Two recently enacted laws in California — requiring thousands of U.S. companies doing business in the Golden State to evaluate and publicly state their own greenhouse-gas emissions and those of companies in their supply and distribution chains and to create a public report about the potential effects of their emissions — are being challenged in court for violating the U.S. Constitution.
Several businesses and trade associations have filed lawsuits challenging the constitutionality of Senate Bills 253 and 261, saying the two laws violate the Constitution’s First Amendment protections of free speech, the Supremacy Clause, and the Commerce Clause. In an analysis of the two laws by the Washington Legal Foundation, attorneys James M. Sullivan and Sarah A. Haddon point to the dubious constitutional underpinnings of the two statutes.
“Under the First Amendment, the Plaintiffs are challenging the Laws’ disclosure requirements as non-commercial compelled speech, requiring strict scrutiny review. Even if a lower level of scrutiny applies, Plaintiffs assert that the Laws unduly burden businesses with no evidence that the disclosures will alleviate California’s climate concerns,” Sullivan and Hadden write. “Plaintiffs’ Supremacy Clase claims contend that the California Laws conflict with the federal Clean Air Act, which regulates greenhouse gases and limits states’ regulation of pollutants beyond their borders. Plaintiffs also allege violations of the Commerce Clause because of the California Laws’ regulatory reach and burdens on businesses outside of California.”
“SB 253 requires California to post information from the disclosures on a state board-created website while SB 261 requires businesses to post to their own websites in addition to anything that California posts,” they point out. “California imposes the costs of administering the Laws on the businesses.”
The laws impose strict requirements on U.S. companies doing business in California, but foreign companies with a presence in the state are required to do … absolutely nothing. As explained by Sullivan and Haddon:
“A Mexico-based manufacturer located only 200 miles from San Diego would not be burdened, but a U.S.-based company operating 3,200 miles away in heavily forested Maine would face increased costs from these regulations impacting its competitive market position. In 2022, over 18,000 foreign-owned enterprises operated in California, and none of these companies are required to report greenhouse-gas emissions of risks under the Laws.”
The laws address what is said — in the absence of any evidence — to be a “climate crisis.” This turns out to be a very complicated business.
“A stated goal driving proponents of SB 263 was identification of ‘who is at the forefront of the pollution’ harming the state,” the Washington Legal Foundation analysis notes. “The mandatory disclosures of SB 261 likewise aim to ‘begin to address the climate crisis.’ In a First Amendment case the Supreme Court already noted ‘climate change’ was a ‘controversial subject’ and ‘sensitive political topic.’ The laws effectively force companies to label themselves as bad actors when it comes to greenhouse-gas emissions. Many factors impact greenhouse-gas emissions and related risks including different geographies. Multiple sources have identified the Laws’ complicated means of measuring greenhouse-gas contributions and risks as not yet capable of producing reliable results, and they are at the very least controversial. Thus, the Laws are not focused on purely factual and uncontroversial information. The Laws should be subject to a heightened standard of review.”
That “heightened standard of review” will come in the courts where the fate of the California laws will ultimately be determined. In passing such sweeping legislation, Sacramento lawmakers and Gov. Gavin Newsom were asking for trouble. And they may get it courtesy of the U.S. Constitution, which they chose to ignore.
Intriguingly, the two California climate laws emulate the Chinese government’s surveillance system aimed at “preventive repression.” Among the system’s strategies are “social credits,” a set of databases and initiatives that monitor and assess — through the awarding of credits for “good” behavior — the trustworthiness of individuals, companies and government entities.
Inverting Beijing’s strategy of social credits to one of social ostracization, California now wants to force businesses to label themselves as bad climate actors, inviting lawsuits, boycotts and other forms of public shunning.
