California Gov. Gavin Newsom
SACRAMENTO - ExxonMobil has filed a federal lawsuit challenging two new California laws requiring large corporations to disclose their greenhouse gas emissions, alleging the measures compel corporate speech in ways that violate the First Amendment.
The Texas-based energy company filed the lawsuit seeking to overturn the 2023 Senate Bills 253 and 261 on Oct. 24 in the Eastern District of California. ExxonMobil’s complaint alleges that the new laws are designed to make the company act as a mouthpiece for global-warming ideas and assessments that it fundamentally disagrees with – infringing on the company’s free-speech rights.
“California may believe that companies that meet the statutes’ revenue thresholds are uniquely responsible for climate change, but the First Amendment categorically bars it from forcing ExxonMobil to speak in service of that misguided viewpoint,” the company says in its lawsuit.
Central to the company’s arguments is what’s called the Greenhouse Gas Protocol, which was developed more than 25 years ago by two international organizations, the World Resources Institute and the World Business Council for Sustainable Development. ExxonMobil emphasizes in its complaint that while it publicly reports about its emissions and efforts to find climate solutions, the company sees the GHG Protocol as flawed because its guidelines are based on absolute emissions rather than the carbon intensity of products.
The company has invested billions of dollars in emission-reducing techniques, including carbon capture and hydrogen power, to reduce the carbon intensity of its fuels, but the protocol’s focus on absolute emissions is at odds with ExxonMobil’s fundamental approach to climate solutions, according to the lawsuit.
SB 253 would force the company to adopt those parts of the GHG Protocol that it has disagreed with in its voluntary reporting of greenhouse gases, the complaint says. SB 261, meanwhile, mandates the company to make public reports about climate-related financial risks that go beyond what it currently provides under federal law to the Securities Exchange Commission, according to the lawsuit.
“... By requiring these additional mandatory disclosures, SB 261 is also expressly preempted by the National Securities Markets Improvement Act of 1996,” the complaint states.
ExxonMobil is calling on the court to declare that the two California laws violate the First Amendment; to enjoin the defendants, including California Air Resources Board Chair Lauren Sanchez and state Attorney General Robert Bonta, from enforcing the measure’s provisions against the company; and to award ExxonMobil attorney fees as well as expert witness fees resulting from the litigation.
California officials argue that the 2023 laws simply mandate that the energy giant provide accurate reporting about its greenhouse gas emissions to consumers. About 92% of Fortune 500 companies disclose their carbon generation through programs based on the GHG Protocol, according to the World Resources Institute.
“These laws are about transparency,” a spokesperson for the California Department of Justice told the Southern California Record in an email. “ExxonMobil might want to continue keeping the public in the dark, but we’re ready to litigate vigorously in court to ensure the public’s access to these important facts.”
A similar lawsuit challenging the two laws was filed by the California Chamber of Commerce, but a federal judge in the Central District of California ruled earlier this year that the chamber had failed to demonstrate that the measures unlawfully interfere with corporate speech rights.
Other large companies, such as Apple and Microsoft, have supported the two California disclosure measures.
Credit: California Air Resources Board
