California and Exxon Clash Over Climate Change Rules

New Regulations Target Corporate Emissions and Risks

California has recently enacted two significant laws aimed at combating climate change. These laws mandate that large companies report the greenhouse gas emissions generated by their products, as well as the climate-related risks they face. This represents a major shift, as companies have previously only been required to report their own direct emissions.

Exxon Mobil Challenges the Laws

Legal Battle Over Climate Transparency

Exxon Mobil, a leading oil company, has filed a lawsuit against California, arguing that the new laws infringe on their free speech rights and unfairly target large corporations. Exxon contends that the laws compel them to report emissions from activities such as the use of gas and diesel in vehicles, which they claim is confusing and could result in double counting.

Key Details of the Laws

The California Climate Accountability Package

The laws, set to take effect in 2026, are known as the California Climate Accountability Package. They include:

• SB 253: Requires companies to calculate their worldwide emissions.
• SB 261: Mandates the disclosure of climate-related risks, such as flooding or changes in government policies.

Exxon argues that the methodology used by California, the Greenhouse Gas Protocol, is unfair. They advocate for a different approach that rewards more efficient companies. Additionally, Exxon claims that the laws represent an overreach by California officials attempting to regulate corporate speech.

Government Response

Governor Newsom's Spokesperson Weighs In

Tara Gallegos, a spokeswoman for Governor Gavin Newsom, criticized Exxon's lawsuit. She expressed shock that one of the world's largest polluters would oppose transparency. She also noted that the laws have already been upheld in court and that the state has confidence in them.

Broader Implications

National and International Context

The lawsuit is similar to one filed by the U.S. Chamber of Commerce and other business groups earlier this year. In that case, a judge dismissed some of the claims but allowed the First Amendment claim to proceed. The Chamber of Commerce has since filed an appeal.

Meanwhile, other states and the European Union are also advancing their own climate disclosure laws, indicating that the debate over climate change regulations is far from over.