SEC Climate Rule Suits Head to Eighth Circuit After Lottery (3)

Litigation over whether the SEC can require public companies to disclose their greenhouse gas emissions and other climate-related information to investors will be consolidated and reviewed by the conservative-leaning Eighth Circuit, as the result of a lottery drawing Thursday.

The Judicial Panel on Multidistrict Litigation lottery selected the US Court of Appeals for the Eighth Circuit as the venue for hearing a case consolidating nine lawsuits against the March 6 Securities and Exchange Commission regulations filed in six different circuits, according to an order. Of the St. Louis-based court’s 17 judges, only one was appointed by a Democratic president.

Twenty-five states joined energy companies and business advocates in arguing the regulation exceeds the SEC’s authority. The Republican attorneys general and business interests filed petitions to review the rules in the US courts of appeal for the Fifth, Sixth, Eighth and Eleventh circuits, which have a conservative bent. Iowa led the lawsuit in the Eighth Circuit.

The rules also drew challenges in liberal-leaning courts from the Sierra Club and the Natural Resources Defense Council that argue the SEC scaled the rules back too much. The Sierra Club filed in the US Court of Appeals for the District of Columbia, while the Natural Resources Defense Council sued in the US Court of Appeals for the Second Circuit.

Tom Zimpleman, senior attorney at the Natural Resources Defense Council, said in a statement his organization looks “forward to presenting our case.”

Hana Vizcarra, an Earthjustice senior attorney representing the Sierra Club, also said: “We look forward to moving on to the merits of the case.”

An SEC spokesperson declined to comment on the lottery results. A representative of Iowa Attorney General Brenna Bird didn’t immediately respond to a request for comment.

(The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.)

‘Merit Neutral’

Investors are increasingly seeking information on climate-related risks, the SEC said when it approved 3-2 a final rule requiring many public companies to report emissions from their direct operations and energy use, as well as risks they face due to a changing climate. The rule has been paused since the Fifth Circuit last week granted a request for a stay from Liberty Energy Inc., a fracking company. But the Eighth Circuit can lift the stay.

“There is no clear authority for the SEC to effectively regulate the controversial issue of climate change,” Liberty Energy said in the Fifth Circuit. Democratic SEC Chair Gary Gensler has said the commission is “merit neutral” on investment decisions based on climate change.

Boyden Gray PLLC represents Liberty Energy and the American Free Enterprise Chamber of Commerce, which joined Iowa, Arkansas, Idaho, Missouri, Montana, Nebraska, North Dakota, South Dakota and Utah in their Eighth Circuit challenge.

A lawyer with the law firm didn’t immediately respond to a request for comment.

The Judicial Panel on Multidistrict Litigation order to put all the litigation in the Eighth Circuit came after a clerk randomly selected the name of the court from a “drum.” Each court that collected a suit received one entry in the lottery.

The case is In Re: Securities and Exchange Commission, The Enhancement and Standardization of Climate-Related Disclosures for Investors, Issued on March 6, 2024, J.P.M.L., MCP No. 180, consolidation order issued 3/21/24.