On May 29, 2026, the United States Securities and Exchange Commission (SEC) published a proposal to formally rescind its landmark 2024 climate-related disclosure rules (Rules), which would have required companies to provide extensive climate-related information in their registration statements and annual reports, including greenhouse gas emissions data and climate-related risk management disclosures.
The rescission proposal
Among its arguments for rescission, the SEC contended that:
- The SEC lacked the statutory authority to adopt the Rules
- The Rules are unsound as a matter of public policy
Lack of statutory authority
The SEC argued that the Rules were adopted in excess of its statutory authority under the Securities Act of 1933 (Securities Act) and the Securities and Exchange Act of 1934 (Exchange Act). The SEC concluded that:
- The Rules’ disclosure requirements are different from the types of enumerated disclosures in the Securities Act and the Exchange Act
- The SEC was only authorized to engage in rulemaking that was “channeled” by and comparable to the categories of disclosures specified in the Securities Act and the Exchange Act (i.e., business or financial information)
Furthermore, the SEC argued that the Rules intrude on state authority over corporate governance matters, which Congress had traditionally reserved for the states.
Policy reasons
The SEC also contended that the Rules are unnecessary and inconsistent with its long-standing, principles-based, company-specific approach to disclosure rooted in materiality, noting that existing disclosure requirements already elicit information about the material effects of climate-related matters.
In addition, the SEC argued that the Rules fall outside of its core mission of protecting investors, maintaining efficient markets, and facilitating capital formation and would result in significant compliance costs for companies.
Finally, the SEC noted the Rules’ potential negative impact on its policy objective of facilitating capital formation, including by discouraging companies from going or remaining public.
Following a mandatory comment period, which closes August 3, 2026, the SEC is expected to proceed with a final rescission of the Rules.
Related litigation developments
The SEC had paused the Rules in 2024 pending the outcome of still-unresolved litigation, consolidated in the US Court of Appeals for the Eighth Circuit as Iowa v. SEC. Last year, as part of that litigation, the SEC voted to end its defense of the Rules and asked the court to rule on their legality. The court declined, instead suspending the litigation until the SEC decided whether to resume its defense or withdraw, repeal, or amend the Rules.
On May 8, 2026, the SEC wrote to the court, reiterating that it did not intend to defend the original Rules and planned to reconsider them through the notice-and-comment process. On the same date, the Iowa Attorney General and fellow petitioners – a coalition of state Attorneys General and businesses – filed a consolidated motion asking the court to “either vacate the [Rules] without argument or lift the abeyance and schedule argument.”
On June 1, 2026, the SEC informed the court of the rescission proposal and its intention to submit a status report to the court on or before August 31, 2026.
Key implications
A successful challenge to the Rules could have sweeping implications for SEC and federal administrative authority.If the Rules are rescinded while the case is pending, the Eighth Circuit could dismiss the consolidated petitions as moot (see Akiachak Native Community v. U.S. Department of the Interior, 827 F.3d 100 (D.C. Cir. 2016); Wyoming v. U.S. Department of the Interior, 839 F.3d 938 (10th Cir. 2016)).
However, a formal rescission of the Rules would itself constitute a final agency action subject to judicial review. Institutional investors and advocacy groups could challenge such a rescission as arbitrary and capricious under the Administrative Procedure Act or as contrary to the SEC’s statutory mandate to protect investors and ensure the materiality of corporate disclosures.
Public companies are encouraged to closely monitor the progress of the rescission proposal and associated legal challenges that may affect the future of the Rules. However, if the Rules are rescinded, investors, customers, and other stakeholders may continue to expect disclosure of climate-related information in a company’s SEC filings.
Engagement with investors and other stakeholders may be instructive in determining a company’s climate-related disclosure practices in the absence of formal disclosure requirements under SEC rules. Moreover, companies are encouraged to continue to monitor their climate and sustainability disclosure obligations under state and foreign climate regulations.
For more information, please contact the authors.
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