Since our March 2026 update, the California Air Resources Board (CARB) submitted its initial regulations implementing Senate Bills (SB) 253 and 261 to the California Office of Administrative Law (OAL), withdrew those regulations to make additional changes, and proposed extending the first SB 253 reporting deadline from August 10 to November 10, 2026. CARB has also proposed significant clarifications regarding which entities are subject to the laws and the transitional reporting options available for 2026.
At the same time, CARB has provided its most detailed preview yet of the requirements it is considering for reporting beginning in 2027. Those preliminary proposals include a phased approach to Scope 3 emissions, limited assurance for Scope 1 and Scope 2 data, and more extensive disclosures concerning reporting methodologies, missing data, uncertainty, exclusions, and recalculations.
These developments give companies additional time to prepare for their first SB 253 submission, but they also make clear that future reports will likely require more mature data systems, internal controls, and documentation than the transitional 2026 filing.
This article summarizes CARB’s latest actions and what affected businesses should be doing now.
The First SB 253 Deadline Is Moving, but the Revised Regulation Is Not Yet Final
In February 2026, the CARB Board approved initial regulations addressing foundational implementation issues under SB 253 and SB 261, including applicability definitions, fees, and an August 10, 2026 deadline for the first SB 253 Scope 1 and Scope 2 emissions reports.
CARB submitted that regulatory package to OAL on May 20, 2026. On June 23, however, CARB withdrew the package to make limited changes and clarify certain requirements. The following day, CARB announced that it would propose extending the first reporting deadline by three months, from August 10 to November 10, 2026.
On July 27, CARB released modified regulatory text and opened a 15-day public comment period that closes August 11, 2026. The proposed modifications formally incorporate the November 10 deadline and make additional changes to the reporting, fee, and applicability provisions.
Importantly, the modified regulation has not yet completed the administrative rulemaking process. CARB must consider the comments it receives and resubmit the package to OAL before the regulation becomes effective. CARB’s current program materials therefore describe November 10 as a proposed reporting deadline that will apply if the Initial Regulation is approved by OAL. Companies should treat November 10 as the current planning deadline while continuing to monitor final approval.
CARB Clarified the Transitional Reporting Options Available for 2026
The modified regulation codifies and clarifies the first year enforcement accommodation reflected in CARB’s December 2024 enforcement notice and adds an express alternative for companies that had not begun collecting emissions information by December 5, 2024.
Under the modified regulatory text, for the report proposed to be due November 10, 2026 only, a reporting entity may submit either:
- Its Scope 1 and Scope 2 emissions from the prior fiscal year to the extent those emissions can be determined from information the reporting entity possessed or was already collecting on or before December 5, 2024; or
- A statement on company letterhead indicating that the entity is not submitting an emissions report because it did not possess Scope 1 or Scope 2 emissions information and was not collecting that information on or before December 5, 2024.
CARB’s 2024 enforcement notice addressed the first option by providing enforcement discretion for entities making good faith efforts to report using information they already possessed or were collecting. The express company letterhead alternative is new in the July 2026 modified regulatory text.
CARB’s modified regulations also confirm that Scope 3 emissions are not required in 2026 and that reports may be consolidated at the parent company level. If a subsidiary independently qualifies as a reporting entity and its parent elects to submit a consolidated report covering that subsidiary, the subsidiary need not prepare a separate report.
The modified text also clarifies which fiscal year supplies the emissions data for the first filing. Generally, entities with fiscal years ending on or before February 1 would report for the fiscal year ending in 2026, while entities with fiscal years ending after February 1 would report for the fiscal year ending in 2025. The latter entities may instead use their most recent preceding fiscal year if that data is available.
This flexibility should not be viewed as a reason to defer preparations. Companies relying on the alternative letter option should document the factual basis for that determination, including when emissions data collection began. Companies submitting emissions information should likewise preserve the information supporting their calculations and good faith compliance efforts. CARB’s existing enforcement notice specifically directs companies seeking first year enforcement discretion to retain data relevant to emissions reporting.
CARB’s Modified Regulation Also Clarifies Applicability
The July modifications provide additional guidance on an issue that has been particularly difficult for companies with complex corporate structures: determining which entities within a corporate group independently fall within SB 253 or SB 261.
Under the modified regulation, both “doing business in California” and revenue would be evaluated at the individual business entity level. For SB 253, a reporting entity must be a U.S.-formed business entity with more than $1 billion in total annual revenue that does business in California. SB 261 uses a $500 million revenue threshold for a covered entity.
The modified text would determine whether an entity exceeds the applicable revenue threshold based on the lesser of its two previous fiscal years of revenue. CARB also proposes defining revenue by reference to “gross receipts” under California tax law and excluding intercompany transactions among entities within the same combined reporting group when calculating an individual entity’s revenue.
