U.S. Securities and Exchange Commission Stays Climate Disclosure Rule

On Thursday, April 4, 2024, the U.S. Securities and Exchange Commission (the Commission or SEC) issued an order staying its March 6, 2024, Final Rules — The Enhancement and Standardization of Climate-Related Disclosures for Investors, Rel. Nos. 33-11275, 34-99678 (Mar. 6, 2024), 89 Fed. Reg. 21,668 (Mar. 28, 2024). As discussed in detail in Sidley’s March 12, 2024, alert here, the Final Rules require domestic and foreign registrants to include extensive climate-related information in public securities filings.

Following a challenge to the Final Rules on March 8, 2024, the Fifth Circuit issued an administrative stay on March 15, 2024, pending judicial review. Thereafter, the Judicial Panel on Multidistrict Litigation consolidated the Fifth Circuit challenge with a number of other pending challenges across the country in the Eighth Circuit, which resulted in the Fifth Circuit’s dissolving its initial administrative stay. Given that challengers were poised to file another motion for an administrative stay pending judicial review, the Commission, upon its own discretion, has now decided to voluntarily stay the Final Rules pending judicial review.

In doing so, the Commission signaled that while it intends to “continue vigorously defending the Final Rules’ validity in court,” it found that a stay is appropriate in light of the procedural complexities associated with managing and consolidating the large number of pending challenges to the Final Rules as well as the regulatory uncertainty that would result for affected stakeholders that may become subject to the Final Rules’ requirements while challenging the validity of the Rules themselves. From the Commission’s perspective, a stay may avoid litigation over procedural issues and keep the focus of forthcoming litigation on the merits of the Final Rules. There was no mention of changes in compliance dates in the SEC’s order; thus it is not clear whether current compliance deadlines will be extended once the litigation is resolved. Given the extensive disclosures required by the Final Rules, registrants should continue to prepare for compliance as soon as possible.


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