California Environmental Law Update: Key Legislative and Regulatory Updates To Track in 2026
California enacted a wide-ranging slate of environmental and climate legislation in 2025 and in prior years, with many of the resulting requirements taking effect in 2026 that will impact companies operating in or doing business with the state. These developments span climate disclosure and financial reporting, greenhouse gas regulation, energy and fuel markets, California Environmental Quality Act (CEQA) reform, and public health and safety standards. The below roundup highlights a collection of key new statutes and regulatory changes that the industry should be tracking now to assess compliance obligations and strategic planning considerations heading into 2026 and future years.
SB 253 and SB 261 (effective Jan. 2026, but subject to an injunction)
SB 253 and SB 261 are landmark climate disclosure and financial reporting legislation that impose reporting requirements on large U.S. public and private companies doing business in California, including disclosure of Scope 1 and Scope 2 greenhouse gas (GHG) emissions beginning in 2026 and Scope 3 GHG emissions in 2027; and submission of biennial climate-related financial risk reports to the California Air Resources Board (CARB) beginning in 2026. Sidley previously discussed key takeaways from this legislation here.
Enforcement of SB 261 remains stayed pursuant to a Ninth Circuit injunction issued in November 2025, and following oral argument on January 9, 2026, the court has taken under submission whether to continue or modify that injunction, including whether any relief should extend to SB 253, with a ruling expected in the coming months.
SB 54 – Extended Producer Responsibility (EPR) (Nov. 2025 with full implementation by 2027)
SB 54 requires producers of covered plastic packaging materials to help manage those materials at the end of their lifecycle. Producers include manufacturers, brand owners, importers, and others in the packaging supply chain. Businesses that sell, distribute, or import packaging or plastic food service ware into California, among others, must comply and may be affected by CalRecycle’s proposed changes.
Late last week, CalRecycle withdrew its proposed regulations to SB 54 in order to “make changes to the regulations to improve clarity and support successful implementation of the law.”[1] The agency plans to introduce revised rules ahead of the 2027 implementing deadline.
Sidley previously discussed EPR in California here and here.
AB 1207 and SB 840 – Cap-and-Trade (effective Sept. 2025)
These bills extend California’s cap-and-trade program — renamed the “Cap-and-Invest Program” — through 2045, providing authority for the state’s market-based greenhouse gas emissions reduction program while adding new oversight, reporting, and investment requirements.
SB 237 – Oil spill Prevention and Gasoline Specifications (provisions beginning in 2026)
SB 237 makes a variety of changes to California’s oil and gas regulatory framework, including authorizing the Governor to suspend certain gasoline specifications (e.g., “summer blend” requirements) during price spikes, imposing oil spill and pipeline safety requirements, and reducing burdens to obtain drilling authorizations in Kern County.
SB 131 – Statutory CEQA Exemption Limited to Infill Housing
SB 131 introduces a series of narrow CEQA exemptions and procedural streamlining tools for projects aligned with specific infrastructure, climate, and housing goals of state and local governments. Rather than implementing broad-based reform, the law selectively exempts specific types of projects from full CEQA review or from certain procedural requirements. Sidley previously discussed key takeaways from this legislation here.
AB 130 – CEQA Reform
Similar to AB131, AB 130 was meant to streamline environmental review under CEQA, but with a narrower focus on exempting certain infill housing developments from CEQA requirements. To qualify, a residential or mixed-use housing project must meet detailed criteria, focused around ensuring the development constitutes infill development. The exemption excludes contaminated sites, projects involving wetlands impacts, and certain projects that would require the demolition of currently occupied housing, thereby further limiting the scope of the new exemption. Sidley previously discussed key takeaways from this legislation here.
SB 283 – Battery Storage Safety (effective Jan. 1, 2026)
SB 283 regulates battery energy storage systems (BESS) in the state by mandating that anyone seeking to install a BESS must first meet and confer with the local fire-suppression authority that has jurisdiction about fire-prevention designs, and submit to an inspection of the system by that local authority before commencing operations.
SB 1053 – Plastic Bag Ban (effective Jan. 1, 2026)
SB 1053 restricts California stores (from grocery and liquor to retail and convenience) from distributing plastic bags, and also places requirements and fees for paper bags.
AB 1056 – Gill Net Phase-Out (effective Jan. 1, 2027)
AB 1056 phases out use of set gill nets — mile-long nets that are attached to the seafloor — in California waters by prohibiting entities from transferring existing permits.
[1] https://content.govdelivery.com/accounts/CALRECYCLE/bulletins/403af14
This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.
