Client Alert: California SB 261 Implementation Halted by Ninth Circuit
/SB 261 on Hold: Appeals Court Grants Injunction, SB 253 Remains in Effect
As of November 18, 2025, a U.S. appeals court has temporarily frozen (halted the implementation of) California Senate Bill (SB) 261, the Climate-Related Financial Risk Act.
The U.S. Court of Appeals for the Ninth Circuit granted a motion for an injunction pending appeal, pausing the enforcement of SB 261 following a legal challenge by the U.S. Chamber of Commerce and other business groups. The law, which would have required large businesses with revenues over $500 million to publicly disclose their climate-related financial risks, was initially set to have its first reports due by January 1, 2026.
This decision is a temporary measure while the appellate court hears the full case, which challenges the constitutionality of the law. The court's decision was a partial win for industry groups, as the Ninth Circuit allowed the enforcement of a separate climate disclosure law, SB 253 (the Climate Corporate Data Accountability Act), to proceed.
The California Air Resources Board (CARB) is the agency tasked with enforcing these rules and has been in the process of developing the associated regulations. Businesses potentially subject to the law are advised to monitor the ongoing litigation and any future guidance from CARB.
Although a temporary injunction is in place, the future of SB 261 is still uncertain, as the appellate court has not issued a final ruling. We recommend clients continue preparing climate-related financial risk reports and remain ready to comply, since regulatory expectations may change quickly after the decision.
For questions regarding SB 261 contact:
Nick McCreary, MS, LEED AP BD+C
Senior Vice President, Sustainability
KERAMIDA Inc.
Email Nick at nmccreary@keramida.com
