A federal court on Friday temporarily halted new Securities Exchange Commission rules that require public corporations to reveal more information concerning the business risks they face from climate change, siding with two oil and gas corporations which have criticized the necessities as costly and arbitrary.
Rules approved this month by the SEC require certain publicly traded corporations to reveal climate risks and the quantity of greenhouse gases they produce. Industry groups, in addition to their political allies, have filed quite a few lawsuits difficult the regulation.
The U.S. Chamber of Commerce, which represents a broad cross-section of industries, filed a lawsuit this week with the U.S. Court of Appeals for the Fifth Circuit demanding an end to the regulations, calling them unconstitutional. Ten Republican-led states have also filed suit to finish the rules.
The emergency stay issued Friday by Fifth Circuit judges followed a case brought by two fracking corporations, Liberty Energy and Nomad Proppant Services. “There is no clear authority for the SEC to effectively regulate the controversial issue of climate change,” the 2 corporations wrote of their petition. Both corporations said they were “arbitrary and capricious” and violated the First Amendment, which protects free speech, by “effectively inciting discussion about climate change.”
Moreover, the regulations will cost corporations “irreparable harm in the form of irreversible compliance costs,” they said.
Climate disasters, including extreme weather resembling hurricanes, floods and drought, are taking an increasing toll on people and businesses around the globe. In 2023, the United States experienced a record 28 weather and climate disasters, each costing at the least $1 billion, – reports the National Oceanic and Atmospheric Administration. Treasury Secretary Janet Yellen said last yr that climate change-related losses could “cascade through the financial system.”
Environmental groups also challenged the rules, saying the SEC didn’t go far enough in protecting investors.
“As climate impacts like wildfires, floods and droughts disrupt every aspect of the U.S. economy, the SEC has chosen to stick its head in the sand rather than require companies to demonstrate the full climate risks they pose,” said Hana Vizcarra, an attorney at Earthjustice, which with with the Sierra Club and other environmental groups also suing the SEC
The SEC initially proposed that enormous corporations could be required to reveal planet-warming emissions not only from their very own operations, but additionally emissions produced in an organization’s so-called “value chain” – a term that covers all the things from the parts and services they buy from other suppliers to how how individuals who use products ultimately get rid of them.
However, after objections from corporations, the SEC removed this requirement and, under the ultimate rules, required the most important corporations to report their direct emissions and only in the event that they determined that the emissions would have an effect on their financial results. These laws gave corporations significant leeway and exempted hundreds of smaller corporations. But some corporations, including fracking corporations that won the case, still believed they’d gone too far.
The Fifth Circuit granted a short lived stay over objections from the SEC, which argued that the request was premature. Companies won’t be required to reveal climate information before March 2026.
