The U.S. Chamber of Commerce, American Farm Bureau Federation, Western Growers Association, California Chamber of Commerce, Central Valley Business Federation, and Los Angeles County Business Federation filed a lawsuit this week in the U.S. District Court for the Central District of California against the state of California over its new corporate climate disclosure laws, which were signed by Gov. Gavin Newsom last October.

The new corporate disclosure laws require businesses to report on emissions across their supply chain, including indirect emissions, no matter where they occur even though such emissions can be nearly impossible for a company to accurately calculate. The laws also require companies to subjectively report their worldwide climate-related financial risks and proposed mitigation strategies. The laws apply to companies across the U.S. and worldwide on the basis of even minimal operations in the state of California, thus attempting to impose essentially a national standard.

The lawsuit claims the state of California violates the First Amendment, which bars California from compelling a business to engage in subjective speech, and the federal Clean Air Act, which preempts a state’s ability to regulate emissions in other states — as California seeks to do by mandating reporting on out-of-state emissions.

In the complaint, the groups say the laws “force thousands of companies to engage in controversial speech that they do not wish to make, untethered to any commercial purpose or transaction.”

They add, “And it does all this for the explicit purpose of placing political and economic pressure on companies to ‘encourage’ them to conform their behavior to the political wishes of the state.”

Tom Quad, executive director of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness, commented: “We are proud of the leadership and innovation shown by America’s businesses in tackling climate change. Businesses and government need to work together to address the problem and that requires policies that are practical, flexible, predictable, and durable. California’s corporate disclosure laws are the opposite of that and violate the First Amendment by forcing businesses to engage in subjective speech.”

Quad further noted that many public companies are already disclosing material climate risks, well ahead of government regulators. “California’s laws usurp the role of federal regulators, opening the door for other states to take an opposite approach to disclosure, leaving businesses and their investors caught in the middle of a political scrap between states. The resulting fragmentation will undermine the competitiveness of American capital markets, ushering in an era of duplicative and conflicting state-imposed requirements,” he added.

To make matters worse, Quad said the laws demand that both public and private businesses with even minimal operations in the state calculate their greenhouse gas emissions from their whole supply chain, no matter where those emissions take place, and subjectively measure and report their worldwide climate-related financial risks and proposed mitigation strategies to California. These costs and compliance issues will be felt by businesses of all sizes, he explained.

“The Chamber and its partners will continue to fight back against illegal and excessive government overreach at the state and federal levels, especially micromanagement that undermines responsible efforts by businesses to address climate risks.”