Ninth Circuit Splits on California Compelled Disclosure Laws

A published Ninth Circuit panel held on November 9, 2026 that business groups are unlikely to defeat California's requirement that large companies report their own emissions, but are likely to defeat its value-chain and climate-risk reporting mandates. The dividing line is compelled commercial speech.

Information last verified on November 11, 2026. This is a developing story; we update it as the record changes.

Status: Published Ninth Circuit opinion issued November 9, 2026 in an appeal from the denial of a preliminary injunction. The merits have not been finally decided. The panel affirmed in part, reversed in part, and remanded, and proceedings continue in the district court.

Jurisdiction scope: This article addresses a published decision of the United States Court of Appeals for the Ninth Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, plus Guam and the Northern Mariana Islands. The statutes at issue are California's. The doctrine applied is federal First Amendment compelled-speech doctrine. The decision does not resolve the validity of any other state's disclosure law, and it is not a final merits judgment on the California statutes either.

What Happened

On November 9, 2026 a three-judge Ninth Circuit panel filed a published opinion in United States Chamber of Commerce v. Sanchez, No. 25-5327, an interlocutory appeal under 28 U.S.C. section 1292(a)(1) from the Central District of California, No. 2:24-cv-00801-ODW-PVC (Wright, J.). The case was argued and submitted in San Francisco on January 9, 2026. Judge Jacqueline H. Nguyen wrote for the panel, joined by District Judge Kiyo A. Matsumoto, sitting by designation. Judge Mark J. Bennett concurred in the judgment in part and dissented in part.

Several business groups, including the United States Chamber of Commerce, the California Chamber of Commerce and the American Farm Bureau Federation, had challenged two California statutes as facially unconstitutional compelled speech and sought a preliminary injunction. The district court denied it, holding that both statutes regulate commercial speech and that the challengers were unlikely to succeed. While the appeal was pending, on November 18, 2025, the Ninth Circuit enjoined enforcement of one of the two statutes, SB 261, but declined to do the same for the other. The panel has now affirmed the denial of preliminary relief as to one set of provisions, reversed as to the others, and remanded.

The standard of review shapes what that means. The panel reviewed the denial of a preliminary injunction for abuse of discretion, reviewed the district court's legal conclusions de novo, and, as First Amendment cases require, independently examined the whole record. Sanchez, slip op. at 13 to 14.

The two statutes were signed by Governor Gavin Newsom on October 7, 2023. SB 253, the Climate Corporate Data Accountability Act, is codified at California Health and Safety Code section 38532 and reaches entities doing business in California with more than $1 billion in annual revenue. It requires annual reporting of Scope 1 emissions, which the statute defines as direct emissions from sources the reporting entity owns or directly controls; Scope 2 emissions, from purchased or acquired electricity, steam, heating or cooling; and Scope 3 emissions, the indirect upstream and downstream emissions from sources the entity does not own or directly control. SB 261, the Climate-Related Financial Risk Act, is codified at section 38533, reaches companies with more than $500 million in annual revenue, and requires them to publish climate-related financial risk reports on their own websites using the framework of the 2017 Task Force on Climate-related Financial Disclosures.

The dispositions differ by provision, and the differences are the whole point of the opinion. As to SB 253's Scope 1 and Scope 2 requirements, the panel held the disclosures regulate commercial speech because they compel factual information about emissions generated through the reporting entity's own operations and bear on capital transactions. It declined to decide whether the deferential Zauderer standard or ordinary intermediate scrutiny governs, because the provisions likely survive the more demanding of the two, and affirmed. As to Scope 3, the panel held the opposite: because those disclosures concern diffuse third-party conduct across the value chain, they are, in the panel's words, insufficiently tethered to the reporting entity's own operations and capital transactions to qualify as commercial speech. Strict scrutiny therefore applied, and the provision likely fails it. As to SB 261, the panel held the statute compels noncommercial speech throughout, because compliance requires companies to assess and publish subjective, predictive and normative judgments.

