Ninth Circuit, Chamber of Commerce v. Sanchez: California's climate-disclosure laws and compelled speech

What happened

On November 9, 2026, the Ninth Circuit ruled on a request to block two California climate-disclosure laws before enforcement. The case is Chamber of Commerce of the United States v. Sanchez, No. 25-5327. Business groups led by the U.S. Chamber of Commerce claim the laws are facially unconstitutional under the First Amendment. The district court had refused to issue a preliminary injunction.

The panel affirmed in part and reversed in part. Judge Nguyen wrote the opinion, joined by District Judge Matsumoto of the Eastern District of New York, sitting by designation. Judge Bennett concurred in the judgment in part and dissented in part.

The two laws are Senate Bill 253, the Climate Corporate Data Accountability Act, and Senate Bill 261, the Climate-Related Financial Risk Act. SB 253 covers entities doing business in California with more than $1 billion in annual revenue. It requires annual reports of greenhouse gas emissions in three "scopes": Scope 1 covers sources the company owns or controls, Scope 2 covers energy it buys, and Scope 3 covers "indirect upstream and downstream" emissions from sources it "does not own or directly control." SB 261 covers companies with more than $500 million in revenue. It requires them to publish reports on "climate-related financial risk" every two years.

What the opinion says

SB 253, Scopes 1 and 2: injunction denied. The court held that these disclosures are commercial speech "because they compel disclosure of factual information on emissions generated through the reporting entities' own operations and bear on capital transactions." Applying intermediate scrutiny, it concluded that the State had shown "substantial interests in mitigating information asymmetries for investors and reducing emissions." It also found the requirements likely "directly advance those interests and are no more extensive than necessary."

SB 253, Scope 3: injunction ordered. The court held that "because Scope 3 disclosures concern diffuse third-party conduct in the value chain, they are insufficiently tethered to the reporting entity's own operations and capital transactions to qualify as commercial speech." It applied strict scrutiny and held that the provision likely fails it. The court sent the case back for the district court to decide whether the Scope 3 provision can be severed from the rest of SB 253.

SB 261: injunction ordered. The court held that SB 261 "compels noncommercial speech by requiring covered entities to disclose, among other information, subjective ideological assessments." It said the required reports involve "predictive and normative judgments about future economic conditions and a politically fraught subject." Applying strict scrutiny, it held that SB 261 is not narrowly tailored. It said the State "could have pursued its emissions-reduction objective through less restrictive means, such as by directly regulating emissions or incentivizing companies to reduce emissions on their own."

The court also declined the Chambers' request to define commercial speech narrowly as speech that "does no more than propose a commercial transaction." It said circuit precedent "calls for a more flexible approach, at least in the government reporting context."

The other side

Judge Bennett would have ordered a preliminary injunction against both laws in full. He wrote that the case concerns "the inalienable right of every" person to decide "how best to speak," quoting Chiles v. Salazar (2026). He argued that "because the majority opinion can be read as equating investors' interest in companies with consumers' interest in products," there may be "no end to the information that states" can require companies to disclose. He wrote that the majority opinion "may open the door to compelled disclosures targeting individuals," and gave employment records as an example. In his view, the majority "strays too far from the 'usual[] defin[ition]' of commercial speech as speech that does no more than propose a commercial transaction." He would apply strict scrutiny to both laws.

California defended both laws as regulations of commercial speech, and the district court had held that SB 253 satisfied the deferential Zauderer standard and SB 261 satisfied intermediate scrutiny. The State's stated purposes, as the opinion records them, were to inform investors, reduce emissions and address misleading corporate statements. The majority wrote that, as to SB 261, the State "all but concedes" it cannot satisfy strict scrutiny.

Where it sits in the record

Governor Newsom signed both bills on October 7, 2023, and the Chambers sued in January 2025. On November 18, 2025, the Ninth Circuit enjoined enforcement of SB 261 pending appeal but denied a similar injunction as to SB 253. The opinion applies the compelled-disclosure framework of National Institute of Family and Life Advocates v. Becerra (2018) and Zauderer v. Office of Disciplinary Counsel (1985). The dissent refers to West Virginia State Board of Education v. Barnette (1943) in discussing compelled statements of opinion. The ruling decides only the preliminary injunction.