New York State Bill Seeks to Impose Greenhouse Gas Emissions Disclosure Requirements

On January 27, 2025, N.Y. Sen. Brad Hoylman-Sigal (D), introduced Senate Bill 3456 (SB 3456) calling for the adoption of the Climate Corporate Data Accountability Act (CCDAA). The bill is substantively identical to California’s CCDAA adopted in 2023 (California Senate Bill 253, as amended by California Senate Bill 219) and would require the N.Y. Department on Environmental Conservation (DEC) to develop and adopt regulations requiring certain “reporting entities” to provide annual reporting on all scope 1, scope 2 and scope 3 greenhouse gas emissions. Reporting entities would first be required to report the prior year’s scope 1 and 2 emissions data in 2027 and the prior year’s scope 3 emissions data in 2028.

Importantly, SB 3456 does not mandate any action from reporting entities. Instead, the bill requires the DEC to adopt regulations that would, in turn, mandate reporting entities’ compliance with the disclosure framework outlined in the bill.

For the purposes of SB 3456, “reporting entities” comprise any business entity (i) formed under U.S. law, (ii) doing business in New York and deriving receipts from activity in New York within the meaning of Section 209 of the New York Tax Law and (iii) with total revenues exceeding $1 billion in the preceding fiscal year, including but not limited to revenues received by all subsidiaries doing business in New York. However, if a reporting entity is included as a consolidated subsidiary in the consolidated financial statements of an ultimate parent entity, the parent entity (potentially even a foreign entity) may submit consolidated reporting instead.

In terms of specific reporting requirements, the bill mandates the adoption of regulations that would initially require emissions to be measured and reported using the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard until at least 2034, after which the New York DEC could adopt an alternative accounting and reporting standard. The bill also mandates the adoption of regulations to require that any reporting be assured by an independent third-party assurance provider, specifying that the assurance engagement for scope 1 and 2 emissions data must be at a limited assurance level beginning in 2027 and at a reasonable assurance level beginning in 2031.

SB 3456 also contemplates an enforcement framework that empowers the New York attorney general to bring a civil action against non-compliant reporting entities seeking up to $100,000 per day in civil penalties for willful violation of the CCDAA, with such penalties capped at $500,000 per reporting year.

Legal Challenges

Although the bill’s future is uncertain, the ultimate constitutionality of state-level climate disclosure laws is already a contested matter. As discussed, New York’s SB 3456 is substantively identical to California’s CCDAA, which currently faces a legal challenge in the US. District Court for the Central District of California in Chamber of Commerce of United States, et al. v. Cal. Air Res. Bd., et al., case no. 2:24-CV-00901-ODW.  In that case, plaintiffs argue that the California CCDAA violates the First Amendment[1] (as unconstitutional compelled speech), the Supremacy Clause,[2] and limitations on extraterritorial regulation, particularly the “Dormant Commerce Clause.”[3]

California moved to partially dismiss the complaint and, on February 3, 2025, the district court issued an order dismissing the plaintiffs’ Supremacy Clause and extraterritoriality arguments concerning the CCDAA without prejudice. The district court reasoned that California’ CCDAA “on its own, does not mandate any action from any of Plaintiffs’ members or any other reporting entity” and instead requires only that California’s Air Resources Board “develop and adopt regulations to require a reporting entity to annually disclose all of the reporting entity’s scope 1 emissions, scope 2 emissions, and scope 3 emissions within the framework required in the legislation.” Thus, in the absence of regulations imposing the requirements of the CCDAA on reporting entities, the Supremacy Clause and extraterritoriality claims were non-justiciable. For more detail about the California case, please see our PHast Track post here.

Given that the court dismissed these claims without prejudice, we expect to see a renewed challenge to California’s CCDAA once California’s Air Resources Board adopts implementing regulations for the California CCDAA, which it must do by July 1, 2025.

Potentially Conflicting Obligations

Facially, both California’s CCDAA and New York’s SB 3456 permit reporting entities to satisfy reporting obligations by submitting reports prepared to meet other state, national and international reporting requirements, including reports prepared to meet other state, national and international reporting requirement or reports voluntarily prepared using the IFRS Foundation Sustainability Disclosure Standards, as long as those reports satisfy the requirements of each state’s applicable law. However, it remains to be seen whether each state’s implementing regulations will harmonize or conflict with the other. As noted above, California must adopt implementing regulations by July 1, 2025.

In either case, as other states begin to adopt state-level climate disclosure regulations, companies face the added burden of monitoring and ensuring compliance with potentially conflicting state-level reporting requirements.

Key Takeaway

The future of New York’s SB 3456 is unclear (this bill was previously introduced in 2023 as Senate Bill S897C but failed to pass through the New York State Senate Finance Committee). Even so, the imposition of climate-related disclosure regulations is likely here to stay, whether at the state or international level. As such, companies that will be subject to multiple climate-related disclosure requirements should take care to implement flexible and scalable internal processes to monitor and discharge the evolving climate disclosure requirements consistently and accurately across multiple jurisdictions, both to make compliance more efficient and to reduce risk.