SEC Climate Rule Status Update: Litigation, Withdrawal and What Companies Should Do Now

The SEC's climate disclosure rules have not been struck down. No court has ruled on whether they are lawful. They were adopted, stayed by the agency that wrote them, abandoned in litigation, and are now the subject of a proposal to rescind them entirely. The comment period on that proposal closed on 3 August 2026.

That procedural distinction matters more than it sounds, because it determines what happens next and how confident a company can be in planning around it. A rule struck down by a court is gone. A rule in the middle of a rescission rulemaking is still technically on the books, still stayed, and still capable of being finalised, modified or litigated further.

Here is the actual status, and the more useful question of what obligations exist regardless.

How the Rules Got Here

The sequence is worth setting out plainly, because summaries tend to collapse steps that had different legal effects.

The Commission adopted the climate-related disclosure rules on 6 March 2024, by a three to two vote, after a comment period that drew more than 14,000 responses. Challenges followed almost immediately and were consolidated in the Eighth Circuit as State of Iowa and others v. SEC. On 4 April 2024 the SEC stayed its own rules pending completion of that review.

On 27 March 2025 the Commission voted to end its defence of the rules. Agency counsel wrote to the court withdrawing the defence and stating they were no longer authorised to advance the arguments in the brief already filed. That is the step usually described as the SEC "withdrawing" the rules, and it is worth being precise: the Commission withdrew its defence, not the rules themselves.

The litigation did not end. Democratic state attorneys general intervened to defend the rules. The Eighth Circuit paused proceedings in April 2025 and directed the SEC to explain its intentions. In a July 2025 status report the Commission said it did not intend to review or reconsider the rules, asked the court to resolve the case on the merits, and declined to say whether it would enforce the rules if they survived.

The court declined that invitation. On 12 September 2025 it held the petitions in abeyance until the Commission either reconsiders the rules through notice-and-comment rulemaking or renews its defence, observing pointedly that it is the agency's responsibility to determine whether its own rules will be rescinded, repealed, modified or defended.

That order forced the issue. On 4 May 2026 the SEC submitted a proposed rulemaking titled Rescission of Climate-Related Disclosure Rules to the Office of Information and Regulatory Affairs. On 7 May it wrote to the Eighth Circuit confirming it would not renew its defence and had begun the rescission process. On 29 May 2026 it formally proposed to rescind the rules in their entirety, published in the Federal Register on 3 June, with comments due by 3 August 2026.

Where Things Stand Today

Four points define the current position.

The rules remain stayed. They have never taken effect and no compliance obligation has ever attached to them.

No court has ruled on the merits. The Eighth Circuit has made no determination about whether the rules exceed the SEC's authority. It has simply declined to decide while the agency sorts out its own position.

Rescission is proposed, not final. The comment period closed on 3 August 2026. The Commission must consider comments and hold a further vote before any rescission takes effect. Most practitioner estimates put a final rule in late 2026 or early 2027 at the earliest.

The litigation is paused, not resolved. It will presumably remain in abeyance while the rulemaking runs. If rescission is finalised, the petitions likely become moot. If it is not, the case is still there.

The SEC advanced two independent grounds for rescission. The first is that the rules exceed the Commission's statutory authority. The second is a policy argument: that the rules are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure, because existing disclosure obligations and anti-fraud provisions already elicit information about material climate effects.

That second argument deserves attention from companies, because it is not a statement that climate disclosure does not matter. It is a statement that the existing framework already covers it.

What did Not Go Away

This is the part that gets lost in coverage of the rescission, and it is where the practical guidance actually lies.

Materiality obligations persist. Registrants must still disclose material climate-related risks under existing requirements covering risk factors, management's discussion and analysis, and general disclosure obligations. The SEC's own rescission rationale rests on the proposition that these provisions already do the work. A company that quietly stops disclosing material climate risk because the specific rules were rescinded has misread the proposal.

Anti-fraud provisions persist. Statements about emissions, targets and transition plans remain subject to liability if they are false or misleading, whether they appear in a filing, a sustainability report or a marketing claim. Removing a prescriptive disclosure rule does not create licence for inaccurate voluntary disclosure. If anything, voluntary disclosure carries more risk than mandated disclosure, because the company chose both the content and the framing.

