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Exxon Sues California Over New Climate Disclosure Laws

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https://www.nytimes.com/2025/10/25/climate/exxon-california-lawsuit-free-
speech.html

The oil giant said requirements that companies calculate new details about 
greenhouse gas emissions and climate risks violate Exxon’s free speech 
rights.

Exxon Mobil sued California late Friday claiming that two new state laws 
that aim to fight climate change would violate the oil company’s free 
speech rights.

The two laws, passed in 2023 and known as the California Climate 
Accountability Package, would require thousands of large companies doing 
business in the state to calculate and report the greenhouse gas emissions 
created by the use of their products, along with the business risks that 
climate change represents for the companies.

Requiring companies to calculate the climate damage caused by people using 
their products is a major change. In the past, climate regulations have 
generally required companies to report their own corporate emissions, but 
not emissions caused by people using the products that they manufacture 
and sell.

For oil companies like Exxon, the new rules, which begin to take effect in 
2026, mean calculating and then reporting the emissions caused by 
activities like the use of gas or diesel in cars and trucks. 
Transportation is one of the major contributors to the emission of 
greenhouse gases like carbon dioxide, which warm the world by acting as a 
blanket in the atmosphere, trapping the heat of the sun.

Exxon’s lawsuit, filed in the United States District Court for the Eastern 
District of California, argued that the laws would force the company to 
use flawed methodology to calculate these emissions and would misrepresent 
the role that Exxon and its products play in warming the world. The suit 
asked a judge to block the state from enforcing the laws against it.

“The statutes compel Exxon Mobil to trumpet California’s preferred message 
even though Exxon Mobil believes the speech is misleading and misguided,” 
the lawsuit said.

California’s lawmakers have been at the forefront of efforts to reduce the 
emissions of greenhouse gases, and the state’s policies often influence 
other states to follow its lead. Exxon’s lawsuit argues that the two 
California laws, instead of helping to curb emissions, aim to punish big 
businesses.

“While California might believe that making Exxon Mobil report historical 
emissions for an oil refinery acquired in Canada or speculative business 
risks for a Kazakhstan pipeline is the best way to spur climate solutions, 
Exxon Mobil disagrees,” the lawsuit said. “The First Amendment bars 
California from pursuing a policy of stigmatization by forcing Exxon Mobil 
to describe its non-California business activities using the State’s 
preferred framing.”

The lawsuit named officials on the California Air Resources Board, a state 
agency that oversees air and climate matters, and the attorney general, 
Rob Bonta.

Tara Gallegos, a spokeswoman for Gov. Gavin Newsom of California, said it 
was “truly shocking that one of the biggest polluters on the planet would 
be opposed to transparency.” She added that the laws “have already been 
upheld in court and we continue to have confidence in them.”

One of the two laws that Exxon is challenging, SB 253, requires businesses 
to compute emissions using a methodology that focuses on a company’s 
overall worldwide emissions. Exxon’s lawsuit argues that would put 
disproportionate blame on large companies simply because of their size.

The methodology California uses, called the Greenhouse Gas Protocol, was 
developed by two organizations: The World Resources Institute, a research 
group in Washington, and the World Business Council for Sustainable 
Development, a network of more than 250 prominent companies including some 
of Exxon’s competitors, like Chevron and Shell.

Exxon’s lawsuit says the state should use a different approach that would 
reward more efficient companies. The lawsuit also claims that the 
inclusion of emissions caused by the use of a company’s products by 
consumers — not just the emissions created by a company’s activities as a 
business — leads to double counting and confusion.

Exxon’s lawsuit also argues that a California law should apply only to in-
state activity, and not require reporting or calculations of emissions 
beyond the state’s borders. It said that a vast majority of Exxon’s 
principal business operations occur outside of California, and that the 
company does not explore for, produce, manufacture or transport crude oil 
or natural gas in the state, nor does it do any refining there. Exxon is 
headquartered in Texas, with operations in more than 60 countries.