The panel put the SB 261 conclusion bluntly in its introduction:

"Because SB 261 does not regulate commercial speech, it is subject to strict scrutiny, a standard which the State all but concedes it cannot satisfy." Source: United States Chamber of Commerce v. Sanchez, No. 25-5327, slip op. at 8 (9th Cir. Nov. 9, 2026)

On the remaining preliminary-injunction factors from Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), the panel found irreparable harm, the balance of equities and the public interest favored relief as to Scope 3 and SB 261, and favored the State as to Scope 1 and Scope 2. Because SB 253 contains a severability clause, the panel remanded so the district court could decide in the first instance whether the Scope 3 requirement can be severed. The judgment line reads: affirmed in part, reversed in part, and remanded.

What the Law Actually Says

Start with the default, because the whole case turns on which default applies. When a government orders a speaker to say something, that is content-based regulation of speech. The panel quoted its own 2024 decision in X Corp. v. Bonta, 116 F.4th 888, 900 (9th Cir. 2024), for the proposition that when a state compels individuals to speak a particular message it alters the content of their speech and engages in content-based regulation. Content-based regulation is presumptively unconstitutional and must satisfy strict scrutiny: a compelling government interest, narrow tailoring, and no less restrictive alternative that would serve the purpose.

Commercial speech is the exception, and it is a large one. Compelled commercial speech is generally reviewed under intermediate scrutiny from Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980): the state must show a substantial interest, direct advancement of that interest, and means no more extensive than necessary. When the compelled commercial disclosure is "purely factual and uncontroversial" and neither unjustified nor unduly burdensome, the still more deferential standard of Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), applies, a review the Ninth Circuit has described as akin to a rational basis test. National Institute of Family and Life Advocates v. Becerra, 585 U.S. 755, 768 (2018), is the modern Supreme Court statement of where that Zauderer path begins and ends.

So everything depends on sorting. For voluntary advertising-style speech, courts look to the three factors from Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 66 to 67 (1983): whether the speech is an advertisement, whether it refers to a particular product, and whether the speaker has an economic motivation. The panel treated those factors as useful guideposts rather than dispositive, and said its precedent calls for a more flexible approach in the government-reporting context, citing Pharmaceutical Research and Manufacturers of America v. Stolfi, 153 F.4th 795, 811 to 816 (9th Cir. 2025). Stolfi is where the Ninth Circuit explained that two of the three factors do not neatly fit a compelled government filing, because such a filing is not an advertisement and is produced out of legal obligation rather than economic motivation. Judge Bennett's separate opinion builds on that point at slip op. 66 to 67 and 71.

In that government-reporting setting the Ninth Circuit asks a different question, drawn from Pharmaceutical Research and Manufacturers of America v. Stolfi, 153 F.4th 795 (9th Cir. 2025) and X Corp.: does the compelled disclosure communicate the terms of an actual or potential commercial transaction, or provide parties to such transactions with information about those transactions? That is the test the panel applied, and it produced the split result. Emissions a company generates itself, the panel reasoned, bear on its risk profile and profitability, and investors, insurers and lenders use that information in deciding whether and on what terms to transact. Emissions generated by independent suppliers and customers did not clear the same bar. Because Scope 3 disclosures concern diffuse third-party conduct in the value chain, from sources the reporting entity does not own or directly control, the panel held they are insufficiently tethered to the entity's own operations and capital transactions to be commercial speech (slip op. 33). The panel's separate conclusion that the link between Scope 3 emissions and a company's own risk exposure is too remote came one step later, in its narrow-tailoring analysis (slip op. 35).

The second line the panel drew is about the character of the statement rather than its subject. Quoting Stolfi, the opinion explains that the court's application of strict scrutiny in X Corp. and in NetChoice, LLC v. Bonta, 113 F.4th 1101 (9th Cir. 2024), turned on the subjective and political or ideological nature of the information the regulations required. In X Corp. the state had required social media companies to state their policy views on hate speech, racism, misinformation and radicalization and to explain how they applied those views. In NetChoice the state had required online businesses to identify, service by service, risks of material detriment to children arising from their data practices, which the court said deputized the businesses into serving as censors for the state and forced them to opine on potential speech-based harms to children disconnected from any economic transaction. Both drew strict scrutiny.

