Latest news with #SenateBill253
Forbes
3 days ago
- Business
- Forbes
California Board Gives Update On Climate Reporting, Wont Meet July Deadline
In 2023, California passed legislation requiring large companies to file climate disclosures beginning in 2026 for FY 2025. A year later, Governor Gavin Newsom signed legislation that delayed the releasing of the implementation guidelines for climate reporting until July 1, 2025. As the deadline quickly approaches, the California Air Resources Board is still in the early stages of rulemaking, making the July 1 deadline unobtainable. A virtual workshop held on May 29 addressed concerns and floated early staff proposals for key aspects of the law. In September 2023, California approved the Climate Accountability Package, a pair of bills aimed at creating sustainability reporting requirements. Senate Bill 253 required companies that do business in California and have an excess of $1 billion in revenue, defined as 'reporting entities', to submit an annual report for Scope 1 and Scope 2 starting in 2026. Scope 3 reporting will begin in 2027. Senate Bill 261 required companies that do business in California and have an excess of $500 million in revenue, defined as 'covered entities', to submit a biennial climate-related financial risk report. The report is based on the work of the Task Force on Climate-Related Financial Disclosures, established by the Financial Stability Board. The responsibility of drafting specific regulations and implementing the reporting standards was delegated to the California Air Resources Board. CARB was initially given until January 1, 2025 to draft the rules and processes. However, the process of drafting such complex regulations required more time. As a result, the Legislature gave CARB an additional six months to complete the drafting. Now, it is clear that deadline will also not be met. On May 29, CARB held a virtual workshop to update stakeholders on the progress of the rulemaking. Over 3,000 people from five continents attended the presentation. Senator Scott Wiener and Senator Henry Stern, the sponsors of the original Climate Accountability Package spoke on progress. Wiener made a point that, despite speculation in the media, reporting requirements will not be delayed and will go into effect in 2026. Under the current timetable, Scope 1 & Scope 2 reporting begin in 2026 for FY 2025. Scope 3 reporting will begin in 2027 for FY 2026. However, CARB used its authority to not enforce reporting requirements in 2026, as no reporting requirements exist. Stern acknowledged ongoing litigation and headwinds on sustainability reporting. He noted that it was his intent to work collaboratively with the European Union and their Corporate Sustainability Reporting Directive. He also noted they are watching the proposed changes by the International Sustainability Standards Board, the organization that drafted the international standards for sustainability reporting and filled the void after the TCFD was dissolved. The EU is currently engaged in a massive rewrite and simplification of the reporting requirements of the CSRD and its sister regulation, the Corporate Sustainability Due Diligence Directive. A strong green push back in the EU and internationally is causing the EU and other jurisdictions to rollback gains made in the past few years. Changes in the EU are expected by the end of the year. CARB is still in the informal pre-rulemaking phase. Once if moves to formal rulemaking, CARB will have one year to complete the process. It will include a 45-day comment period. If amendments are adopted, a second comment period will run for 15-days. Initial solicitation for comments opened in December 2024 and closed in March. CARB received 261 responses during that period. The themes of those responses focused on who qualifies as a 'reporting entity' in SB 253 or 'covered entity' in SB 261. "Reporting entity means a partnership, corporation, limited liability company, or other business entity formed under the laws of this state, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States with total annual revenues in excess of one billion dollars ($1,000,000,000) and that does business in California. Applicability shall be determined based on the reporting entity's revenue for the prior fiscal year." "Covered entity means a corporation, partnership, limited liability company, or other business entity formed under the laws of the state, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States with total annual revenues in excess of five hundred million United States dollars ($500,000,000) and that does business in California. Applicability shall be determined based on the business entity's revenue for the prior fiscal year. 'Covered entity' does not include a business entity that is subject to regulation by the Department of Insurance in this state, or that is in the business of insurance in any other state." Themes were focused on the definition of 'doing business in California', revenue, and corporate relationships between parent and subsidiary companies. In the development and interpretation of law, words matter. Codes, ordinances, laws, and regulations typically begin with a list of definitions of key terms. Frequently, those definitions are prefaced with the phrase 'for purposes of this section.' This allows lawmakers to define a term for limited use in that section of the law preventing new legislation from negatively impacting established law. Definitions bring clarity, allowing those subjected to the law, regulators, attorneys, and judges to know the exact intent of the lawmakers. In the Climate Accountability Package, the phrases 'covered entity' and 'reporting entity' are both defined in their respective sections. The only notable distinction between the definitions is the annual revenue threshold. Both include the phrase 'that does business in California.' However, that phrases is not defined and was quickly identified as an issue. Initial proposals pointed to Article 1, Section 23101(a) of the California Revenue and Taxation Code definition of 'doing business.' The California Franchise Tax Board interprets the definition to mean meeting one of five conditions. The board updates the dollar thresholds annually. A company is considered doing business in California if In the initial solicitation, stakeholders were asked 'Should CARB adopt the definition of 'doing business in California' found in the Revenue and Tax Code section 23101?' The presentation did not give the breakdown on responses, most likely because CARB admitted they had not fully reviewed all of them. The workshop included an initial staff concept. They propose using the tax board's definition, but with one change. Companies would need to meet requirement 1 AND any of requirements 2 - 5. This establishes a clearer standard for companies that would fall under the reporting requirements, but is so low that most companies will qualify. The workshop identified three questions that need to be addressed: The distinction in reporting requirements under SB 253 ad SB 261 are based on 'total annual revenue.' However, as was the issue with 'doing business in California', questioned remained as to what is used to calculate revenue. Specifically, if the thresholds are for the parent company or the subsidiary. Comments The