SEC commissioner warns the agency's withdrawal of defence for climate rules is unlawful

April 4, 2025

Securities and Exchange Commission (SEC) commissioner Caroline Crenshaw has warned that the agency's decision to withdraw its defence of climate disclosure rules is unlawful.

Last week, SEC acting chair Mark Uyeda and commissioner Hester Peirce voted to end the agency's legal defence of regulations requiring companies to disclose climate-related risks and greenhouse gas emissions.

However, Crenshaw claims that the current commission’s dismantling of the rule is unlawful as it violates the Administrative Procedure Act (APA), which governs the SEC's rule-making process.

In addition to disobeying APA, Crenshaw warned that the commission’s withdrawal is also inconsistent with historical practice and reflects bad governance.

She stated that the SEC cannot abandon agency action simply because the current commission wouldn't have supported the rule when it was passed.

“The APA prescribes a careful, considered framework that applies both to the promulgation of new rules and the rescission of existing ones. There are no backdoors or shortcuts. But that is exactly what the Commission attempts today,” she said.

Therefore, she urged the SEC to "do its job" and defend its existing rule in litigation. If the agency chooses not to defend the rule, she said it should ask the court to pause the litigation while it develops a rule it is willing to defend, or at the very least, appoint counsel to do so.

“Today’s actions are but one symptom of a much larger problem – the Commission taking shortcuts in order to achieve preferred outcomes – this time by skirting the APA. We are now firmly in a period of policy-making through avoidance and acquiescence, rather than policy-making through open, transparent, and public processes,”

“This approach does not benefit the markets, capital formation, or investors. In this instance, the majority of the Commission is hoping to let someone else do their dirty work,” she added.

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