SB 261 fell on that side of the line. The panel found that complying with the statute's risk-reporting framework requires a company to make predictive judgments about uncertain future conditions, to make normative assessments about whether mitigating those risks is worth the cost, and to do so in state-prescribed terms. That, the panel said, is the kind of mandate X Corp. addressed: a requirement to convey the company's policy views on an intensely debated and politically fraught topic. The panel added in a footnote that the mere presence of judgment or opinion in a disclosure does not automatically make it noncommercial, citing Riley v. National Federation of the Blind of North Carolina, 487 U.S. 781, 797 (1988); the problem is a compulsion to publish normative assessments on a politically fraught subject.

Two limits on that reasoning matter as much as the holding. First, a disclosure does not become noncommercial merely because its subject is controversial. The panel reaffirmed, citing CTIA-The Wireless Association v. City of Berkeley, 928 F.3d 832, 845 (9th Cir. 2019), and Board of Trustees v. Fox, 492 U.S. 469, 475 (1989), that commercial speech keeps its character even when it touches contested public issues; it rejected the argument that emissions figures become ideological because climate policy is contested. Second, the court distinguished National Association of Manufacturers v. SEC, 800 F.3d 518 (D.C. Cir. 2015), where sellers had to label diamonds "conflict free" or not, a morally charged characterization. Reporting a quantity is a factual disclosure; labeling yourself as ethically tainted is not. Our page on state AI content disclosure and labeling requirements tracks the state disclosure mandates this classification question reaches.

Finally, remember the procedural frame. This was a facial challenge decided at the preliminary-injunction stage. A facial challenge succeeds only where a law's unconstitutional applications substantially outweigh its constitutional ones, the standard the Supreme Court set out in Moody v. NetChoice, LLC, 603 U.S. 707, 724 (2024). The panel's conclusions are about likelihood of success on that question, not final adjudications of it.

Judge Bennett would have gone further. He agreed strict scrutiny applies to SB 261, but would apply it to SB 253 as well, including Scope 1 and Scope 2, and would have remanded with instructions to enjoin both statutes preliminarily. His position is that commercial speech is usually defined as speech that does no more than propose a commercial transaction, and that in compelled-disclosure cases the court should demand a strong showing on the second Bolger factor, a direct connection between the compelled speech and a specific product or service. Emissions data, on his view, tells market participants about the issuer, the insurer or the insured rather than about the debt, insurance or stock being sold. He warned that the majority's information-asymmetry rationale has no obvious stopping point, quoting the Second Circuit's observation in International Dairy Foods Association v. Amestoy, 92 F.3d 67, 74 (2d Cir. 1996), that there may be no end to the information states can require companies to disclose, and suggested the reasoning could reach compelled disclosures about individuals in labor markets. The majority answered those hypotheticals in two footnotes, saying they raise questions the court was not asked to and did not decide. A partial dissent is not law, but it is a marker of where the doctrine is unsettled.

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

We are covering an opinion about emissions reporting because it is not really an opinion about emissions. It is a Ninth Circuit statement, in a published and therefore binding decision, about which compelled disclosures by businesses get the deferential tier of review and which get the tier almost nothing survives. Nearly every state technology mandate this site tracks is a compelled disclosure: label synthetic media, tell users they are talking to a bot, publish a transparency report about moderation decisions, attest to a user's age before serving content. Whether those statutes face intermediate scrutiny or strict scrutiny is usually the decisive question in the litigation over them, and the panel drew its line explicitly.

As we read it, the opinion separates three things that get lumped together as "disclosure." The first is a verifiable fact about the speaker's own product, service or transaction. The panel put that squarely in the commercial-speech box, and under Zauderer or Central Hudson such a mandate is defensible if the state can document a real problem and a reasonable fit. The second is a statement of judgment, assessment or policy view on a contested subject. X Corp., NetChoice and now SB 261 put that in the strict-scrutiny box, and the state's own litigating position in this case suggests how hard that box is to escape. The third is information about other people's conduct that the speaker does not itself hold. That is the Scope 3 problem, and it failed twice over: it was not commercial speech, and the tailoring analysis turned partly on the fact that the data originates with third parties the reporting company neither owns nor controls.

