Sustainable Energy & Infrastructure Litigation Updates — March 2025

Regulatory Updates

The Trump administration’s SEC has begun the process of undoing the mandatory climate disclosure rule promulgated by the SEC under the Biden administration. Specifically, the SEC has now asked the Eighth Circuit — where the various challenges to the law have been consolidated — to take no action until the SEC “determine[s] the appropriate next steps.” Such “next steps” could likely be a decision by the Trump administration’s SEC to no longer defend the legality and validity of the climate disclosure rule.

In contrast, the mandatory climate disclosure rule promulgated by California recently survived a significant legal challenge when the federal district court rejected the majority of the legal arguments asserted by the Chamber of Commerce against the law’s validity. Although a First Amendment challenge to this law remains pending, many of the more significant legal arguments — e.g., that the California climate disclosure law improperly burdened interstate commerce — were rejected by the court. Based upon this decision, it is altogether possible that additional states may soon propose similar climate disclosure regimes.

Litigation Updates

A federal district court judge in Texas recently upheld a rule promulgated by the Biden administration’s Department of Labor that enabled ESG-focused investing. Specifically, the court determined that the rule was proper and in accordance with ERISA since it “allowed fiduciaries to consider collateral benefits when deciding between competing investment options that each equally served the beneficiaries’ financial interests.” In other words, ESG principles — or other non-pecuniary factors — could be considered when investing, although not at the expense of financial metrics. Although the decision is fairly narrow — ESG principles can only be used as a “tiebreaker” between equally valid investments (considered on a financial basis) — it is nonetheless significant that a court has approved the use of ESG principles, albeit in a limited context, and that such a rule survived the demise of the Chevron doctrine (i.e., deference to agency decision-making) following the Supreme Court’s decision in Loper Bright. A greenwashing lawsuit against a major apparel company was recently dismissed in a federal district court (S.D. Fla.).

The court’s dismissal for lack of standing due to a failure to plead injury — since “Plaintiffs’ allegations fail to tie any aspect of [the company’s] statements to the purported price premium that Plaintiffs paid” — may lead to the dismissal of similar greenwashing lawsuits, as this decision reinforced the principle that there must be a specific link between the alleged greenwashing and the economic injury suffered by plaintiffs, which is a more difficult standard to satisfy, even at the pleading stage.

Subscribe To Viewpoints