As litigation continues, the US Securities and Exchange Commission said it will pause implementation of its controversial climate risk disclosure rule to allow a federal appeals court to focus on the merits of the legal challenges.

The April 4 order is a temporary victory for energy industry interests and conservative groups that sued over the rule's shareholder disclosure measures. Meanwhile, the SEC said it will "continue vigorously defending the final rules' validity in court and looks forward to expeditious resolution of the litigation."

Given "the procedural complexities accompanying the consolidation and litigation of the large number of petitions for review of the final rules, a commission stay will facilitate the orderly judicial resolution of those challenges," the SEC order said. A stay "avoids potential regulatory uncertainty if registrants were to become subject to the final rules' requirements during the pendency of the challenges to their validity."

The Colorado fracking company Liberty Energy Inc., the US Chamber of Commerce, the National Legal and Policy Center, and the Oil and Gas Workers Association have said the SEC overstepped its authority when requiring many companies to disclose their greenhouse gas emissions and climate risks to shareholders. Environmental groups who argued that the final rule was too narrow also filed lawsuits.

Earlier in the week, 18 states and the District of Columbia intervened on behalf of the SEC in the litigation before the US Court of Appeals for the 8th Circuit. In all, 10 different petitions have now been consolidated under one review by the 8th Circuit court.

The SEC issued its disclosure rule after shareholders asked for more corporate transparency on regulatory and environmental business risks they face as climate change costs rise. Similar regulations have been issued in the European Union and California.

Groups allied with energy interests argue that only Congress can set climate policy, invoking the so-called major doctrines rule. The US Supreme Court's conservative majority established that rule in 2022 in West Virginia v. EPA, finding that the regulatory agency did not have a right to cap carbon emissions from power plants as envisioned by its Obama-era Clean Power Plan.

Red states and opponents of federal regulations to address climate change have relied on the landmark Supreme Court ruling in multiple legal challenges filed since the Biden administration took office.