Updated at 4:40 P.M. E.D.T.



The Securities and Exchange Commission is pausing implementation of a rule that would have forced companies to disclose their climate impact, citing court cases challenging the legality of the administrative action.



“The Commission has discretion to stay its rules pending judicial review if it finds that ‘justice so requires,’” the SEC wrote in a legal <a href="https://www.sec.gov/files/rules/other/2024/33-11280.pdf">filing</a> Thursday. “The Commission has determined to exercise its discretion to stay the Final Rules pending the completion of judicial review of the consolidated Eighth Circuit petitions.”&nbsp;



The pause of the rule comes as Congressional Republicans had planned to introduce resolutions to rescind the SEC rule under the Congressional Review Act.&nbsp;



The GOP had hoped that vulnerable Senate Democrats, Hill aides tell the Sun, could be key to killing what conservatives describe as a “burdensome” regulation.&nbsp;



The SEC says that it still views the climate reporting rule as legal and is only placing a temporary hold on enforcement. “The Commission will continue vigorously defending the Final Rules’ validity in court and looks forward to expeditious resolution of the litigation,” the SEC says. “But the Commission finds that, under the particular circumstances presented, a stay of the Final Rules meets the statutory standard.”



The SEC had <a href="https://www.sec.gov/news/press-release/2024-31">announced</a> the climate disclosure requirement on March 6, requiring companies to release data about their carbon emissions, claiming the rule will help inform investors.&nbsp;



In response to the SEC rule, House Republicans and the top Republican on the Senate Banking Committee, Senator Tim Scott, had planned to introduce what is called a joint resolution of <a href="https://crsreports.congress.gov/product/pdf/IF/IF10023">disapproval</a> under the Congressional Review Act. That resolution could force the SEC rule to be rescinded if the resolution passes both houses of Congress and is signed by President Biden.&nbsp;



“There are rules around when you can introduce that … based on when it’s received by Congress and when it’s posted in the federal register and when each chamber is in session. As such, the ranking member will introduce when the Senate is next in session but exact timing is TBD,” a source in Mr. Scott’s office tells the Sun.&nbsp;



The chairman of the Financial Services subcommittee on oversight and investigations, Congressman Bill Huizenga, was planning to introduce the House version of a resolution of disapproval, his office tells the Sun. The House resolution would have been introduced once the body returns for its session on April 9, though it could still be brought forth.&nbsp;&nbsp;



Despite Democratic control of the Senate, there was some hope for such a mechanism in an election year when so many Democrats in the upper chamber are in tough reelection races.&nbsp;



The SEC rule has been tied by critics to the “environmental social governance” investment strategies, or ESG, which some Democrats have voted against in the past. In 2023, some Senate Democrats <a href="https://www.nysun.com/article/senate-vote-on-woke-investing-to-set-stage-for-first-biden-veto">voted</a> with Republicans to disapprove of a Labor Department recommendation that said pension funds should consider embracing ESG strategies.&nbsp;



The House Financial Services Committee is scheduled to hold a hearing on the “partisan political agenda” of Biden administration regulators, including the SEC chairman, Gary Gensler, on April 10.&nbsp;



“Republicans have consistently warned Biden’s regulators to stick to their knitting for the good of our financial system,” the chairman of the committee, Congressman Patrick McHenry, says.&nbsp;



Critics say that the new SEC rule is just the latest in a long string of administrative overreach, empowered, in part, by the Supreme Court’s Chevron deference precedent that grants executive branch agencies broad authority to unilaterally issue regulations. That precedent itself is under review by the high court in its current term.



“Most government agencies are claiming powers that would’ve been unthinkable even 10 years ago,” a senior counsel at the New Civil Liberties Alliance, Peggy Little, <a href="https://www.nysun.com/article/new-sec-climate-rules-likely-to-come-under-fire-for-regulatory-overreach">told</a> the Sun about the SEC’s overreach. Ms. Little further described the SEC rule as “lawless.”



Congress’ investigations of the SEC rule are numerous. Mr. Huizenga’s subcommittee has already held a hearing on the climate disclosure rule in Tennessee to discuss the impact on business development and regulatory compliance costs.&nbsp;



The subcommittee also heard testimony from a second-generation farmer named Renea Jones who has been working in eastern Tennessee for decades. “To comply with [the rule], we would need to hire an attorney, and a chemist to keep up,” Mr. Jones said.&nbsp;



The House Oversight Committee has also demanded information from Mr. Gensler on the rule. The chairman of the Oversight Committee, Congressman James Comer, who himself is a farmer and former agriculture commissioner of Kentucky, has called the final rule a “disaster” that was authored at the urging of “leftist activists and the self-appointed policy makers of big finance.”



The SEC initially defended the climate regulation by saying it will help investors make informed decisions by forcing “more consistent, comparable, and reliable information about the financial effects of climate-related risks on a registrant’s operations and how it manages those risks.”

The SEC chairman, Gary Gensler, on July 28, 2023 at Washington. 

Facing Court Challenges, Vow of Congress To Reverse, SEC Pauses Implementation of Climate Disclosure Regulation 

Congressional Republicans had pledged to issue resolutions that could have led to the withdrawal of the rule, seen as a regulatory overreach.

Facing Court Challenges, Vow of Congress To Reverse, SEC Pauses Implementation of Climate Disclosure Regulation  | The New York Sun

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Facing Court Challenges, Vow of Congress To Reverse, SEC Pauses Implementation of Climate Disclosure Regulation

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