SEC Climate Disclosure Regulations Paused by Fifth Circuit (2)

The Fifth Circuit put the SEC’s climate reporting rules temporarily on hold Friday amid litigation challenging the regulations.

The US Court of Appeals for the Fifth Circuit’s order staying the March 6 rules came after Liberty Energy Inc. requested the pause as the fracking company pursues its case. The decision was the first major ruling, and setback, for the Securities and Exchange Commission in the litigation over the regulations that require companies to report their greenhouse gas emissions and make other climate-related disclosures.

Liberty told the Fifth Circuit on March 8 it needed the stay due to “irreparable injury in the form of unrecoverable compliance costs and constitutional injuries” from the rules. The SEC disputed the claims, saying they’re “speculative and remote assertions of harm.”

The Fifth Circuit didn’t explain why it approved the administrative stay in its two-page unpublished order issued by judges Edith Jones, Stephen Higginson and Cory Wilson. The administrative stay isn’t the final decision on whether to keep the rules on hold throughout the litigation. It prevents the regulations from taking effect until the court reaches a final decision on halting the regulations as lawsuits continue.

An SEC spokesperson declined to comment on ongoing litigation. A lawyer for Liberty Energy did not immediately respond to requests for comment.

It’s unknown whether the Fifth Circuit will continue to rule on litigation over the SEC’s regulations. Lawsuits contesting the regulation are pending in at least six courts. A lottery is expected to determine which court will handle a case that consolidates the various challenges.

Republican attorneys general sued to the stop the regulations in the US appeals courts for the Sixth, Eighth and Eleventh circuits, in addition to filing a petition in the Fifth Circuit that was combined with the Liberty Energy case. Environmental groups filed suits in the US appeals courts for the Second Circuit and the District of Columbia, after saying the rules didn’t go far enough.

Republican-appointed judges hold the majority on the Fifth, Sixth, Eighth and Eleventh circuits. Judges picked by Democratic presidents hold most of the seats on the Second and DC circuits, however.

The SEC had told the Fifth Circuit that Liberty’s request to pause the rules was premature ahead of a lottery to pick a court to handle the challenges, saying the company was “forum shopping.” Liberty denied the claims.

The case is Liberty Energy v. SEC, 5th Cir., No. 24-60109, order issued 3/15/24.