SEC Proposes Rescission of its Stayed Climate Rule

On May 29, 2026, the Securities and Exchange Commission (the SEC) released a proposed rule (the Proposed Rule) that, if adopted, would rescind the SEC’s Biden-era climate disclosure rule (the Climate Rule), which would have significantly expanded and standardized disclosures related to greenhouse gas emissions and climate-related financial risks.

The Proposed Rule is expected to effectively end the litigation over the Climate Rule, which has been held in abeyance since April 2025 following the withdrawal of the SEC’s defense of the rule following the change in presidential administration.

Background of the Climate Rule

The Climate Rule, which we discussed in greater detail in our Client Alert, was adopted by the SEC on March 6, 2024 and almost immediately challenged in cases filed across six federal circuit courts before being consolidated and transferred to the Eighth Circuit Court of Appeals. The SEC voluntarily stayed implementation of the Climate Rule in April 2024 pending completion of the ongoing litigation.

Despite originally vowing to vigorously defend the Climate Rule, in March 2025 following the election of President Trump, the SEC formally withdrew its defense of the Climate Rule. The litigation over the Climate Rule has been held in abeyance since April 4, 2025, pending further clarity on the SEC’s proposed future course with respect to the Climate Rule.

Proposed Rule Sets Forth Arguments for Rescinding the Climate Rule

The Proposed Rule, if adopted, would formally rescind the Climate Rule. In doing so, it describes the Climate Rule as a “dramatic overreach of the [SEC’s] statutory authority and, independently, unsound as a matter of policy.”¹ In a press release and fact sheet issued concurrently with the Proposed Rule, and as more fully detailed in the Proposed Rule, the SEC described the policy reasons it believes justify the proposed rescission of the Climate Rule, including that the Climate Rule:

• is “unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure” that best serves the interests of registrants and investors;
• strays “well beyond the policy concerns of the federal securities laws”;
• would impose substantial costs on public companies and their shareholders that are “not justified by the informational benefits they may provide to some investors”; and
• is “at odds with the [SEC’s] policy objectives of facilitating capital formation and promoting public company status.”

In his statement accompanying the Proposed Rule, SEC Chair Paul S. Atkins said that the Proposed Rule should be reexamined in light of his view that “SEC disclosure obligations should comply with the [SEC’s] statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens.”

SEC Commissioners Mark T. Uyeda and Hester M. Peirce, who voted against the Climate Rule when it was first adopted, also weighed in. Commissioner Uyeda described the Climate Rule as a “cautionary tale to financial regulators that their expertise is narrow and their authority is not without limit,”² while Commissioner Peirce warned against the SEC “[d]esigning securities disclosure to be a lever of change.”³

Next Steps

The SEC is seeking comment on, among other things:

• whether there are any alternatives to outright rescission that it should consider;
• whether the SEC should revise its 2010 Commission Guidance Regarding Disclosure Related to Climate Change (the 2010 Climate Guidance); and
• whether and to what extent the Climate Rule would impact firm decisions about whether to become or remain a public company.

Comments on the Proposed Rule are due within sixty (60) days of the publication of the Proposed Rule in the Federal Register.

In the meantime, despite the continued stay and likely rescission of the Climate Rule, companies should continue to consider whether and to what extent material climate impacts and risks should still be disclosed under the SEC’s current disclosure rules, such as Item 105 (Risk Factors) or Item 303 of (Management’s Discussion & Analysis) of Regulation S-K. Additionally, although the SEC is soliciting comments on whether to revise the 2010 Climate Guidance, the 2010 Climate Guidance remains in effect and the SEC is not proposing to rescind or modify it as part of the Proposed Rule.

¹ Rescission of Climate-Related Disclosure Rules, Securities Act Release No. 11,421, Exchange Act Release No. 105,572, at 6 (May 29, 2026), https://www.sec.gov/files/rules/proposed/2026/33-11421.pdf.

² Mark T. Uyeda, Comm’r, Sec. & Exch. Comm’n, Statement of Commissioner Mark T. Uyeda on the Rescission of Climate-Related Disclosure Rules (May 29, 2026), https://www.sec.gov/newsroom/speeches-statements/uyeda-statement-rescission-climate-related-disclosure-rules-052926.

³ Hester M. Peirce, Comm’r, Sec. & Exch. Comm’n, Climate Change: Statement on Proposed Rescission of Climate-Related Disclosure Rules (May 29, 2026), https://www.sec.gov/newsroom/speeches-statements/peirce-climate-change-statement-proposed-rescission-climate-related-disclosure-rules-052926.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Shelly Heyduk, an O’Melveny partner licensed to practice law in California; Rob Plesnarski, an O’Melveny partner licensed to practice law in the District of Columbia; Andra Troy, an O’Melveny partner licensed to practice law in New York; Ashley Gust, an O’Melveny counsel licensed to practice law in New York; Aliza Cohen, an O’Melveny resource attorney licensed to practice law in California; Chloe Keedy, an O’Melveny associate licensed to practice law in California; and Kate Jones, an O’Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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