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.”

Lawsuit challenging California's disclosure laws for greenhouse gas emissions and climate-related business risk.

Exxon Mobil Corp. v. Sanchez

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ExxonMobil Filed Suit Challenging California Climate Disclosure Laws

Filed

United States of America

California

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

People with different national or cultural traditions from the dominant population

Social and cultural groups that share collective ancestral ties to the lands and natural resources where they live, occupy or from which they have been displaced

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

This sector involves the wholesale and retail selling of goods.

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

ExxonMobil Filed Suit Challenging California Climate Disclosure Laws

Policy instrument

Impacted group

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance