Federal court rejects Exxon Mobil's claim that California climate-risk law is preempted

In Sacramento, a federal district court determined that California's S.B. 261 climate-risk disclosure law does not compel companies to disclose financial risks from climate change on their websites. Exxon Mobil filed suit, claiming the statute was preempted by the National Securities Markets Improvement Act and that its enforcement would interfere with federal securities regulations. The judge rejected those claims, noting the law does not require changes to filings with the Securities and Exchange Commission and that the imposed fine does not prevent firms from offering securities to investors in California.

As a result, the state’s disclosure requirement remains enforceable, though its reach is limited to the specific obligations outlined in the statute. The ruling clarifies the relationship between state climate-risk disclosure mandates and federal securities law. It also underscores the courts' view that state penalties do not automatically conflict with federal filing requirements.