The second law that Exxon is challenging, SB 261, requires companies to 
disclose climate-related risks they face from, say, coastal oil facilities 
that could flood during storms, or changes to government policies that 
could have financial implications for them. Exxon said that it already 
provided such information under federal securities laws, and that the 
state provision would require it to use a “very speculative” framework 
that differs greatly from the federal one.

The suit argued that the laws are an example of overreach by California 
officials trying to govern corporate speech. The aim of the laws, it said, 
was to publicly shame big business, not effectively regulate emissions.

Michael Littenberg, a corporate partner at the law firm Ropes & Gray 
advising companies and trade associations on the laws, said the filing 
raised a key question: Whether there would be a “pile-on effect” of other 
companies bringing similar challenges. But he added that the California 
Air Resources Board “has not shown any appetite” to delay putting the laws 
into effect, so he expects companies to continue preparing to comply with 
them.

The lawsuit is similar to one filed by the U.S. Chamber of Commerce and 
other business groups in January 2024. In that case, Judge Otis D. Wright 
II of the U.S. District Court for Central California dismissed some of the 
claims early this year, allowing only the First Amendment claim to 
continue. He denied the plaintiffs’ request for a preliminary injunction 
to block the laws from taking effect in August.

The Chamber of Commerce then filed an appeal with the U.S. Court of 
Appeals for the Ninth Circuit.

The chamber’s lawsuit also named as defendants leaders of the California 
Air Resources Board, and the attorney general, Mr. Bonta. In court filings 
in the Chamber of Commerce lawsuit, Mr. Bonta’s office argued that the 
laws actually serve a core First Amendment goal by allowing well-informed 
financial decision-making. “Plaintiffs have yet to explain how the laws 
compel even a single company to state a political or ideological opinion,” 
Caitlan McLoon, a deputy attorney general, wrote in a brief last month.

In that case, a few groups have filed amicus briefs with the appellate 
court on both sides of the fight. The Washington Legal Foundation, which 
supports free-enterprise principles, argued that the laws force businesses 
to parrot the state’s views. Ceres, a business network that supports a 
transition to cleaner energy, said the laws had broad support from 
corporations and investors. In the latest filing, on Friday, FarmSTAND, 
which opposes industrial animal agriculture, said the laws were important 
to counter meat and dairy companies engaging in what the group called 
greenwashing, or deceptive publicity about their environmental practices.

At the end of the Biden administration, the Securities and Exchange 
Commission had been nearing implementation of new federal climate 
disclosure rules. Those rules were also challenged in court, and in March, 
shortly after the start of the current Trump administration, the 
commission voted to end its legal defense of the rules.

The rules remain effectively shelved, but not repealed, according to 
Jayson O’Neill, senior director of climate finance for Focal Point 
Strategy Group, a communications firm that works with climate and good-
governance groups. He noted that other states have also proposed their own 
climate disclosure laws.

The European Union is also moving forward with new climate disclosure 
rules. In a letter this week to the E.U., Energy Secretary Chris Wright 
and his Qatari counterpart, Saad Sherida al-Kaabi, minister of state for 
energy affairs, raised concerns about the measure, the Corporate 
Sustainability Due Diligence Directive. They called on the E.U. to repeal 
the directive or remove provisions that they said would be economically 
damaging.

Karen Zraick covers legal affairs for the Climate desk and the courtroom 
clashes playing out over climate and environmental policy. 


-- 
November 5, 2024 - Congratulations President Donald Trump.  We look 
forward to America being great again.

We live in a time where intelligent people are being silenced so that 
stupid people won't be offended.

Every day is an IQ test. Some pass, some, not so much.

Thank you for cleaning up the disasters of the 2008-2017, 2020-2024 Obama 
/ Biden / Harris fiascos, President Trump.

Under Barack Obama's leadership, the United States of America became the 
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Exxon Sues California Over New Climate Disclosure Laws "Leroy N. Soetoro" <leroysoetoro@americans-first.com> - 2025-10-26 23:16 +0000

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