The Securities and Exchange Commission (SEC)’s controversial climate rule will face legal scrutiny at the Eighth Circuit, as a result of a lottery drawing by The Judicial Panel on Multidistrict Litigation. This rule requires public companies to disclose their greenhouse gas emissions and other climate-related information to investors. The litigation consolidates nine challenges from different circuits into one, which is set to be presided over by the conservative-leaning Eighth Circuit.
The SEC’s ruling has two distinct groups of challengers. On one hand, there are energy companies, business advocates, and twenty-five states who argue that the regulation exceeds the SEC’s authority. On the contrary, environmental groups such as the Sierra Club and the Natural Resources Defense Council assert that the SEC didn’t go far enough and have scaled back the rules excessively.
An important detail is that out of the 17 judges in the Eighth Circuit, only one was appointed by a Democratic president. The Republican attorneys general and business interests filed petitions to review the rules in the US courts of appeal for the Fifth, Sixth, Eighth and Eleventh circuits, which typically embrace more conservative views.
Iowa led the lawsuit in the Eighth Circuit while the Sierra Club and the Natural Resources Defense Council filed their challenges in the more liberal-leaning US Court of Appeals for the District of Columbia and the Second Circuit respectively.
The SEC defended its ruling by noting that investors are increasingly seeking information on climate-related risks. In spite of this, Liberty Energy, a fracking company has won a temporary stay on the regulation from the Fifth Circuit. However, it is within the Eighth Circuit’s power to lift this stay.
The decision to hear the case in the Eighth Circuit came after a clerk randomly drew the name of the court from a drum.
The consolidated case is cited as In Re: Securities and Exchange Commission, The Enhancement and Standardization of Climate-Related Disclosures for Investors, Issued on March 6, 2024.
For more information, please refer to the detailed report available here.