Securities Regulation Daily Wrap Up, ESG NEWS—8th Cir.: Climate intervenors say case should remain in abeyance, (Jul 31, 2025)

By Anne Sherry, J.D.

It would waste judicial resources for the court to rule on the validity of the climate rule when the SEC has not decided its next steps, the response argues.

States intervening to defend the SEC’s climate risk disclosure rules argue that the SEC is trying to take the easy way out by asking the court to rule on the rules’ validity. Responding to the SEC’s status report in which it urged the Eighth Circuit to end abeyance and issue a ruling, the intervenors emphasized that the SEC has not committed to an action on the rules. This only intensifies the rationale for abeyance in the first place, which is to conserve judicial resources (Intervenor States’ Response to the July 23, 2025 Status Report of the SEC, Iowa v. SEC, No. 24-1522 (8th Cir. July 30, 2025)).

On April 24, the Eighth Circuit granted a motion by 18 intervenor states to hold the case in abeyance indefinitely. The court directed the SEC to report on whether it planned to review or reconsider the rules, given its withdrawal of support for them. In its status report, the SEC asked the court to terminate the abeyance, continue considering the parties’ arguments, and exercise its jurisdiction to decide the case. However, the SEC said that while it does not intend to review or reconsider the rules, it cannot prejudge what it will do if the court denies the petitioners’ challenges.

The intervenor states seized on the SEC’s prevarication. “SEC’s Janus-faced response just exacerbates the judicial-efficiency concerns that prompted the Court to hold these petitions in abeyance,” they wrote in their response. The court should not devote the resources to hearing oral argument and writing a complex opinion unless necessary, and it would waste judicial resources were the court to uphold the rules only for the SEC to nullify them using the same notice-and-comment process that it could have used all along.

On the contrary, the states argue that conserving the SEC’s resources is not a valid reason to lift the abeyance. “The rigors of notice-and-comment rulemaking are features, not bugs, of administrative law,” and agencies cannot choose whether to comply with the statutorily required procedure. The fact that court challenges may follow is likewise part of how Congress has structured review of agency actions.

In refusing to prejudge its actions, the SEC sidesteps its own admission that a majority of its commissioners believe the rules exceed the agency’s statutory authority, the intervenors say. They also assert that the SEC also cannot explain why it must wait for the court to rule before it can choose whether to rescind the climate rules (the SEC said in its status report that “the outcome of the litigation and the reasoning of the Court will bear heavily on the Commission’s next steps”). Even if a court decision would not be “advisory” in a jurisdictional sense, it would be advisory in a practical sense given the current Commission’s majority opposition to the rules. And because the rules are stayed while the litigation is pending, there is no hardship from preserving the abeyance.

The case is No. 24-1522 and all consolidated cases.

Attorneys: Patrick Cannon Valencia, Office of the Attorney General, for State of Iowa. Nicholas J. Bronni, Office of the Attorney General, for State of Arkansas. Alan M. Hurst, Office of the Attorney General, for State of Idaho. Joshua Divine, Office of the Attorney General, for State of Missouri. Christian Brian Corrigan, Office of the Attorney General, for State of Montana. Grant Donald Strobl, Office of the Attorney General, for State of Nebraska. Philip J. Axt, Office of the Attorney General, for State of North Dakota. Charles David McGuigan, Office of the Attorney General, for State of South Dakota. Stanford Purser, Office of the Attorney General, for State of Utah. Jonathan Andrew Berry (Boyden Gray PLLC) for American Free Enterprise Chamber of Commerce. Megan Barbero for the SEC.

Companies: American Free Enterprise Chamber of Commerce

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