Acting SEC Chair Mark Uyeda has directed the Commission’s appellate litigation team to request that the Court of Appeals for the Eighth Circuit, which is considering challenges to the validity of the SEC’s climate disclosure rules, suspend consideration of the case while the Commission reconsiders its position. In Acting Chairman Statement on Climate-Related Disclosure Rules, he instructs the staff to request “that the Court not schedule the case for argument to provide time for the Commission to deliberate and determine the appropriate next steps in these cases.”
On March 6, 2024, the Commission adopted rules requiring public companies to disclose certain climate-related information, including material Scope 1 and Scope 2 GHG emissions. See SEC Adopts Landmark Climate Change Disclosure Rules, March 2024 Update. Several lawsuits were filed challenging the validity of the rules. The Commission suspended their effectiveness pending the outcome of these cases, which were consolidated in the Eighth Circuit. See SEC Puts its Climate Disclosure Rules on Hold, April 2024 Update.
Acting Chair Uyeda’s statement is likely the first step toward SEC withdrawal of the climate disclosure rules. He notes that both he and Commissioner Peirce voted against the rules and that the briefs that the Commission has filed in defense of the rules do not represent his views. (In light of the resignation of Chair Gensler and Commissioner Lizarraga, Acting Chair Uyeda and Commissioner Peirce now constitute a majority of the three-person Commission.) Mr. Uyeda states that he continues to question the Commission’s authority to adopt the rules, the need for the rules, the cost/benefit analysis, and the Commission’s adherence to the Administrative Procedure Act. The third member of the Commission, Caroline Crenshaw, issued a statement reiterating her support for the climate disclosure rules and “disagree[ing] with the position unilaterally taken today by the acting Chairman.”
President Trump has nominated former SEC Commissioner Paul Atkins to Chair the Commission, although his confirmation hearings have not yet been scheduled. It seems unlikely that, under his leadership, the Commission will continue to defend the validity of these rules and may instead seek to rescind them. However, for public companies and their audit committees, this may not end the need to make GHG emissions and other climate-related disclosures. Many large U.S. companies will be subject to California’s climate disclosure requirements, and some will be required to comply with E.U. requirements. See California Tweaks its Climate Disclosure Law But Reporting Deadlines are Unchanged, November 2024 Update. In addition, many public companies make climate disclosures voluntarily in response to investor interest. See What Backlash? ESG Reporting Continues to Grow, September-October 2024 Update.
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