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The SEC’s embattled climate disclosure rule just hit another roadblock.
The agency decided to pause implementation of the rule to give the US Court of Appeals for the Eighth Circuit time to review the many petitions filed against it. Various parties, including the US Chamber of Commerce, 25 Republican attorneys general, the Texas Alliance of Energy Producers, and fracking company Liberty Energy have filed legal challenges against the climate rule. They’ve argued, in effect, that the SEC lacked the authority to implement the rule, and that it would be too burdensome for companies to implement. (And, proving that you can’t satisfy anybody, the Sierra Club has also sued over the rule, claiming it doesn’t go far enough.)
The SEC said in its stay order that it hopes the pause will help companies avoid uncertainty as to whether they need to comply with the rule while it faces legal challenges. It’s paused actions due to court cases before: In 2010, it stayed a rule about electing company directors, and in 2019 it paused a pilot program testing lower stock market fees.
The agency vowed to “vigorously” defend its climate disclosure rule in court. The fate of the rule might not be decided for a year or more, ESG attorney Jacob Hupart told Bloomberg Law. And there’s a chance the case might advance to the Supreme Court.
But ultimately, it may not matter so much to large companies if the SEC rule doesn’t go forward. They’re already subject to regulations around greenhouse gas emissions from other jurisdictions, including the EU and California.
“It’s not pencils down on climate disclosure more generally,” attorney Michael Littenberg told the AP.
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