A federal appeals court has temporarily halted the Securities and Exchange Commission’s new public company climate disclosure rule.
In an unpublished order issued March 15, a three-judge panel on the 5th U.S. Circuit Court of Appeals in New Orleans granted an administrative stay, blocking the rule until the court considers a lawsuit brought by energy companies Liberty Energy and Nomad Proppant Services.
The two plaintiffs filed their initial lawsuit March 6 and requested the stay March 8, claiming that the SEC doesn’t have the authority to issue such a rule, that the rule is arbitrary and capricious and also violates the First Amendment “by mandating controversial disclosures using controversial frameworks and effectively mandating discussions about climate change.”
The SEC approved the rule March 6 to require that public companies disclose a host of climate-related information in their periodic reports and registration statements. That information includes material climate-related risks; activities to mitigate or adapt to such risks; information about the company’s board of directors’ oversight of climate-related risks; and information on any climate-related targets or goals that are material to the company’s business, results of operations or financial condition, according to an SEC fact sheet and information outlined by SEC staff during the March 6 meeting.
In a March 13 filing, the SEC argued that the court should not grant the stay because the petitioners’ asserted harms are not immediate. “The challenged rules, which have not yet been published in the Federal Register, have extended compliance dates that will not require any disclosures before March 2026 at the earliest,” the SEC said.
The agency added that the final rule fits “comfortably within the commission’s long-standing authority to require the disclosure of information important to investors in making investment and voting decisions and are consistent with the commission’s prior exercise of that authority.
In granting the stay, the judges did not provide an explanation, nor indicate how long it could last.