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Corporate Alliance Takes Legal Stand Against California’s Climate Transparency Legislation

A coalition of businesses filed a lawsuit to challenge new California regulations mandating extensive greenhouse gas disclosures.

The legal action targets Senate Bills 253 and 261, which affect companies with significant revenues.

Constitutional Concerns

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The plaintiffs argue that the regulations compel speech against the First Amendment and overstep California’s jurisdiction, conflicting with federal law and principles.

National Impact

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The legislation is considered “groundbreaking” with potential effects beyond California, raising concerns about its compliance costs and complexity.

Plaintiffs’ Stance

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Represented by major commerce and farming organizations, the suing parties claim the laws infringe on businesses’ rights to refrain from engaging in political speech.

Political and Economic Pressures

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The lawsuit criticizes the laws for pressuring companies to align with California’s climate policies, arguing this infringes on commercial freedom and the First Amendment.

Collaboration vs. Obstacles

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Tom Quaadman, executive director for the U.S. Chamber of Commerce Center for Capital Markets Competitiveness emphasizes the need for practical and collaborative approaches to sustainable development, criticizing the laws for forcing businesses into subjective speech.

Disproportionate Burdens

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Critics argue that California’s disclosure laws disproportionately burden local businesses with compliance costs, putting them at a disadvantage against out-of-state competitors.

Litigation Anticipation

Legislative analyses predicted legal challenges based on perceived inequalities for in-state companies and jurisdictional overreach for out-of-state entities.

Authors Defend Legislation

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Senators Henry Stern and Scott Wiener defend the bills, dismissing the lawsuit as political theater and climate denial, and assert the regulations’ transparency benefits.

Cost and Compliance Debate

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While the lawsuit cites potential compliance costs exceeding $1 million, Sen. Wiener and a report from ERM suggest much lower expenses, challenging the plaintiffs’ financial arguments.

Governor’s Concerns

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Governor Gavin Newsom expressed concerns about the financial impact on businesses and the feasibility of the implementation deadlines, calling for legislative revisions.

Future Legislative Actions

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Newsom directs administration efforts to work with legislators to address compliance timelines and reporting protocols, indicating potential adjustments to the laws.

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Credit: Rep. Marjorie Taylor Greene, R-Ga., at a rally in Wilkes-Barre, Pa., on Sept. 3. Mary Altaffer / AP