On March 6, 2024, the Securities and Exchange Commission (SEC or the Commission) finalized its long-awaited climate disclosure rules on a party-line 3-2 vote. We previously provided a summary of the content of that final rule. As noted in that summary, the SEC rules were promptly challenged, and those judicial actions have been consolidated into a multi-district litigation in the Eighth Circuit Court of Appeals.

On April 4, 2024, the Securities and Exchange Commission issued an order staying the effectiveness of the final climate disclosure rules pending completion of judicial review of the numerous petitions challenging the rules. The administrative stay will remain in place until resolution of the pending litigation.

Pursuant to Section 25(c)(2) of the Exchange Act and Section 705 of the Administrative Procedure Act, the SEC has discretion to stay its rules pending judicial review if it finds that “justice so requires.” The Commission found that, in this instance, those standards were met, given, among other things, the procedural complexities of the consolidated litigation and the large number of petitions for review. Further, the Commission stated that issuance of a stay “will facilitate the orderly judicial resolution of those challenges and allow the court of appeals to focus on deciding the merits” and avoid potential regulatory uncertainty if registrants were required to comply with the regulations while the judicial challenges were pending. 

In its order, the SEC stated that it was not departing from its view that the final rules are consistent with applicable law and the Commission’s long-standing authority to require disclosure of information important to investors in making investment and voting decisions. The SEC further stated that it intended to vigorously defend the rules in court.