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In a recent setback for the U.S. Securities and Exchange Commission (SEC), the Fifth Circuit Court of Appeals placed the SEC’s climate reporting regulations temporarily on hold.
This decision marks a notable pause in the SEC’s efforts to require companies to disclose their greenhouse gas emissions and other climate-related information, Bloomberg reports.
Stuart Alderoty, Ripple's chief legal officer, pointed to this event as yet another loss for the SEC.
The pause comes as a result of a request from Liberty Energy, which argued that the new rules would cause irreparable harm due to compliance costs and constitutional issues.
Despite the SEC’s rebuttal that Liberty's concerns were speculative, the Fifth Circuit issued a two-page order without detailed explanation, preventing the regulations from taking effect pending further court decisions.
Regulatory roadblocks and legal challenges
The stay on the SEC’s climate disclosure rules represents a critical juncture in the broader litigation landscape concerning the agency’s regulatory reach.
The rules, which were initially set to enforce transparency regarding environmental impacts, have sparked a complex legal battle involving multiple stakeholders.
Liberty Energy’s request for a stay, citing potential irreparable harm, showcases growing tension between regulatory ambitions and industry concerns.
The legal path ahead remains uncertain, with a lottery expected to consolidate various challenges into a single court case.
Pattern of SEC setbacks
Alderoty’s commentary on recent SEC losses extends beyond this latest court decision. Over the past month, Alderoty has critiqued the SEC’s legal strategies and its broader approach to regulation.
He pointed out instances where the SEC appeared to act in bad faith, such as relying on a default judgment in court — a scenario where the other party did not show up, leading to an unchallenged win.
Alderoty likened this to declaring oneself a champion after a shadow boxing match where the opponent fails to appear.
Furthermore, he echoed concerns raised by others about the SEC’s perceived overreach and the importance of the courts as a check on regulatory power.
His criticisms align with a broader debate on the balance between regulatory oversight and the autonomy of the entities subject to such regulation.