In a widely anticipated move, the U.S. Securities and Exchange Commission (SEC) has announced that it will no longer defend the agency’s climate disclosure rule issued during the Biden administration. The disclosure rule (Final Rule), which we wrote about here, was adopted by the SEC in March 2024 and would have required public companies to disclose certain climate-related information in their registration statements and annual reports. The Final Rule was intended to enhance and standardize certain climate-related disclosures in order to address stakeholder demands for more consistent, comparable and reliable information about the financial effects of climate-related risks and how companies manage such risks. As we wrote in February, Mark Uyeda, the Acting Chairman of the SEC, began the process of unwinding the Final Rule by directing agency personnel to ask the U.S. Court of Appeals for the 8th Circuit not to schedule oral arguments in the pending litigation.
In a statement, the SEC disclosed that it submitted a letter to the 8th Circuit advising that the agency’s attorneys no longer would appear in court to defend the Final Rule and were “no longer authorized to advance the arguments in the brief the [SEC] had filed” in support of the Final Rule. The announcement follows a vote by the SEC’s three commissioners to cease defending the Final Rule, although the agency did not disclose how individual commissioners voted. Acting Chair Uyeda stated that the “goal of today's [SEC’s] action and notification to the court is to cease the [SEC’s] involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”
In terms of next steps, the SEC’s decision to abandon its defense of the Final Rule should enable the 8th Circuit to rule in favor of the plaintiffs challenging the disclosure requirement which would then operate to block its effectiveness. Assuming the Court proceeds in that manner, we do not believe that the SEC would need to go through a formal rulemaking process to rescind the Final Rule.
