U.S. EPA Eliminates Key Scope 3 Role, Leaving Gap Ahead of SB 253 Compliance

On July 28, 2025, the U.S. Environmental Protection Agency (EPA) eliminated the positions and unit responsible for maintaining the Extended Input-Output (EEIO) model, a key federal tool used to calculate Scope 3 greenhouse gas (GHG) emissions. The move signals a likely end to federal support for EEIO emissions factors, presenting challenges for companies preparing to comply with California’s landmark climate disclosure law, SB 253 (as amended by SB 219). As federal involvement recedes, the private sector and California regulators may fill the gap, introducing uncertainty about how Scope 3 emissions will be quantified going forward.

Legal Framework: Scope 3 and the Role of EEIO Factors

Established in 1998 by global climate research organizations, the Greenhouse Gas Protocol remains the internationally recognized standard for measuring and reporting GHG emissions. It categorizes emissions into three buckets:

• Scope 1: Direct emissions from owned or controlled sources
• Scope 2: Indirect emissions from purchased electricity, steam, heating, or cooling
• Scope 3: All other indirect emissions, including those from purchased goods and services, business travel, and upstream/downstream value chains

The Protocol underpins nearly all major climate disclosure regimes, including the U.S. Securities and Exchange Commission’s (SEC) climate disclosure rules (currently stayed pending the outcome of litigation), the EU’s Corporate Sustainability Reporting Directive (CSRD), and California’s SB 253 (for which we covered key developments in October 2023, September 2024, December 2024, January 2025, and June 2025). However, implementation has been far from straightforward. During the Biden Administration, regulators engaged in extensive debate over whether to require disclosure of Scope 3 emissions—a debate that ultimately resulted in their exclusion from the SEC’s final rules, while in contrast, California moved forward with mandatory Scope 3 reporting under SB 253. In the courts, California’s SB 253 was challenged in 2024 on First Amendment and Supremacy Clause grounds, and the SEC abandoned its defense of its climate disclosure rules in litigation earlier this year.

Significance of Scope 3 and SB 253

SB 253 imposes wide-reaching climate-related disclosure obligations on large U.S. companies “doing business” in California. Specifically, SB 253 requires companies with over US$1 billion in annual revenue to disclose Scope 1 and 2 emissions by 2026 and Scope 3 emissions by 2027.

According to preliminary workshops from the California Air Resources Board (CARB), “doing business in California” may include any company with more than US$735,019 in sales or US$73,502 in property in the state. Given the size of California’s economy, these thresholds could extend compliance obligations to a majority of the Fortune 1000, regardless of where companies have offices or are incorporated. And with similar disclosure obligations already in force in Europe under the CSRD, large companies must begin preparing now to quantify and report Scope 3 emissions—even in the face of a federal regulatory retreat.

A Federal Retreat: Implications for Scope 3 Quantification

Scope 3 emissions are inherently complex to quantify, often requiring estimation based on a company’s financial data, supplier inputs, and upstream and downstream activities. For over a decade, the EPA’s EEIO model provided free, annually updated emissions factors that allowed companies to estimate emissions based on costs and economic activity.

That support is now in question. Wes Ingwersen, the longtime EPA scientist who led the EEIO effort, confirmed his departure from the agency last week. In his exit post, he expressed doubts about whether agency management would continue to support the EEIO model. The most recent EEIO update was in 2022, and absent ongoing support, the data will quickly become outdated, particularly for sectors exposed to price volatility or supply chain disruptions.

What Comes Next? Private Alternatives and State-Led Innovation

In the absence of federal maintenance, private-sector alternatives are already stepping in, with proprietary and possibly quite expensive tools. Likewise, state agencies like CARB may attempt to develop their own emissions estimation tools. Privately developed tools and newly emerging state-developed standards are unlikely to match the rigor and national credibility that EEIO provided under the past 13 years of federal oversight.

Companies subject to SB 253 or similar global climate disclosure regimes should act now to build internal systems for Scope 3 accounting. The data will need to be collected starting on January 1, 2026—a mere five months away. And, California is moving full steam ahead for the first Scope 3 reporting deadline of January 1, 2027.

* Special thanks to John Beath Environmental, LLC, for their expertise and contributions to this piece.

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.