California Issues Important Enforcement Guidance for its New GHG Emissions Disclosure Requirements – Provides Additional Compliance Flexibility

The California Air Resources Board has published an Enforcement Notice relating to the Climate Corporate Data Accountability Act (Senate Bill 253). The Act requires annual public disclosure of scope 1, 2 and 3 greenhouse gas emissions by U.S.-organized entities doing business in California with total annual revenues exceeding $1 billion. Under the Act, the first disclosures are required in 2026 for fiscal 2025, for scope 1 and 2 emissions. Scope 3 emissions disclosures follow the next year. The Act is further discussed in this recent Ropes & Gray post.

The Enforcement Notice describes how CARB will exercise its enforcement discretion. It is not intended as an interpretation of the requirements of the Act. 

In the Enforcement Notice, CARB indicates that it recognizes that companies may need some lead time to implement new data collection processes to allow for fully complete scope 1 and 2 emissions reporting, to the extent they do not currently possess or collect the relevant information. Accordingly, CARB will exercise its enforcement discretion such that, for the first report due in 2026, reporting entities may submit scope 1 and 2 emissions “from the reporting entity’s prior fiscal year” (quotes in the original) that can be determined from information the reporting entity already possesses or is collecting at the time the Notice was issued (December 5, 2024).

The Enforcement Notice goes on to indicate that CARB will exercise enforcement discretion for the first reporting cycle on the condition that entities demonstrate good faith efforts to comply with the requirements of the law. This enforcement discretion is aimed at supporting entities actively working toward full compliance. Therefore, for the first reporting cycle, CARB will not take enforcement action for incomplete reporting against entities, as long as they make a good faith effort to retain all data relevant to GHG emissions reporting for the entity’s prior fiscal year. 

CARB is tasked with developing and adopting implementing regulations under the Act. Originally, CARB was required to do so by January 1, 2025. SB 219 pushed the date back to July 1, 2025 (see this post). The compressed period between adoption of implementing regulations and first compliance was universally viewed as not helpful for companies, since it gives them less time to address the regulations adopted by CARB. The enforcement discretion being exercised by CARB will presumably take much of the first reporting period pressure off companies. The Enforcement Notice indicates that CARB will provide details on reporting for subsequent year reporting cycles as part of CARB’s rulemaking process.

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