That three-way split maps onto the technology statutes more neatly than the climate subject matter suggests. A requirement that a generative AI provider attach provenance metadata to content its own system produced looks like a fact about the speaker's own product. A requirement that a platform assess and publish how harmful its services are to minors looks like the compelled assessment NetChoice rejected. A requirement that a platform compile and publish findings about what third-party users did on it looks like the category the Scope 3 analysis found most problematic. None of that is a holding. The panel decided nothing about artificial intelligence, chatbot disclosure, platform transparency reporting or age verification, and no such statute was before it. We are describing a framework, not a result, and we offer no view on how any pending case should or will come out.

Two cautions are worth stating plainly. First, the posture limits everything. These are likelihood-of-success determinations at the preliminary stage, reached on the record the parties assembled. The tailoring analysis in particular rested heavily on what the evidence did and did not show, including that every study in the record linking mandatory reporting to emissions reductions concerned Scope 1 or Scope 2, and that the state's greenwashing interest was unsupported. A different record could produce a different answer, which is a reason for anyone extrapolating from this opinion to extrapolate carefully. Second, the doctrine is contested inside the panel itself. Judge Bennett's specific-product approach, if it ever became the rule, would push firm-level disclosure mandates toward strict scrutiny much more broadly than the majority's test does, and it would do so for technology mandates as readily as for climate ones. Readers following that broader question may also want our tracker of state artificial intelligence statutes, the parallel fight over whether federal law will displace state AI rules, and our survey of age verification requirements for online services, all of which turn in part on compelled-speech questions of this kind.

How This Affects You

A disclosure mandate is a law that requires you, or a business, to say something rather than forbidding you from saying something. That includes a warning label, a filing to a regulator, a notice to a customer, a report posted on a company website, and a tag attached to a piece of content. Courts treat these as speech regulations because being forced to speak is a First Amendment problem in its own right, not merely a business-compliance cost.

Which tier of review a mandate gets is the practical question, and the panel answered it this way for these two statutes. Compelled statements of plain, verifiable fact about the speaker's own goods, services or operations, reported in standardized terms, receive the least protection. Compelled statements that require the speaker to evaluate, predict, characterize or take a position on a contested question receive the most. Compelled statements about what independent third parties did sit in a more doubtful middle, and at least on this record did not qualify as commercial speech at all.

If you are following or complying with a state technology-disclosure law, that framing is the one to carry into the reading. Ask what kind of statement the statute actually demands: a fact the speaker already knows about its own product, or a judgment the state wants published in the state's vocabulary. Ask whether the speaker possesses the information at all. The panel asked those questions about these two statutes, and it decided nothing about any other law.

None of this tells you whether any particular statute applies to you, whether you are in compliance, or whether a challenge to it would succeed. A preliminary-injunction ruling about two California statutes cannot answer those questions, and a published appellate opinion binds only courts within its circuit. If a disclosure obligation applies to your organization, that is a question for a lawyer licensed where you operate.

What Happens Next

The case returns to the Central District of California. The panel's immediate instruction on remand is narrow: because SB 253 contains a severability clause, the district court is to decide in the first instance whether the Scope 3 requirement can be severed from the rest of the statute. That answer determines how much of SB 253 remains operative while the litigation continues.

The merits are still open. The panel resolved likelihood of success, not the ultimate constitutional question, and the business groups also pressed non-First Amendment claims that the opinion notes were not at issue in this appeal. A final judgment on the First Amendment challenge would require the district court to decide the case on a developed record, and any such judgment would itself be appealable.

Further appellate review is procedurally available in any federal appeal, through a petition for panel rehearing or rehearing en banc in the Ninth Circuit and, after that, a petition for certiorari to the Supreme Court. Whether any party seeks those steps, and whether any court grants them, is unknown as of November 11, 2026, and we do not predict it. We will update this page as the docket moves.

