SEC Seeks to Pause Litigation Over Climate Disclosure Rule

Earlier this week, Mark Uyeda, the Acting Chairman of the U.S. Securities and Exchange Commission (SEC), began the process of unwinding that agency’s final climate disclosure rule enacted during the Biden administration. In a widely expected move, Acting Chairman Uyeda directed agency personnel to ask the U.S. Court of Appeals for the 8th Circuit not to schedule arguments in the pending litigation, which had been briefed fully and awaiting argument. Acting Chairman Uyeda, along with Commissioner Peirce, voted against enacting the climate disclosure rule and have remained sharply critical of the climate disclosure rule, calling it “deeply flawed,” questioning the need for them and whether the agency has the authority to require the disclosures.

The SEC’s final climate disclosure rule, which we wrote about here, was adopted in March 2024 and was immediately the subject of several lawsuits in federal courts across the country. Those legal challenges, brought by the U.S. Chamber of Commerce, Republican attorneys general and companies in the oil and gas industry, were consolidated before the U.S. Court of Appeals for the 8th Circuit. On April 4, 2024, the SEC voluntarily issued an order staying implementation of its final climate disclosure rule while the agency defended them against those legal challenges. Shortly after Acting Chairman Uyeda’s directive, counsel for the SEC filed a letter with the court asking it to refrain from scheduling oral arguments in the case, indicating that the SEC intends to submit a status report to the court within 45 days. While the ultimate status of the climate disclosure rule remains open, President Trump’s nominee to chair the SEC, Paul Atkins, also has been deeply critical of them. His nomination remains pending in the U.S. Senate. The agency could amend the climate disclosure rule or withdraw them altogether.

Despite the new administration’s pushback against the prior administration’s approach to climate issues, the European Union and United Kingdom continue to push ahead with rulemaking initiatives that implicate companies with operations in those jurisdictions sufficiently significant to trigger the disclosure requirements. Likewise, California’s climate disclosure rules, which we wrote about here, while subject to ongoing litigation, recently survived a motion to dismiss and companies continue to wait for clarifying regulations to be published by state regulators. In addition, many stakeholders expect other states to follow California’s lead now that the federal government seems inclined to leave climate-related issues to others. For instance, New York recently reintroduced two bills (i.e., SB 3456 and SB 3697) mandating climate-related disclosures.