By Rodney F. Tonkovic, J.D.
Citing its own stay, the SEC filed an omnibus opposition to all of the motions to stay its climate disclosure rules currently before the Eighth Circuit. Five groups of petitioners are seeking emergency relief to stay the Commission's final rules on the enhancement and standardization of climate-related disclosures. The Commission itself stayed the challenged rules on April 4, 2024, so, it argues, there is no basis for the court to grant the requested relief (Iowa v. SEC, April 5, 2024).
Climate rules challenged. The Commission adopted the final climate disclosure rules on March 6, 2024, and they were set to become effective on May 28, 2024. Soon after the rules were adopted, nine petitions for review were filed in several circuit courts, and they were consolidated in the Eighth Circuit on March 21, 2024.
By April 3, five motions to stay the rules had been filed with the Eight Circuit. The motion in Iowa v. SEC, for example, argues that the rule goes beyond the SEC's authority, violates the First Amendment, and is arbitrary and capricious. The petitioners, the motion says, have a strong likelihood of success on the merits and will also suffer irreparable injury if the rules take effect.
On March 29, the Commission filed a motion to establish a consolidated briefing schedule for the motions that had been filed and any future motions. Thirty-one petitioners then opposed this motion.
Commission stay. On April 4, 2024, the Commission issued an order staying the final rules pending the Eight Circuit's completion of judicial review of the consolidated petitions. According to the Commission, the rules are consistent with applicable law and its authority, but a stay will facilitate orderly resolution of the challenges while avoiding regulatory uncertainty.
The Commission argues that in light of its decision to stay the rules, the petitioners' motions for stay should be denied. While the petitioners did not seek a stay from the Commission, the agency concluded that the statutory standards were met and addressed the issue sua sponte. As a result, the stay preserves the status quo until the completion of judicial review and thus removes any need for the court to intervene. Plus, the petitioners' requests for stay were based on claimed harms from the rules taking effect, the Commission says, and the stay eliminates this possibility.
Briefing schedule. If the petitioners continue to seek relief, the Commission asks that the court order a briefing schedule allowing a single, consolidated response to any motions for relief. In addition, certain petitioners seek an alternative accelerated briefing and argument schedule, and while the Commission believes that its stay removes the predicate for this, it will confer with petitioners' counsel to determine a schedule that facilitates a timely ruling on the merits.
Sustainable Investment Caucus statement. The co-chairs of the Congressional Sustainable Investment Caucus, Representatives Juan Vargas (CA-52) and Sean Casten (IL-06) issued a statement about the SEC's stay. The representatives share the SEC's belief that the rule is lawful and are confident that the courts will reach the same conclusion.
The case is No. 23-1522.