SEC Freezes Climate Rules After Challengers Pushed for Pause (1)

The SEC put its climate reporting rules for public companies on hold Thursday in the face of multiple lawsuits challenging the regulations.

The Securities and Exchange Commission’s decision to pause the March 6 regulations on its own came after business interests and right-leaning challengers asked the US Court of Appeals for the Eighth Circuit to freeze the rules as their litigation there continues. The SEC’s latest move was another early victory for climate disclosure regulation opponents, which have said the agency exceeded its authority with requirements for companies to report their greenhouse gas emissions and disclose climate-related risks to their business.

The US Court of Appeals for the Fifth Circuit previously paused the rules from March 15 to 22, over opposition from the SEC. The litigation then moved to the Eighth Circuit, which was randomly selected in a lottery to hear lawsuits over the regulations. The SEC initially fought against a pause in the Eighth Circuit, as well.

The SEC “will continue vigorously defending” the rules despite issuing the hold, formally called a stay, the agency said in a three-page order. The pause will remain in place as the Eighth Circuit reviews the challenges, avoiding “potential regulatory uncertainty,” the SEC said. The hold also will help the Eighth Circuit focus its review on the merits of the challenges, according to the agency.

“In issuing a stay, the Commission is not departing from its view that the Final Rules are consistent with applicable law and within the Commission’s long-standing authority to require the disclosure of information important to investors in making investment and voting decisions,” the SEC said.

Fracking company Liberty Energy Inc., the US Chamber of Commerce, Iowa, Texas Alliance of Energy Producers and conservative advocacy group National Legal & Policy Center had stay requests pending in the Eighth Circuit. A hold was necessary due to imminent harm companies face from compliance with the rules, they said.

“The Commission knows that it has way overstepped its bounds,” Luke Wake, a Pacific Legal Foundation attorney representing the Texas Alliance of Energy Producers, said in a statement.

Representatives of the other challengers didn’t immediately respond to requests for comment.

The SEC is fighting eight legal challenges in the Eighth Circuit from business and conservative interests, as well as 25 Republican attorneys general. Environmental groups also have two lawsuits pending in the court, after they said the regulations were too weak. Democratic attorneys general from 18 states and the District of Columbia are looking to join the litigation in support of the rules, as well.

Liberty Energy is fighting the rules in the US District Court for the Northern District of Texas, in addition to its ongoing case in the Eighth Circuit.