Exxon sues California over new laws requiring corporate climate disclosures

ExxonMobil has filed suit in federal court challenging two California laws that would require the oil giant to report the greenhouse emissions resulting from the use of its products globally.

The 30-page complaint, filed Friday in the U.S. District Court for the Eastern District of California, argues that the laws violate the company’s free speech rights by requiring it to “trumpet California’s preferred message even though ExxonMobil believes the speech is misleading and misguided.”

Senate Bill 253, the 2023 legislation known as the Climate Corporate Data Accountability Act, requires the California Air Resources Board to adopt regulations by this year to mandate public and private companies with more than $1 billion in annual revenue to begin publicly disclosing their emissions across three “scopes.”

Scope 1 emissions are defined as direct greenhouse gas emissions from a company and its branches. Scope 2 includes indirect emissions, such as electricity bought by the company. Scope 3 are emissions from the company’s supply chain, including waste, water usage, business travel and employee commutes, which account for about 75% of a company’s greenhouse emissions for many industries. Reporting begins in 2026 on scopes 1 and 2 and in 2027 on scope 3.

The attorney general’s office and Exxon did not respond to requests for comment Saturday.

According to the complaint, the Air Resources Board solicited public input on the rule-making process but has not yet responded to ExxonMobil’s Sept. 5 letter outlining its disagreements with the proposed reporting methods.

ExxonMobil contends that the legislative history shows that the bills seek to “place disproportionate blame on companies like ExxonMobil for being large and for the avowed purpose of spurring public opprobrium,” according to the lawsuit.

“California may believe that companies that meet the statutes’ revenue thresholds are uniquely responsible for climate change, but the 1st Amendment categorically bars it from forcing ExxonMobil to speak in service of that misguided viewpoint,” the complaint said.

An ExxonMobile gas station in Los Angeles.

(Eric Thayer / Los Angeles Times)

Michael Gerrard, a leading climate change legal expert at Columbia University, said in response to a message from The Times that the suit reflected “Exxon’s pattern of aggressively pushing back” against any climate change-related regulation.

“These laws do not require Exxon to make any changes in the way it produces, transports, refines or sells oil. They are just about information that Exxon doesn’t want to provide to the public,” Gerrard said. “If Exxon thinks any of the information would be misleading, it’s free to explain why so that readers can draw their own conclusions.”

Supporters of the legislation say it discourages corporate greenwashing, or marketing that falsely portrays a company’s efforts to reduce climate-warming emissions.

“We need the full picture to make the deep emissions cuts that scientists tell us are necessary to avert the worst impacts of climate change,” the bill’s author, Sen. Scott Wiener (D-San Francisco), said at the time of its adoption.

A separate bill, SB 261, requires corporations with revenue over $500 million to disclose their climate-related financial risks.

In its lawsuit, ExxonMobil said the law would force it “to engage in granular conjecture about unknowable future developments and to publicly disseminate that speculation on its website.”

The lawsuit names as defendants California Atty. Gen. Rob Bonta, Air Resources Board chair Lauren Sanchez, executive officer Steven S. Cliff and two officials in the board’s Industrial Strategies Division.