State law persists, and is where the real obligations now sit.

The States Filling the Gap

California is the most significant source of climate reporting obligations for most large US companies, and it has continued moving forward throughout the federal retreat.

SB 253 applies to entities with more than one billion dollars in total annual revenue doing business in California, and requires annual disclosure of Scope 1 and Scope 2 greenhouse gas emissions on a Greenhouse Gas Protocol basis, with Scope 3 beginning in the 2027 cycle. The first report was originally due on 10 August 2026, which is today. CARB deferred it to 10 November 2026 in late June, pulling its regulation back from final administrative review to make clarifying changes at the same time, and released revised rulemaking in late July. Companion legislation SB 261 requires biennial climate-related financial risk reporting from companies above 500 million dollars in revenue.

Both California statutes face a First Amendment challenge in Chamber of Commerce v. Sanchez, No. 25-5327. The Ninth Circuit enjoined SB 261 on 18 November 2025 but expressly declined to enjoin SB 253, which is why one is paused and the other is proceeding. CARB followed in December 2025 with an enforcement advisory confirming it will not enforce SB 261 against covered entities for failing to report, and opened a docket for voluntary submissions.

The court heard argument on 9 January 2026 and, on the most recent available reporting, had still not issued a decision. One detail from that hearing is worth flagging for anyone planning Scope 3 work: California signalled openness to severing Scope 3 from SB 253 if the court found it constitutionally problematic. The panel questioned the mechanics of requiring companies to gather third-party data. Scope 3 is therefore the element of the California regime most exposed to the litigation outcome.

New York's position is more contingent than headlines suggested. Its Climate Corporate Data Accountability Act, in the amended Senate bill S9072A, passed the Senate 40 to 22 on 10 February 2026 and went to the Assembly Codes Committee, where the legislature's records show no further action. If enacted, it would require Scope 1 and 2 disclosure from 2028 and Scope 3 from 2029, with limited assurance from 2028 rising to reasonable assurance in 2032. Those dates are a year later than the superseded 2025 bill, and summaries citing 2027 are describing the wrong version.

Bills in New Jersey, Illinois and Colorado have all stalled, with Colorado's postponed indefinitely. Colorado's draft is the most instructive, because it contained an explicit carve-out stating that reporting entities would not be required to disclose anything violating their free speech rights. That is defensive drafting written in direct response to the constitutional challenge facing California, and it is the template to expect if the Ninth Circuit rules against compelled disclosure.

There is also a parallel federal rollback at the EPA, and it is further advanced than the SEC's in one respect and less advanced in another.

The Greenhouse Gas Reporting Program, which has required roughly 8,000 facilities across 47 source categories to report emissions annually since 2009, is subject to a proposed rollback published in September 2025. It would remove obligations for 46 source categories after reporting year 2024 and suspend the remaining petroleum and natural gas segments until reporting year 2034. That proposal is not final. What has been finalised is an extension of the reporting deadline for 2025 emissions, moved from 31 March 2026 to 30 October 2026, with the EPA indicating it will address the rest of the proposal in one or more later actions. So the programme still exists, the data is still due, and the deadline is roughly eleven weeks away.

Separately and more consequentially, on 12 February 2026 the EPA finalised the rescission of the 2009 endangerment finding, the legal foundation underpinning most federal greenhouse gas regulation, together with the repeal of vehicle emission standards. The agency described it as the largest deregulatory action in United States history. Legal challenges are expected.

For companies, the practical point is narrower than the politics. Greenhouse Gas Reporting Program data has underpinned many corporate emissions baselines and feeds into state reporting and certain energy tax credit calculations. If your inventory relies on it, confirm what survives before assuming continuity, and note the 30 October deadline still stands.

International Obligations Do Not Pause

For any company with European or Asian operations or listings, federal rescission changes very little.

