5th Circuit Stays the SEC’s Climate Disclosure Rules! (Now What)

“Things are topsy-turvy in the office.” I can’t help but think of that famous line from the end of “The Americans” TV series. But when you stop and think about it, it’s not a surprise that the SEC’s new climate disclosure rules are already subject to a stay given that we all have known for some time that there would be multiple legal challenges to the rules as soon as they were adopted.

So here we are. On Friday, a three judge panel for the U.S. Court of Appeals for the Fifth Circuit granted a motion seeking an administrative stay in a one-sentence order. The stay is temporary. There are lawsuits filed against the SEC’s rules in four federal court of appeals so far – so those will be consolidated at this point in a single court to determine what to do next. The timing of the disposition of this is unknown.

What does this mean for you and your relationship with the new rules? Not much at this point. We already knew there would be legal challenges. That is now playing out. The safe thing to do is to keep operating as if the rules will come into effect as adopted. Other SEC rules have been challenged in court upon adoption and they are still with us, such as the conflict minerals rules.

So learn the new rules. Educate your senior managers and boards about them. For larger companies, you have disclosure obligations under other reporting regimes anyway. It’s perfectly fine to continue to freak out. If you’re not freaking out about this, you would be freaking out about something else…

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