What funding and compliance deadlines should California businesses know for new 2026 environmental regulations?
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Executive summary
California’s twin 2026 climate laws—SB 253 (GHG disclosures) and SB 261 (climate‑related financial risk reports)—carry firm statutory start dates and revenue thresholds that large businesses must treat as imminent compliance obligations even as regulators finalize rules and litigation plays out [1] [2]. Key dates include biennial SB 261 publication due Jan. 1, 2026 (enforcement temporarily paused) and initial SB 253 GHG reporting in 2026 for fiscal‑year‑2025 Scope 1 and 2 emissions with first‑year submission timing clarified by draft rulemaking activity [3] [4].
1. What deadlines matter and who is covered
SB 253 requires U.S.-organized entities with annual revenue over $1 billion that do business in California to disclose Scope 1 and Scope 2 emissions beginning with fiscal‑year‑2025 data reported in 2026, and to phase in Scope 3 reporting beginning in 2027; SB 261 requires entities with over $500 million in annual revenue to publish climate‑related financial risk reports starting in 2026 [1] [5] [3]. CARB and multiple advisory sources confirm the statutory compliance dates remain “in the law” even while rule text is being developed, so revenue and “doing business in California” definitions will determine whether an entity is in scope [2] [6].
2. Exact filing windows and CARB’s evolving timeline
Draft regulatory work has slipped into late‑2025 and early‑2026, but CARB has signaled initial proposed regulations and deadlines will be issued in early 2026, with the agency indicating a phased rulemaking through 2026 to set recurring 2027+ program requirements [7] [8]. Public reporting windows cited in drafts and analyses point to initial SB 253 submissions tied to mid‑2026 dates (June 30 and an August 10, 2026 reporting point appear in the commentary), while SB 261’s site‑posting requirement was statutorily Jan. 1, 2026—CARB issued an enforcement advisory saying it would not enforce that first SB 261 deadline [9] [7] [8].
3. Fees, funding sources and administrative build‑out
CARB is designing an annual fee regime to fund the programs; options under consideration include flat fees derived by dividing estimated annual program costs (roughly $13.9 million in one estimate) by the number of covered entities, and CARB plans to issue invoices approximately one month after the SB 253 proposed reporting deadline [10] [7]. The initial program build‑out will be supported in part by a loan from California’s Greenhouse Gas Reduction Fund and CARB anticipates hiring up to 42 permanent positions by FY 2026‑27 to operate the programs—an important signal that program costs will be recovered through fees on covered entities [8] [10].
4. Enforcement posture, assurance and litigation risks
CARB has issued enforcement discretion advisories: it will not enforce SB 261’s publication deadline for the initial cycle, and it has indicated flexibility on first‑year SB 253 reporting to allow use of data entities already possess; limited assurance is not required for 2026 reporting under CARB’s discretion [8] [11] [3]. However, judicial actions—including a Ninth Circuit injunction on enforcement of SB 261—mean regulatory obligations and timelines could shift depending on appeals, so businesses face legal uncertainty even as statutory dates remain [10] [11].
5. Practical compliance and timing actions businesses should prioritize
Companies that meet or may meet the revenue thresholds should calculate FY2025 Scope 1 and 2 emissions now, assess enterprise‑level revenue consolidation approaches to determine scope, prepare publicly‑accessible SB 261 reports (even if initial enforcement is paused) and budget for potential annual fees once CARB issues fee regulations—expect invoices shortly after CARB’s chosen 2026 SB 253 reporting date [5] [2] [7]. Given rulemaking delays but statutory deadlines, preparatory work—data inventories, emissions accounting aligned with the GHG Protocol, legal review of revenue and “doing business” definitions, and budgetary planning for fees and possible third‑party assurance—remains the prudent course [4] [6].
6. Contrasting views and what to watch next
Advocates and many compliance advisers say the 2026 dates must be treated as real and to start reporting preparations immediately; industry stakeholders and the governor previously warned about feasibility and costs, and litigation has already produced temporary enforcement pauses, so there are competing pressures to both comply and seek clarifications or relief [12] [2] [10]. The immediate watchlist: CARB’s early‑2026 proposed regulations and fee notices, any Ninth Circuit decisions or stays affecting SB 261, and CARB’s final determination of initial submission dates (notably whether August 10, 2026 or an alternative mid‑2026 date governs SB 253 invoicing and reporting) [7] [10] [9].