A coalition of ten Republican states announced the launch of a lawsuit in the U.S. federal appeals court, aimed at blocking the implementation of the U.S. Securities and Exchange Commission’s (SEC) new climate-related disclosure rules.

The new suit could mark the first major hurdle for the new rules, only hours after their adoption by the SEC on Wednesday, with U.S. Congressional Republicans and the U.S. Chamber of Commerce also voicing opposition to the Commission’s new climate disclosure requirements.

States joining the lawsuit include West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, and Wyoming, and Virginia.

In the suit, the states’ Attorneys General argued that the new rule exceeded the authority of the SEC, describing it as “arbitrary, capricious, an abuse of discretion, and not in accordance with law,” and asked the court to strike down the rule as unlawful.

In a statement announcing the launch of the lawsuit, Indiana AG Todd Rokita described the new rule as part of “the Biden administration’s efforts to weaponize the Securities and Exchange Commission,” adding that it “would place onerous requirements on U.S. companies in service to a radical-left climate agenda.”

The SEC announced the release and adoption of the new rules on Wednesday in a 3-2 vote by commissioners, 2 years following the Commission’s initial draft release, establishing for the first time requirements for public companies in the U.S. to provide disclosure on climate risks facing their businesses, plans to address those risks, the financial impact of severe weather events, and, in some cases, greenhouse gas emissions originating from their operations.

While marking a major sustainability reporting milestone, the finalized SEC rule significantly scaled back the requirements of the SEC’s initial proposal, most notably removing the requirement for companies to report on Scope 3 emissions, or those originating in their value chains, and requiring Scope 1 and 2 operational emissions reporting only from larger companies, and even then, only when deemed material.

Despite the less onerous requirements of the finalized rule, however, the U.S. Chamber of Commerce, in a statement released Wednesday evening, said that it “remains a novel and complicated rule that will likely have significant impact on businesses and their investors.” The organization had earlier placed the SEC’s climate disclosure rule on a list of “Top Regulatory Targets” that it said “pose a significant threat to America’s economic growth and competitiveness,” and in its statement added that it “will continue to use all the tools at our disposal, including litigation if necessary, to prevent government overreach and preserve a competitive capital market system.”

At the federal level, Congressional Republicans have launched a series of initiatives against the rule over the past several months, with the House Financial Services Committee in July 2023 introducing the Guiding Uniform and Responsible Disclosure Requirements and Information Limits (GUARDRAIL) Act, which would only allow the SEC to require disclosure that the issuer has determined as material to a voting or investment decision. In February 2023, Republican congressional leaders published a letter to SEC Chair Gary Gensler, arguing that the rule exceeds the SEC’s authority, accusing the SEC under Gensler of pursuing a “progressive social agenda,” and arguing that a climate disclosure rule “in any form,” would “harm consumers, workers, and the U.S. economy.”

Following the adoption of the new rules on Wednesday, House Financial Services Committee chairman Patrick McHenry described the rule as “gross regulatory overreach,” and said that the committee will hold hearings examining the rule’s impact on capital markets.

McHenry added:

“With this rulemaking, Chair Gensler continues to make clear a partisan political agenda outweighs the SEC’s statutory mission. Given the substantial changes made since the rule was proposed, the SEC must reissue it for public comment to satisfy the requirements under the Administrative Procedure Act.”

In a statement following the launch of the lawsuit, an SEC spokesperson said:

“The Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process and will vigorously defend the final climate risk disclosure rules in court.”