Lawsuits Commence Over Commission’s New ESG Rule

After the Commission released its final rule “The Enhancement and Standardization of Climate-Related Disclosures for Investors” nine separate petitions were filed to challenge legal challenges were filed against the Commission’s rule. Seven of the petitions were filed by state attorneys general and other interested entities challenging the Commission’s authority to regulate ESG factors, while two petitions came from environmental groups claiming the rules did not go far enough. The petitions were filed in six different circuits leading to a lottery to determine which circuit court would hear the case. On March 22, it was announced that the Eighth Circuit Court would hear the case. The Eighth Circuit is comprised of Arkansas, the Dakotas, Iowa, Minnesota, Missouri, and Nebraska. Of the Circuit Court’s 17 judges, only one was appointed by a Democratic president. Notably, the Fifth Circuit Court entered a temporary stay of the rules on March 15; however, the Eighth Circuit Court is not bound by this stay (under the multi-circuit petition statute) and could revoke or modify the stay. Another interesting layer of the pending litigation is the Supreme Court’s review of the Chevron Doctrine, which governs the deference agencies are given when promulgating rules and interpreting the laws it administers.

Click here to read an update on the ESG rule challenge from Ropes & Gray.