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On March 27, 2025, the SEC voted to end its defense of its climate disclosure rules, with Democratic Commissioner Caroline Crenshaw dissenting, arguing that refusing to defend the rules violates the Administrative Procedure Act.
The rules, which were scheduled to become effective on May 28, 2024, mandate certain climate-related disclosures from SEC registrants, as we have described in detail here. In April 2024, the SEC voluntarily stayed the rules pending completion of the Eighth Circuit Court of Appeal’s review.
Following the vote, the SEC staff sent a letter to the court stating that the SEC withdraws its defense of the rules and that SEC counsel are no longer authorized to advance the arguments in the brief the SEC had filed. The letter states that the SEC yields any oral argument time back to the court.
It is not clear if any other party could or will intervene to defend the rules. In her dissent, Crenshaw said that if the court continues without the SEC’s participation, it should appoint counsel to do advocate in the litigation on behalf of investors, issuers and the markets.
Meanwhile, climate disclosure legislation remains a possibility at the state level. In early February, the U.S. District Court for the Central District of California granted a partial motion to dismiss filed by the California Air Resources Board, dismissing claims that California's two climate disclosure laws (the Climate Corporate Data Accountability Act and the Climate-related Financial Risk Act, as described further here) violate the Supremacy Clause and limitations on extraterritorial regulation. However, the litigation still continues over the First Amendment claim, which has not been dismissed. The California Senate has also proposed legislation to strengthen carbon removal disclosure.
In New York, a state senator has introduced a bill into the state senate that would require certain business entities within the state to annually disclose scope 1, scope 2 and scope 3 greenhouse gas emissions, similar to the disclosure required by the California legislation. The proposed Climate Corporate Data Accountability Act, Senate Bill S3456, would apply to entities doing business in New York and with total revenues of more than $1 billion in the preceding fiscal year, including but not limited to revenues received by all of the business entity's subsidiaries that do business in the state of New York. Similar laws have also been proposed in New Jersey, Colorado and Illinois.
28 March 2025
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