This is general legal information, not legal advice. It addresses a published decision of the United States Court of Appeals for the Ninth Circuit applying federal First Amendment doctrine to two California statutes, and reflects sources verified on November 11, 2026. The ruling concerns likelihood of success at the preliminary-injunction stage, not a final judgment, and the case remains pending. Laws change and this story is developing; consult a lawyer licensed in your jurisdiction about your specific situation.

Related articles

• State AI disclosure and labeling requirements
• AI laws across the fifty states
• How state defamation law treats false statements

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Last updated: 2026-11-11. This is a developing story; details verified as of 2026-11-11.

Frequently Asked Questions

Did the Ninth Circuit strike down California's climate disclosure laws?

No. The November 9, 2026 decision was an appeal from the denial of a preliminary injunction, so the panel ruled on which side is likely to succeed, not on the ultimate constitutionality of either statute. It affirmed the denial of an injunction for part of SB 253, reversed for the rest of SB 253 and for all of SB 261, and sent the case back to the district court.

What is the difference between Scope 1, Scope 2 and Scope 3 emissions under SB 253?

As the opinion describes California Health and Safety Code section 38532, Scope 1 covers direct emissions from sources the reporting entity owns or directly controls, Scope 2 covers emissions from electricity, steam, heating or cooling the entity purchases, and Scope 3 covers indirect upstream and downstream emissions from sources the entity does not own or directly control, such as suppliers and customers.

Why did SB 261 receive strict scrutiny when SB 253's Scope 1 and Scope 2 provisions did not?

The panel held that reporting your own emissions figures is a factual disclosure tied to your own operations and to capital transactions, which makes it commercial speech. It held that SB 261's climate-related financial risk reports instead require predictive judgments about uncertain future conditions and normative assessments on a politically fraught subject, which falls outside the commercial speech doctrine and so triggers strict scrutiny.

What is compelled commercial speech?

It is a government requirement that a business state something in connection with its commercial activity, such as a warning label, a notice to customers or a mandatory report. Courts review compelled commercial speech under intermediate scrutiny from Central Hudson, and under the more deferential Zauderer standard when the compelled statement is purely factual and uncontroversial and is neither unjustified nor unduly burdensome.

What is the difference between Zauderer, Central Hudson and strict scrutiny?

Zauderer is the most deferential of the three and the Ninth Circuit has described it as akin to a rational basis test. Central Hudson requires a substantial government interest, direct advancement of it, and means no more extensive than necessary. Strict scrutiny requires a compelling interest, narrow tailoring and the absence of a less restrictive alternative, and in this case the panel noted the state all but conceded it could not satisfy that standard for SB 261.

Does this decision change AI disclosure, chatbot disclosure, platform transparency or age verification laws?

No. The panel decided nothing about any of those statutes and none was before it. The decision matters to them only because it states how the Ninth Circuit decides which tier of First Amendment review a compelled business disclosure receives, which is frequently the central question in litigation over technology disclosure mandates.

Is this opinion binding precedent?

The opinion is marked for publication, which makes it precedential within the Ninth Circuit. A published panel opinion binds district courts in the circuit and later panels unless it is withdrawn, overruled en banc, or displaced by the Supreme Court. It is not binding on courts outside the Ninth Circuit.

What did Judge Bennett's separate opinion say?

Judge Bennett concurred in the judgment in part and dissented in part. He agreed strict scrutiny applies to SB 261, but would have applied it to all of SB 253 as well, on the view that a compelled disclosure is commercial speech only when it informs market participants about a specific product or service. He would have reversed and remanded with instructions to preliminarily enjoin both statutes.

What does the district court have to decide on remand?

The panel remanded for the district court to decide in the first instance whether SB 253's Scope 3 disclosure requirement is severable from the rest of the statute, which SB 253 addresses through a severability clause. The merits of the First Amendment challenge also remain to be resolved on a full record.