SEC Voluntarily Stays Climate Disclosure Rules

On April 4, 2024, the U.S. Securities and Exchange Commission (the “SEC”) voluntarily stayed its climate-related disclosure rules pending completion of the Eighth Circuit Court of Appeal’s review of the rules. According to its order, the SEC will “continue vigorously defending” the rules in court, but issued the stay in part to avoid potential regulatory uncertainty if registrants were to become subject to the rules’ requirements during the pendency of the challenges to their validity. 

This development is likely to affect compliance deadlines to the extent the rule survives judicial scrutiny, but in general there is little basis for predicting what the future holds for the rules.  

The rules, which were scheduled to become effective on May 28, 2024, mandate certain climate-related disclosures from SEC registrants, as we have described in detail here. 

Shortly after their adoption, numerous legal challenges were filed, mainly by parties seeking to invalidate the rules (such as energy companies, coalitions of U.S. states and business organizations) but also by environmental groups arguing that the rules do not go far enough. These petitions have been consolidated for review by the Eighth Circuit. 

The stay, which was issued pursuant to Securities Exchange Act Section 25(c)(2) and Administrative Procedure Act Section 705, is limited to these rules. It does not affect any other SEC rules or guidance, such as the 2010 guidance regarding climate change disclosure, which discusses how existing SEC rules may require disclosure of climate-related risks and their impacts on a registrant’s business or financial condition.