SEC Votes to Withdraw Legal Defense of Climate-Disclosure Rules

The agency is being challenged in court over rules requiring companies to disclose climate-related risks.

The Securities and Exchange Commission headquarters in Washington, on Nov. 25, 2024. Reuters/Benoit Tessier/file photo

The U.S. Securities and Exchange Commission (SEC) voted on March 27 to end legal support for rules requiring companies to disclose climate-related risks and greenhouse gas emissions—rules that the agency had sought to save during the Biden administration.

“The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules,” SEC Acting Chairman Mark T. Uyeda said in a statement announcing the move.

In a separate statement, Commissioner Caroline Crenshaw, the SEC’s only Democratic member, said the withdrawal of legal support “leaves other parties, including the court, in a strange and perhaps untenable situation.”

“In effect, the majority of the Commission is crossing their fingers and rooting for the demise of this rule, while they eat popcorn on the sidelines,” Crenshaw said. “The court should not take the bait.”

The Epoch Times has contacted the SEC for further comment.

The rules in question were adopted by the commission on March 6, 2024, and would have required publicly traded companies, as part of their registration statements and annual filings, to disclose to investors any climate-related risks that have or are “reasonably likely” to have a material impact on their business.

The rules also would have required some large and midsize companies to disclose how much carbon dioxide is emitted by their operations.

In a statement after adopting the rules last year, the SEC said the regulations reflected its efforts to “respond to investors’ demand for more consistent, comparable, and reliable information about the financial effects of climate-related risks on a registrant’s operations and how it manages those risks while balancing concerns about mitigating the associated costs of the rules.”

The agency was swiftly challenged in court by multiple states and private parties, who argued the SEC lacked legal authority when issuing the regulations because it failed to first gain congressional approval.

Plaintiffs further argued the rules would burden businesses with more red tape and that they were part of a wider push by the Biden administration to ensure investment decisions were focused on climate-related considerations as opposed to financial returns.

In April 2024, the agency announced that it would place on hold the implementation of the climate-related rules, pending a review of the legal challenges.

Despite the pause, the SEC vowed to “continue vigorously defending” the disclosure requirements and said it was “not departing from its view that the Final Rules are consistent with applicable law and within the Commission’s long-standing authority to require the disclosure of information important to investors in making investment and voting decisions.”

The regulatory agency faced a self-imposed deadline of Mar. 28 to inform the U.S. Court of Appeals for the Eighth Circuit of its planned course of action.

Now under the Trump administration, the Republican-dominated SEC had been widely expected to abandon the rules after Uyeda said last month that the climate-disclosure rule was “deeply flawed and could inflict significant harm on the capital markets and our economy.”

Following its vote, the agency sent a letter to the court confirming it was withdrawing its defense of the rules. It added that commission counsel are “no longer authorized to advance the arguments in the brief” the SEC had filed under the Biden administration in support of the rules.

The letter stated that the commission yields any oral argument time back to the court.

Reuters contributed to this report.