June 26, 2022

Volume XII, Number 177

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June 24, 2022

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Legislators Again Kept In Dark About Constitutional Infirmities Of Climate Corporate Accountability Act

SB 260 is scheduled to be heard tomorrow by the Assembly Judiciary Committee.  This bill would enact the "Climate Corporate Accountability Act".    If enacted, the bill purportedly would require large companies doing business in California to provide specified data related to the companies to provide specified greenhouse gas emissions data to the Secretary of State.  However, the bill would have an enormous impact on businesses big and small, both within and outside of California.  The reason is that the bill would require a reporting entity to disclose Scope 3 emissions.  These are indirect greenhouse gas emissions, other than indirect greenhouse gas emissions from electricity purchased and used by a reporting entity (i.e., Scope 2 emissions), from activities of a reporting entity that stem from sources that the reporting entity does not own or directly control and may include, but are not limited to, emissions associated with the reporting entity’s supply chain, business travel, employee commutes, procurement, waste, and water usage, regardless of location.  As I have previously noted, this requirement will result in duplicative and inaccurate data.  More importantly, it will burden all businesses in the supply chains of the companies targeted by SB 260.

I was distressed to see that the analysis prepared for tomorrow's hearing omits any discussion of two significant constitutional problems that the bill engenders. First, SB 260 infringes on the constitutional guaranty of free speech because it compels speech.  Second, it violates the "dormant commerce clause" of the U.S. Constitution by imposing a significant burden on interstate commerce.  Although I sent these concerns to the Judiciary Committee staff (and the author), they are not mentioned in the analysis.  It is indeed unfortunate that the committee members are again being left in the dark.

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 171
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
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