The SEC paused implementation of the climate-related disclosure rules in the face of significant legal challenges.  The rules would impose substantial disclosure mandates on companies, including concerning the costs of extreme weather events, corporate strategies for addressing climate change, corporate governance procedures and, for certain companies, greenhouse gas emissions.

The SEC had proposed the rules two years ago and received significant comments.  The final rules took into account concerns raised by market participants and removed the Scope 3 disclosure requirement and added materiality qualifications, among other notable changes.  However, the final rules continue to impose costly disclosure requirements.  The plaintiffs in the cases, including SEC registrants, say the final rules are beyond the SEC’s statutory authority, that some would compel speech on controversial topics in violation of the First Amendment, and that the SEC failed to comply with certain provisions of the Administrative Procedure Act. 

In the SEC order, the SEC notes that, “Given the procedural complexities accompanying the consolidation and litigation of the large number of petitions for review of the final rules, a commission stay will facilitate the orderly judicial resolution of those challenges and allow the court of appeals to focus on deciding the merits.”

The SEC notes “the Commission will continue vigorously defending the final rules’ validity in court and looks forward to expeditious resolution of the litigation.”

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