Exxon Mobil Corp. v. Sanchez

Exxon Mobil Corporation (ExxonMobil) filed a lawsuit in the federal district court for the Eastern District of California against California Air Resources Board officials and the California attorney general seeking to enjoin the implementation and enforcement of California’s climate change disclosure laws, S.B. 253 and S.B. 261. S.B. 253 requires companies doing business in California with annual revenues over $1 billion to disclose Scope 1, 2, and 3 greenhouse gas emissions; S.B. 261 requires companies doing business in California with annual revenues over $500 million to report on climate-related business risks. ExxonMobil asserted that both laws compel speech in violation of the First Amendment and that the National Securities Markets Improvement Act of 1996 expressly preempts S.B. 261. In support of its First Amendment claim, ExxonMobil alleged that the two statutes constitute content-based regulation of speech that requires ExxonMobil to use reporting frameworks for emissions and business risk that ExxonMobil believes are “misleading and counterproductive” (the Greenhouse Gas Protocol) and “fundamentally unsuitable for mandatory reporting” (the framework for business risk reporting). ExxonMobil contended that the laws should be subjected to strict scrutiny (rather than the relaxed scrutiny applicable to “commercial speech”) because the laws force companies “to speak in service of a state-preferred viewpoint blaming them for climate change.” ExxonMobil also asserted that regardless of the scrutiny applied, there is no constitutionally adequate justification for the burden on speech based on interests in consumer protection, investor protection, or emissions reduction. ExxonMobil asserted that “[t]here is no legitimate reason to require ExxonMobil to produce additional reports beyond what it already produces other than to force ExxonMobil to align with California’s views on climate change.”