These entity level rules are distinct from CARB’s parent level reporting option. A subsidiary must first independently qualify as a reporting or covered entity. Consolidation determines how qualifying entities may report, rather than whether a subsidiary is itself subject to the law.
The modified regulation would also require reporting and covered entities to retain for five years California tax records demonstrating that they meet the applicable revenue and “doing business in California” thresholds and provide those records to CARB upon request.
Companies with multiple U.S. subsidiaries, foreign parent entities, reorganizations, acquisitions, or operations conducted through affiliated entities should therefore evaluate applicability at the entity level and document their analysis rather than relying solely on CARB’s preliminary list of potentially covered entities.
More Reporting Guidance and a Voluntary Online Platform Are Expected by September 1
At its July 21 workshop, CARB stated that it plans to provide additional materials supporting the 2026 Scope 1 and Scope 2 reporting process by September 1, 2026. Those materials are expected to include:
- A voluntary online intake platform for fee contact information and greenhouse gas emissions reporting;
- An accompanying guidance document; and
- An instructional video.
With only approximately two months between the anticipated guidance and the proposed November deadline, companies should not wait for the new materials before compiling and reviewing their available information.
CARB Is Developing More Prescriptive Requirements for 2027 and Beyond
CARB’s July 21 public workshop focused primarily on a subsequent rulemaking that would govern SB 253 reporting beginning in 2027. That rulemaking remains in the pre-proposal stage, meaning the concepts described below may change before CARB publishes formal regulatory text. Nevertheless, the workshop provides a useful roadmap for the systems and processes companies will likely need to develop.
CARB Proposes Initially Requiring Five Scope 3 Categories
SB 253 requires Scope 3 emissions reporting to begin in 2027 but authorizes CARB to establish the schedule for those disclosures. CARB staff now proposes initially requiring reporting for five of the 15 Scope 3 categories identified in the Greenhouse Gas Protocol:
- Purchased goods and services;
- Fuel- and energy-related activities not included in Scope 1 or Scope 2;
- Waste generated in operations;
- Business travel; and
- Employee commuting.
The remaining 10 categories would initially be voluntary.
For each required category, CARB staff proposes requiring companies to identify the category and activities included; describe the quantification and accounting methodologies and data types used; report total emissions; explain exclusions; and identify the percentage of emissions calculated using primary supplier or other value chain data. CARB’s proposal would permit industry average data and spend-based methods for certain upstream emissions calculations consistent with the Greenhouse Gas Protocol.
This phased approach may reduce the immediate burden compared with requiring all 15 categories in 2027. Even so, collecting reliable information for purchased goods and services may require substantial coordination among sustainability personnel, procurement teams, vendors, suppliers, and outside consultants.
CARB Proposes Beginning Limited Assurance with Reports Submitted in 2027
CARB staff’s July proposal would require independent limited assurance over Scope 1 and Scope 2 emissions beginning with reports submitted in 2027. Staff is considering several recognized assurance standards, including AA1000AS v3, AICPA AT-C Section 210, ISAE 3410 together with ISAE 3000, ISSA 5000, and ISO 14064-3:2019.
The timing warrants continued attention, however, as CARB’s proposal is in tension with the statutory language. SB 253 itself states that assurance for Scope 1 and Scope 2 emissions must be performed at a limited assurance level “beginning in 2026.” CARB’s July staff proposal, by contrast, would begin the regulatory assurance requirement with reports submitted in 2027. CARB will therefore need to provide further clarity regarding the timing and mechanics of the assurance requirement.
Regardless of how that issue is ultimately resolved, companies should begin assessing assurance readiness now. An assurance provider will generally need more than a final emissions total. Companies should anticipate review of supporting data, calculation files, organizational boundaries, emissions factors, management controls, assumptions, and documentation supporting estimates or substituted data.
CARB Is Increasing Its Focus on Data Quality and Transparency
CARB’s proposed framework would require substantially more detail regarding how reported emissions were developed. Among other concepts presented at the July workshop, CARB is considering requirements addressing:
- Organizational boundaries and consolidation approaches;
- Emissions factors and global warming potential values;
- Quantification and measurement methodologies;
- Measurement uncertainty;
- Missing data protocols and substitute data procedures;
- Material exclusions;
- Changes in methodology;
- Primary and secondary data;
- Biogenic emissions;
- Emissions reductions and removals; and
- Recalculation of previously reported emissions.
CARB also proposes requiring Scope 2 emissions inventories to be calculated and reported using both location-based and market-based methods.
The direction of the proposal is increasingly clear: beginning in 2027, CARB anticipates requiring reporting entities not only to disclose emissions totals but also to provide transparent and defensible explanations of how those totals were developed.
Insurers May Become Subject to SB 253 Reporting in 2027
CARB’s initial regulation excludes insurance companies from the special 2026 emissions reporting requirement to avoid duplication with parallel reporting administered by the California Department of Insurance (CDI). CARB staff has indicated, however, that CDI reporting may not satisfy all SB 253 requirements beginning in 2027 because the existing insurance reporting framework does not include Scope 3 emissions or SB 253’s assurance requirements.
