports, covering a company's direct emissions and the emissions tied to its purchased energy, are due November 10, with the more complex Scope 3 reporting on supply-chain emissions following in 2027.
California's climate reporting laws were passed in 2023, with California Democrats promoting the broader climate accountability package as a way to reduce carbon emissions and increase corporate accountability, according to the New York Post's reporting. The laws require businesses to detail their carbon emissions, and businesses have argued that the disclosures demand extensive emissions tracking and third-party audits, per the same Post report.
Federal Regulator Raises Alarm Over Bank Compliance
Those compliance demands have drawn direct pushback from Washington. The Office of the Comptroller of the Currency sent a warning to the California Air Resources Board about the two climate reporting laws, according to the New York Post. The OCC said compliance burdens could increase costs, reduce services, or cause banks to withdraw from California altogether, and warned that smaller banks in particular may pull out of the state, the Post reported.
The regulator also said that banks unable to withdraw from the state, including California-headquartered institutions, would be disadvantaged by the substantial compliance obligations, per the Post's account. The OCC argued that federally regulated banks fall under its jurisdiction and said federal laws preempt conflicting state laws for federally chartered banks under the Supremacy Clause, urging California to exempt banks from the disclosure laws entirely, according to the same report.
The OCC went further, warning that failure to respect federal authority could harm the U.S. banking system and distract banks from actual financial risks, the Post reported. The agency also warned the laws could decrease competition, increase prices, and reduce Californians' access to financial services, and said the laws could harm residents and Main Street businesses, according to the Post's reporting by Titus Wu.
Two Laws, Two Very Different Legal Fates
SB 253 and its companion, SB 261, have taken sharply different paths through the courts. Business groups sued over both laws, arguing the disclosure mandates compelled speech in violation of the First Amendment and violated interstate commerce rules, the Post reported. A federal appeals court allowed SB 253 to remain active while that case is pending, but temporarily blocked enforcement of SB 261 last year, according to the same report.
That split is reflected in the final state regulation. Thompson Hine notes that SB 261's timing remains unsettled under the Ninth Circuit injunction, and the rule does not set an SB 261 reporting deadline. An Arnold & Porter legal analysis adds that multiple legal challenges to SB 253 remain pending, even though the Ninth Circuit declined to enjoin that law outright.
SB 261 applies to a broader group of businesses than SB 253. Thompson Hine describes it as covering U.S.-organized businesses with more than $500 million in total annual revenue that do business in California and requiring a biennial report on climate-related financial risk, while Arnold & Porter describes the threshold as entities with at least $500 million in revenue doing business in the state. Either way, SB 261's enforcement remains paused for now.
What Companies Must Actually Do By November 10
For businesses that clear the $1 billion threshold under SB 253, the clock is already running. The state's Air Resources Board has offered a voluntary 2026 Report Intake Platform since September 1, where companies can submit contact information, billing information, emissions reports, or a notice of non-reporting, according to Arnold & Porter. The agency previewed an annual November 10 deadline going forward along with a Scope 3 phase-in limited to five commonly reported categories, per the same analysis.
The California Air Resources Board will also issue annual fee notices to SB 253 and SB 261 entities by December 10 each year, with payment required within 60 calendar days of the notice date, Thompson Hine reports. The final regulation does carve out some exemptions, including for nonprofit or charitable organizations that are tax-exempt under the Internal Revenue Code, according to Farella Braun + Martel. CARB had adopted an earlier version of the regulation back on February 26, with subsequent amended versions going through public comment before this month's final sign-off.