CSRD still applies to EU companies above 1,000 employees and 450 million euro in turnover, and to non-EU groups above 450 million euro of EU-generated turnover, with Wave 2 reporting on financial year 2027. Value chain data requests flow to US suppliers regardless of the requester's location, and the EU's value chain protections for smaller suppliers explicitly exclude greenhouse gas emissions data. The UK, Australia, Japan, Korea, Singapore, China and others are all moving toward or already operating mandatory regimes built on the ISSB standards.

The practical consequence is that a US multinational's climate reporting obligations are increasingly determined outside the United States, and a domestic company selling into international supply chains faces the same demands commercially rather than legally.

What Companies Should Do Now

Do not dismantle what you built. Many registrants invested in emissions inventories, controls and governance in anticipation of the SEC rules. That infrastructure serves California, the international regimes, lender and investor requests, and materiality-based disclosure under existing rules. Dismantling it to save cost is a decision that will need reversing.

Keep disclosing material climate risk. The rescission proposal explicitly rests on existing obligations being adequate. Continuing to address material climate risk in risk factors and MD&A is consistent with the SEC's own reasoning, not contrary to it.

Treat California as your compliance floor. For most large US companies, SB 253 is now the binding requirement. Confirm CARB's final deadline before relying on 10 November 2026, since the deferral was still working through administrative approval. Watch the Ninth Circuit, because a ruling could change the picture for both California statutes.

Apply the same rigour to voluntary disclosure. Anti-fraud exposure does not track whether disclosure was mandated. Numbers published voluntarily should have the same traceability, documented methodology and internal review as numbers published under a rule.

Review your risk factor language. Filings currently describe the rules as pending, stayed or under reconsideration. That language needs updating as the rescission progresses, and it should not overstate the certainty of the outcome while the proposal is still open.

Watch the abeyance. If rescission is finalised, the Eighth Circuit litigation likely becomes moot. If it is not finalised, or is finalised and then challenged, the case remains live. Neither outcome is assured, and the intervening state attorneys general have shown they will litigate.

The honest summary is that federal climate disclosure in the United States has been effectively neutralised without ever having been tested on the merits, while the obligations that actually bind companies have migrated to Sacramento, Brussels and a widening group of Asian regulators. For most large companies the net effect of the SEC's retreat is not fewer obligations. It is a different, more fragmented set of them, with less prospect of a single national standard to rationalise the work.

Status Checklist

1. Note the current position: rules adopted, stayed since April 2024, never effective, rescission proposed 29 May 2026 with comments closed 3 August 2026.
2. Understand that no court has ruled on the merits and the Eighth Circuit litigation remains in abeyance rather than resolved.
3. Expect no final rescission before late 2026 or early 2027, since a further Commission vote is required.
4. Continue disclosing material climate risk under existing risk factor and MD&A obligations, consistent with the SEC's own stated rationale.
5. Maintain anti-fraud discipline over voluntary climate statements, which carry liability regardless of any mandate.
6. Treat California SB 253 as your compliance floor and confirm CARB's final deadline before relying on 10 November 2026.
7. If you clear 500 million dollars in revenue, keep an SB 261 report ready in case the Ninth Circuit lifts the injunction.
8. Plan New York around 2028 and 2029 if enacted, and disregard summaries citing the superseded 2027 dates.
9. Note that EPA greenhouse gas reporting for 2025 emissions is still due by 30 October 2026, even though a broader rollback of the programme is proposed.
10. Update risk factor language on the rules as the rescission proceeds, without overstating certainty while the proposal remains open.

Position as of 10 August 2026. The rescission proposal is not final, the Eighth Circuit litigation is paused rather than concluded, and California's deferred deadline was still completing administrative approval at the time of writing. Confirm current status against the SEC, CARB and the relevant court dockets, and take professional advice for your circumstances.

Sources

Federal Register, Securities and Exchange Commission, United States Court of Appeals for the Eighth Circuit, California Air Resources Board, New York State Senate, Arnold and Porter, Duane Morris, Clark Hill, Winston and Strawn, TheCorporateCounse, Davis Polk, White and Case, US SIF, Environmental Protection Agency, Sabin Center for Climate Change Law, Jones Day, Clean Air Task Force, Morgan Lewis, Sullivan and Cromwell, Pillsbury, Persefoni

This article is intended for general professional information and does not constitute legal, financial, or investment advice.