(Reuters) – A U.S. appeals court on Friday temporarily blocked new rules issued by the U.S. Securities and Exchange Commission requiring public companies to report climate-related risks.
The New Orleans-based 5th U.S. Circuit Court of Appeals granted requests from Liberty Energy Inc. and Nomad Proppant Services LLC to put the rules on hold while it considers a lawsuit from oilfield companies challenging them.
The 5th Circuit did not explain the reasoning behind the order. It was the first court action in a flurry of lawsuits filed over the rules since the SEC approved them on 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 President Joe Biden’s efforts to leverage federal agency rule-making to tackle the threats of climate change.
The companies said in court filings that the rules would force companies to collectively spend more than $4 billion in compliance costs and that companies could face an increase in litigation.
They argued that the rules go beyond the SEC’s authority under US securities law, and that they are an attempt to get the SEC involved in climate policy by requiring disclosure of “breathtaking amounts of information” about greenhouse gas emissions and other climate concerns. Are “indirect efforts”. ,
On Wednesday, the SEC told the 5th Circuit that the pause was unnecessary because the rules extended the compliance deadline that does not require disclosures until March 2026. The agency said no potential harm to the companies is imminent.
The agency also said that rules requiring disclosure of material information to investors “fit comfortably” within its mandate, 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 such as the US Chamber of Commerce have challenged the rules in court, including the 5th, 6th, 8th and 11th US Circuit Courts of Appeals.
The Sierra Club, one of the largest environmental advocacy groups in the US, meanwhile, has challenged the rules in the US Court of Appeals for the DC Circuit, arguing that they do not go far enough to protect investors.
It is unclear whether the 5th Circuit or other courts will ultimately hear the challenges as it is expected that the cases will be consolidated and the location selected through a lottery.