Under CARB’s current proposal, beginning in 2027 insurers could submit the same report to satisfy both CDI and SB 253 if that report satisfies all requirements imposed by CARB. If the CDI report does not address all CARB requirements, the reporting entity would need to supplement it with the remaining required information.
Insurance companies therefore should not assume that the 2026 exclusion represents a permanent exemption.
SB 261 Enforcement Remains Paused
The litigation posture regarding SB 261 has not materially changed since our March update.
On November 18, 2025, the Ninth Circuit issued an order enjoining enforcement of SB 261 during the pendency of the appeal in Chamber of Commerce v. Sanchez. CARB currently states that it will not enforce the January 1, 2026 reporting deadline and will provide additional information, including an alternate reporting date, as appropriate, after the appeal is resolved. CARB has meanwhile opened a portal for entities that choose to submit climate-related financial risk reports voluntarily. CARB’s current SB 261 guidance is available here.
The injunction does not apply to SB 253. Companies subject to SB 253 should therefore continue preparing for the 2026 emissions reporting requirement unless and until a court or CARB provides otherwise.
Companies that may ultimately be subject to SB 261 should also consider maintaining their climate risk reporting work. If the injunction is dissolved or the legal challenge is unsuccessful, CARB may establish a replacement compliance schedule that leaves affected companies with limited additional preparation time.
What Companies Should Do Now
1. Continue Preparing for a November 10 Filing
Companies should treat November 10, 2026, as the current planning deadline for their first Scope 1 and Scope 2 submission, while recognizing that the revised regulation still requires OAL approval. The additional three months provide useful breathing room, but they do not eliminate the need to determine organizational boundaries, identify available data, select calculation methodologies, and complete internal review.
2. Reassess Whether the Company Is Subject to SB 253
Companies should review their applicability analyses in light of CARB’s modified definitions. In particular, companies should evaluate revenue and “doing business in California” at the individual entity level, determine which fiscal years control the revenue analysis, identify potentially relevant intercompany transactions, and evaluate whether parent level consolidation is appropriate for entities that independently qualify. Companies should document that analysis and retain the supporting records rather than relying solely on CARB’s preliminary list of potentially covered entities.
3. Decide Which 2026 Reporting Path Applies
Companies should determine whether they possessed or were collecting Scope 1 and Scope 2 emissions information on or before December 5, 2024. That determination affects whether a company may submit emissions information under the transitional reporting provision or use the newly proposed company letterhead alternative. Companies should preserve records supporting whichever approach they select.
4. Build Toward Assurance-Ready Reporting
Although CARB’s current staff proposal would begin limited assurance with reports submitted in 2027, the statute states that limited assurance begins in 2026. Companies should monitor CARB’s forthcoming guidance for clarification.
In the meantime, companies can begin developing processes capable of withstanding third-party review by establishing clear ownership of emissions data, documenting methodologies, maintaining calculation records, adopting review controls, and resolving inconsistencies among sustainability, financial, operational, and procurement systems.
5. Begin Work on the Five Proposed Scope 3 Categories
Companies should evaluate whether they currently collect sufficient data for the five Scope 3 categories CARB has identified for proposed mandatory reporting in 2027. Purchased goods and services may warrant particular attention because obtaining supplier and value chain information can be time consuming and may require coordination across procurement and vendor management functions.
6. Continue Monitoring and Participating in CARB’s Rulemaking
CARB’s 15-day comment period on the modified initial regulation closes August 11, 2026. CARB is also continuing stakeholder engagement as it develops the subsequent regulation governing 2027 and later reporting.
The Bottom Line
CARB’s withdrawal of the initial regulation and proposed extension of the first SB 253 deadline provide companies with additional preparation time, but they also underscore that California’s climate disclosure framework remains a work in progress.
The 2026 filing is intended to function as a transitional reporting cycle, with CARB providing substantial flexibility for companies that had not developed complete emissions data systems before December 2024. The more significant compliance challenge is likely to come in 2027, when CARB expects to introduce Scope 3 reporting and more detailed requirements governing the quality, transparency, and defensibility of reported emissions information and when CARB’s proposed assurance framework would take effect.
Companies should use the additional time before the proposed November 10 deadline not only to prepare their first submission, but also to begin developing the governance, data systems, contractual processes, and internal controls necessary for later reporting cycles.
Miller Nash’s environmental and business attorneys can assist companies in evaluating whether SB 253 or SB 261 applies, analyzing parent and subsidiary reporting structures, reviewing first year reporting strategies, coordinating legal and technical compliance teams, preparing comments for CARB, and monitoring the ongoing rulemaking and litigation.
This article is part of our ongoing coverage of California’s SB 253 and SB 261.
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This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
