The U.S. Securities and Exchange Commission (SEC) has told the U.S. Court of Appeals that it does not intend to review or revisit its climate disclosure rules for companies, and asked the court to rule on rule on petitions filed against the rules.
The SEC also declined to say whether it would uphold the climate disclosure rules if the court ruled against the petitions.
The SEC comments form part of a status report provided by the Commission, in response to a request made by the Eighth Circuit court in April.
Prior to the court’s request, SEC Acting Chairman Mark Uyeda had already declared that the Commission would end its legal defense of the rules , effectively walking away from its regulation requiring companies to report on climate risks and greenhouse gas emissions, without actually having to rescind the rules. Uyeda was appointed Acting Chair after the resignation of prior Chair Gary Gensler in January, following the election of Donald Trump. Trump’s nominee for SEC Chair, Paul Atkins, who has also opposed the climate reporting rule, has since been confirmed and appointed Chair.
Under Gensler, the SEC announced the release and adoption of the new rules in March 2024, establishing for the first time requirements for public companies in the U.S. to provide disclosure on climate risks facing their businesses, plans to address those risks, the financial impact of severe weather events, and, in some cases, greenhouse gas emissions originating from their operations.
The rule faced a series of legal challenges immediately following its release, with nine court petitions filed within 10 days, including a lawsuit against the rule filed by 25 Republican state attorneys general, and another appeals court motion requesting a stay of the rules led by the U.S. Chamber of Commerce. The petitions were subsequently consolidated in the Eighth Circuit court.
In its status report, the SEC “does not intend to review or reconsider the Rules at this time,” and instead “requests that the Court proceed with the litigation and decide the case.” The SEC’s report appears to give weight to the arguments of the petitioners against the rule, noting that one of the key issues in the case is the determination of whether the Commission has the statutory authority to issue the climate disclosure rules, and adding that “a majority of the current Commissioners believes that the Commission lacked statutory authority for the Rules.”
Interestingly, while the status report acknowledged that the SEC decided to drop its defense of the rules, it also noted that “many States intervened to defend the rules.”
While asked by the court to say if the Commission “will adhere to the rules if the petitions for review are denied,” the SEC only said that its future actions in the matter would be “subject to Commission deliberation and vote of its members, and the Commission cannot prejudge that action.”
In a statement released following the report, SEC Commissioner Caroline Crenshaw, the only remaining Commissioner who supported the rule’s adoption, criticized the SEC’s response, accusing the Commission of trying to get around the process that would be required to rescind the rule.
Crenshaw said:
“The Court asked us in no uncertain terms “will [the Commission] adhere to the [R]ules if the petitions for review are denied[?]” We did not—but should have—answered that question. The unspoken truth under this Commission is that the answer is “no.” Three of the four current Commissioners have been vocal critics of the Rules. They have also withdrawn the Commission from the defense of the Rules in litigation.”
Crenshaw added:
“The Commission simply does not want to say what we all know to be true by now—it has no intention of allowing the Climate-Related Disclosure Rules to go into effect.”
