A U.S. appeals court on Friday temporarily paused new rules issued by the Securities and Exchange Commission (SEC) requiring public companies to report climate-related risks.
The New Orleans-based 5th U.S. Circuit Court of Appeals granted a request from Liberty Energy Inc. and Nomad Proppant Services LLC to put the rules on hold while it considers the oilfield companies’ lawsuit challenging them.
The 5th Circuit did not explain the reasoning behind the order. It was the first court action on a flurry of lawsuits filed over the rules since the SEC approved them March 6.
The rules aim to standardize climate-related company disclosures about greenhouse gas emissions, weather-related risks and how companies are preparing for the transition to a low-carbon economy.
The SEC did not immediately respond to a request for comment.
First proposed in 2022, the rules are part of Democratic President Joe Biden’s efforts to leverage federal agency rulemaking to address climate change threats.
The companies said in court filings that the rules would force companies to collectively spend over $4 billion in compliance costs and could open companies up to increased litigation.
They argued the rules go beyond the SEC’s authority under U.S. securities law, and that they are a “thinly veiled attempt” to inject the SEC into climate policy by requiring disclosure of a “breathtaking volume of information” about greenhouse gas emissions and other climate concerns.
On Wednesday, the SEC told the 5th Circuit that a pause was unnecessary, since the rules have extended compliance deadlines that do not require disclosures before March 2026. The agency said any potential harm to the companies is therefore not imminent.
The agency also said the rules “fit comfortably within” its authority to require disclosure of information important to investors, and that they would provide “consistent, comparable and reliable information” about climate risks.
At least 25 Republican-led states including West Virginia, Texas and Ohio and major business groups like the U.S. Chamber of Commerce have challenged the rules in court, including in the 5th, 6th, 8th and 11th U.S. Circuit Courts of Appeals.
The Sierra Club, one of the largest environmental advocacy groups in the U.S., has meanwhile challenged the rules in the U.S. Court of Appeals for the D.C. Circuit, arguing they do not go far enough to protect investors.
It is unclear whether the 5th Circuit or one of the other courts will ultimately hear the challenges, since the cases are expected to be consolidated and the venue picked via a lottery.
(Reporting by Clark Mindock Editing by Franklin Paul, Alexia Garamfalvi and David Gregorio)