The U.S. Securities and Exchange Commission (SEC) has announced that it will halt enforcement of its highly contested climate “disclosure rule” until a federal court decides whether the rule is lawful.
The new rule, which requires companies registered with the SEC to provide a broad swath of information related to climate change in their annual reports, was issued on March 6. The Liberty Justice Center and Pelican Institute for Public Policy jointly filed a lawsuit to challenge the rule on March 21.
The lawsuit argues that the rule should be set aside because the federal laws creating and empowering the SEC do not authorize it to require such detailed disclosures on environmental matters, which will burden companies and alter their behavior far more than ordinary financial disclosures. The lawsuit also argues that the rule unconstitutionally compels speech in violation of the First Amendment—requiring companies by law to implicitly endorse viewpoints on climate change that are the subject of intense public debate.
“The SEC’s decision to stay the rule is welcome news,” said Jacob Huebert, President of the Liberty Justice Center. “It means that the rule won’t take effect while our case is before the court—and we intend to see that it never takes effect.”
“We are glad to see the SEC recognize the need to halt enforcement of its disclosure rule, and look forward to continuing to fight this overreach in court,” said Sarah Harbison, General Counsel at Pelican Institute’s Center for Justice.
Matt Coday, President of the Oil & Gas Workers Association, one of the petitioners challenging the rule in the case, also spoke favorably about the SEC’s step down, celebrating the fact that companies and employees in the oil and gas industry will not be bound by unnecessary and burdensome regulations during the process of litigation. Read more from Coday about the negative impacts the rule would have here.
The legal filings in National Legal and Policy Center v. Securities and Exchange Commission are available here.