Recently, UCLA Professor Stephen Bainbridge posted this critique of California's climate disclosure laws - SB 253 and SB 261. Readers of this blog will recall that SB 253 requires "reporting entities" to disclose Scope 1, 2 & 3 greenhouse gas emissions. Reporting entities will also be required to obtain an independent third-party assurance of these disclosures. See California Legislation Will Make It More Costly For Those Doing Business With Those Doing Business In California. SB 261 imposes climate related financial risk reporting requirements. See California Enacts Law Mandating Climate-Related Financial Risk Reporting.

Last September, Governor Gavin Newsom signed SB 219 which, among other things, extends the date for the California Air Resources Board to adopt the regulations specified in SB 253 from January 1, 2025, to July 1, 2025. The first reports by reporting entities will still be due in 2026 on a date to be established by CARB in its rulemaking. Those first reports will cover scope 1 and scope 2 emissions during the reporting entity’s prior fiscal year.

In December, CARB issued a so-called "Enforcement Notice" with respect to SB 253 stating:

Accordingly, CARB will exercise its enforcement discretion such that, for the first report due in 2026, reporting entities may submit scope 1 and scope 2 emissions from “the reporting entity’s prior fiscal year” that can be determined from information the reporting entity already possesses or is already collecting at the time this Notice was issued [December 5, 2024]. CARB will exercise enforcement discretion for the first reporting cycle, on the condition that entities demonstrate good faith efforts to comply with the requirements of the law. This enforcement discretion is aimed at supporting entities actively working toward full compliance. Thus, for the first reporting cycle, CARB will not take enforcement action for incomplete reporting against entities, as long as the companies make a good faith effort to retain all data relevant to emissions reporting for the entity’s prior fiscal year. CARB will provide details on reporting for subsequent year reporting cycles as part of CARB’s rulemaking process.

I question whether this notice constitutes an "underground regulation" under California's Administrative Procedure Act. That act generally imposes standards on state agency regulations and public notice and comment requirements. The APA defines a "regulation" to mean "every rule, regulation, order, or standard of general application or the amendment, supplement, or revision of any rule, regulation, order, or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure". Cal. Gov't Code § 11342.600. It cannot be gainsaid that the CARB's Enforcement Notice applies generally and not to a specific person or circumstance. Furthermore, the Enforcement Notice implements SB 253. Thus, it is difficult to escape the conclusion that the Enforcement Notice is a "regulation" within the meaning of the APA. The APA prohibits state agencies from issuing, utilizing, enforcing, or attempt to enforcing any guideline, criterion, bulletin, manual, instruction, order, standard of general application, or other rule, which is a regulation as defined in § 11342.600, unless the guideline, criterion, bulletin, manual, instruction, order, standard of general application, or other rule has been adopted as a regulation and filed with the Secretary of State pursuant to this chapter. Cal. Gov't Code § 11340.5.

I reached out to the CARB for comment and received the following response, which does not answer the question of the legality of the Enforcement Notice:

The enforcement notice provides a notification to the public for how CARB would exercise enforcement discretion regarding a part of Senate Bill 253.