initial staff concept defines revenue as 'For the purposes of determining whether an entity meets the annual revenue threshold in SB 253 and SB 261, 'total annual revenue' would be defined as gross receipts as set forth in California Revenue and Taxation Code § 25120(f)(2).' That section defines gross receipts as 'the gross amounts realized (the sum of money and the fair market value of other property or services received) on the sale or exchange of property, the performance of services, or the use of property or capital (including rents, royalties, interest, and dividends) in a transaction that produces business income, in which the income, gain, or loss is recognized (or would be recognized if the transaction were in the United States) under the Internal Revenue Code , as applicable for purposes of this part. Amounts realized on the sale or exchange of property shall not be reduced by the cost of goods sold or the basis of property sold.' The definition includes a list of exemptions. However, that still leaves unanswered the question as to if revenues are for the parent or the subsidiary. This is an important distinction that needs to be addressed. A subsidiary may only meet the lower reporting requirement, while the parent based in another jurisdiction may trigger the higher reporting requirements. In a simple world, a company is only liable for the actions of the company. However, companies are frequently established as subsidiaries, have institutional investors, and various other factors that make defining a company often times legally murky. This is posing an issue for CARB as they look at the relationship between a parent company and a subsidiary. The workshop pointed to three main questions that need to be addressed relating to corporate relationships. The initial staff concept is to leverage the Cap-and-Trade approach defining corporate relationships: CARB engaged the Montrose Environmental Group to conduct a comprehensive study on existing GHG accounting and reporting programs around the world. The study was presented by Mariah Gehle and Alexa Ambroseo. The presentation looked at the reporting requirements by Scope, if third party verification is required, and data availability. They noted that "Voluntary programs publish more emissions methodologies for Scope 2 and 3 emissions sources and allow flexibility in how they calculate and report the indirect emissions. Regulatory frameworks tend to cover Scope 1 emissions and may not provide guidance or methodologies for Scope 2 and 3 emissions." Yhe California Air Resources Board will continue to operate in the informal stage of rulemaking, holding discussions with stakeholders to address issues before the official process begins to make climate disclosure standards. Now is the time for interested parties to weigh in. Once the formal process begins, the template will be set. Expect the formal process to begin by fall, with a target of final approval by the end of 2025.
Los Angeles Times
28-04-2025
- Politics
- Los Angeles Times
‘Botched' new exam format, AI controversy build pressure on California State Bar
Good morning. Here's what you need to know to start your day. California has nearly 270,000 lawyers, and they've all cleared the difficult final hurdle to securing a license to practice law: passing the bar exam. The licensing exam is administered twice a year in California, and while it is usually a source of anxiety and stress for fresh law school graduates and their families, the test is usually not a source of controversy or front-page news. Until this year. For its test in February, the State Bar of California — the agency that licenses and disciplines attorneys — opted to create its own exam as a way to save some much-needed money rather than rely on a national testing system for exam questions. The new format also allowed aspiring lawyers to take the exam remotely, as opposed to the typical in-person test. But the rollout of that test was marked by glitches and chaos that led some test takers to file a lawsuit against the State Bar. As Times national correspondent Jenny Jarvie reports, there are growing calls from law school leaders and an influential state legislator to return to the test developed by the National Conference of Bar Examiners, which California had used since 1972. Such a move 'would be a major retreat for the embattled State Bar,' Jenny wrote. 'The Supreme Court has yet to direct the State Bar to return to the NCBE system, even though test takers complained that some of the multiple-choice questions in the new test included typos and questions with more than two correct answers and left out important facts.' Last week, deans of more than a dozen major law schools in the Golden State wrote a letter to California Supreme Court Justice Patricia Guerrero, expressing 'serious concerns about the exam's fairness and validity.' Sen. Thomas J. Umberg (D-Santa Ana), chair of the state Senate Judiciary Committee, has also urged the State Bar to abandon its own test. 'Given the catastrophe of the February bar, I think that going back to the methods that have been used for the last 50 years — until we can adequately test what new methods may be employed — is the appropriate way to go,' Umberg told Jenny. Last week, the State Bar faced another round of outrage after admitting that artificial intelligence was used to develop some multiple-choice questions on its new exam. Jenny reported that neither the State Bar's Committee of Bar Examiners nor the California Supreme Court was aware that AI had some role in generating the exam questions until after the test was administered. The State Bar could soon face more scrutiny. Umberg filed legislation that would launch an independent review of the exam by the California State Auditor. 'That bill is slated to be reviewed at a May 6 Senate Judiciary Committee hearing, along with Senate Bill 253, the State Bar's annual license fee authorization bill, which gives lawmakers leverage to push the State Bar to make improvements,' Jenny explained. You can read more of her reporting here. Take a rare glimpse inside the mountain tunnel that carries water to Southern California. Fear and anxiety reign as burglary soars in post-fire Altadena What else is going on Get unlimited access to the Los Angeles Times. Subscribe here. Dodgers pitcher Yoshinobu Yamamoto was good in his rookie season with L.A. 'Great at times, even,' Times sportswriter Jack Harris noted. Now in Year 2, the Japanese-born star is surpassing expectations, Jack writes, thanks to 'a few simple things: more confidence in himself, more comfort in his surroundings and more conviction on the mound.' How can we make this newsletter more useful? Send comments to essentialcalifornia@ Staying in Show us your favorite place in California! Send us photos you have taken of spots in California that are special — natural or human-made — and tell us why they're important to you. Today's great photo is from Times staff photograher Allen J. Schaben: Yolanda Rubio, parent and teachers aid, plays with a child in the Early Head Start program at Pacific Clinics' Early Head Start Center in Pasadena on April 18. Have a great day, from the Essential California team Ryan Fonseca, reporterMatt Hamilton, staff writer, California team Check our top stories, topics and the latest articles on
