Ag Groups suing California over Clean Air Act

By: Sydney Sheffield 

The United States Chamber of Commerce, American Farm Bureau Federation (AFBF), Western Growers Association, California Chamber of Commerce, Central Valley Business Federation, and Los Angeles County Business Federation have recently filed a lawsuit in the United States District Court for the Central District of California against the state of California regarding the corporate disclosure laws that were signed into law by California Governor Gavin Newsom in October 2023. 

The new corporate disclosure laws, state Senate bills 253 and 261, require businesses to report on emissions across their supply chain, including indirect emissions. The laws also require companies to report their worldwide climate-related financial risks and proposed mitigation strategies. The laws apply to companies across the United States and worldwide based on operations in the state of California. The lawsuit claims the state is attempting to impose essentially a national standard.

The lawsuit claims the state of California violates the First Amendment, which bars California from compelling a business to engage in subjective speech, and the federal Clean Air Act, which preempts a state’s ability to regulate emissions in other states.

“We are proud of the leadership and innovation shown by America’s businesses in tackling climate change. Businesses and government need to work together to address the problem and that requires policies that are practical, flexible, predictable, and durable,” said Tom Quaadman, United States Chamber of Commerce Center for Capital Markets Competitiveness executive director. 

“California’s corporate disclosure laws are the opposite of that and violate the First Amendment by forcing businesses to engage in subjective speech. With many public companies already disclosing material climate risks, businesses are well ahead of government regulators. California’s laws usurp the role of federal regulators, opening the door for other states to take an opposite approach to disclosure, leaving businesses and their investors caught in the middle of a political scrap between states.”

The lawsuit claims that estimating certain greenhouse emissions with any degree of accuracy is not yet possible and any sort of reporting would be “more of an art than a science”. The lawsuit also claims that the burden of these laws would disproportionately fall onto small- and medium-sized businesses, including family farms. The inability to accurately estimate greenhouse gas emissions may force larger businesses to stop doing business with these smaller organizations.

“The Chamber and its partners will continue to fight back against illegal and excessive government overreach at the state and federal levels, especially micromanagement that undermines responsible efforts by businesses to address climate risks,” Quaadman concluded.

Read the lawsuit here.