The U.S. Securities and Exchange Commission has taken a major step toward reversing course on The Enhancement and Standardization of Climate-Related Disclosures for Investors rule (the “Greenhouse Gas Rule”) currently pending in the courts.

The Greenhouse Gas Rule adopted by the SEC on March 6, 2024, is currently being challenged in litigation consolidated in the Eighth Circuit, and the Commission previously stayed the effective date pending completion of that litigation.

In a move that was anticipated and maybe only surprising by its timing before a new Trump SEC Chair had been confirmed by the Senate, on February 11, 2025, SEC Acting Chair Mark Uyeda issued a statement saying the Greenhouse Gas Rule “.. is deeply flawed and could inflict significant harm on the capital markets and our economy.” He then “.. directed the Commission staff to notify the Court of the changed circumstances and request that the Court not schedule the case for argument to provide time for the Commission to deliberate and determine the appropriate next steps in these cases.” While this policy reversal was expected of a Trump Administration, it is nonetheless a dramatic change from what had been the signature policy of Gary Gensler in the Biden SEC.

It has been suggested that withdrawing its defense of the Greenhouse Gas Rule will allow the courts to promptly rule in favor of the plaintiffs which will not require the SEC to go through formal rulemaking to rescind the Rule, something that could take two years.

In his statement, the Acting Chair made clear that both he and fellow Republican Commissioner Hester Peirce had voted against the Greenhouse Gas Rule’s adoption. She argued at the time that “only a mandate from Congress should put us in the business of facilitating the disclosure of information not clearly related to financial returns.” And he had argued the Commission was “without statutory authority or expertise” to address climate change issues.

His public statement goes on to describe that “the Commission’s briefs previously submitted in the cases consolidated in the Eighth Circuit do not reflect my views. The briefs defend the Commission’s adoption of the Rule, but I continue to question the statutory authority of the Commission to adopt the Rule, ..” with the recent change in the composition of the Commission, now the majority view. However, that view is not unanimous, and Democratic SEC Commissioner Caroline Crenshaw released a statement criticizing the directive to the staff as unilateral and “without the input of the full Commission.”

But beyond those views, there is no doubt the January 20, 2025, Presidential Executive Order regarding a Regulatory Freeze that will prevail on the conduct of the litigation.

For how this ends, President Trump’s nominee to chair the SEC, Paul S. Atkins has publicly opposed the Greenhouse Gas Rule and you can read his views in his letter jointly penned with other former SEC Commissioners. Lest there be any question about his perspective, the Greenhouse Gas Rule “.. represents an unprecedented and unjustified effort beyond financial materiality and engages the Commission in matters beyond its statutory remit.”

Loath to let the law intrude, we must note that after the Supreme Court ruling in West Virginia v. EPA, many legal scholars agree that the Greenhouse Gas Rule would not withstand “major question doctrine” and would be struck down by the U.S. Supreme Court.

We would be remiss if we did not note that the SEC Longstanding Disclosure Related to Climate Change Remains and we continue to do that work annually for public companies and their counsel.

While climate change disclosure is no longer the cause de célèbres, it should be lost on no organization, including all who do business in California, even if located elsewhere, that there is pending a judicial challenge to the Delay in Corporate Greenhouse Gas Reporting in California that has Implications for All of Us. And despite that in the most burdensome state net zero greenhouse gas reduction law in the country, Citizens and Businesses Join Suing Maryland to Halt BEPS, in the face of longstanding U.S. national energy policy, with additional legislation now pending the Maryland Governor Proposes to Ration Electricity to reduce greenhouse gas emissions.

Even under the Trump Administration businesses must remain vigilant of evolving climate change policies. We will continue reporting changing environmental policy in future blog posts and you may always reach out to Stuart Kaplow.