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Editorial 8 MIN READ

The SEC and FTC spent 2024 writing rules. In April 2025, two of them are gone

A survival audit of the FTC noncompete ban and the SEC climate-disclosure rule, and what employers and issuers should actually plan around

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 6 sections
  1. The FTC noncompete rule: vacated, and not being defended
  2. What state law actually says
  3. The SEC climate rule: stayed, then abandoned
  4. California's climate statutes are the new floor
  5. The second-order effects
  6. Sources

wo of the most aggressive federal rulemakings of the last administration did not survive the first quarter of 2025. The FTC noncompete rule is vacated and the SEC climate-disclosure rule has been effectively abandoned by the agency that wrote it. Employers and public issuers planning on either of those rules as backstops need a new plan.

This is a status audit as of April 15, 2025, with the operative orders, docket numbers, and what is actually in force at the state level underneath.

The FTC noncompete rule: vacated, and not being defended

On April 23, 2024, the Federal Trade Commission finalized 16 C.F.R. Part 910, a rule banning nearly all post-employment noncompete clauses nationwide and voiding most existing ones for workers other than senior executives. It was set to take effect on September 4, 2024.

It never did. On August 20, 2024, Judge Ada Brown of the Northern District of Texas entered final judgment in Ryan LLC v. FTC, No. 3:24-cv-00986, setting the rule aside on an Administrative Procedure Act theory. The court held that Section 6(g) of the FTC Act does not authorize substantive competition rulemaking and that the ban was arbitrary and capricious in scope. The order was not limited to the plaintiffs; it vacated the rule in its entirety, nationwide.

The FTC appealed to the Fifth Circuit, where the case was consolidated with ATS Tree Services LLC v. FTC out of the Eastern District of Pennsylvania (which had gone the other way on the preliminary-injunction question). Oral argument was calendared for November 2024.

Then the administration changed. Chair Lina Khan, the rule's principal architect, was replaced by Commissioner Andrew Ferguson, who was elevated to chair on January 20, 2025 and confirmed in that role shortly after. Ferguson dissented from the noncompete rule when it was adopted and has publicly described Section 6(g) rulemaking as beyond the agency's authority. The Commission has not formally withdrawn the appeal as of mid-April, but the agency's posture is now closer to agreement with the district court than to defense of the rule. The practical expectation inside the noncompete bar is that the Fifth Circuit affirmance will stand and the Commission will not seek further review.

So for employers: the rule is not in force, is not going to be in force, and the compliance project that many HR teams ran through the summer of 2024 can be closed. Existing noncompetes are governed by whatever state law would have governed them on April 22, 2024, the day before the rule issued.

What state law actually says

The state-level picture did not move with the federal rule and has not moved since. If anything, it was already doing most of the work the FTC wanted to do.

California prohibits post-employment noncompetes by statute. Cal. Bus. & Prof. Code § 16600 declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business void, with narrow sale-of-business and dissolution exceptions in §§ 16601 to 16602.5. SB 699 and AB 1076, both effective January 1, 2024, extended the policy to reach out-of-state noncompetes imposed on California workers and required employers to notify affected current and former employees that their clauses were void. The California regime is substantially more hostile to noncompetes than the FTC rule would have been, and the FTC's demise changes nothing about it.

Minnesota banned most post-employment noncompetes prospectively in Minn. Stat. § 181.988, effective July 1, 2023. North Dakota prohibits them by longstanding statute, N.D. Cent. Code § 9-08-06. Oklahoma does the same at Okla. Stat. tit. 15, § 219A, which voids any agreement restricting the right to engage in a lawful profession but preserves narrow customer-nonsolicit carve-outs. Montana limits them through the "reasonableness" framework in Mont. Code Ann. § 28-2-703 and case law that has trended skeptical.

Outside those five states, noncompetes remain enforceable to the extent state courts find them reasonable in geography, duration, and scope. Washington caps enforceability by income threshold (RCW 49.62, with the 2025 threshold published annually by L&I). Illinois voids them below an hourly wage floor under the Illinois Freedom to Work Act, 820 ILCS 90. Colorado layers a compensation threshold and notice requirement on top of a narrow set of permitted purposes under C.R.S. § 8-2-113. The map is patchier than a federal ban, and counsel advising a multi-state employer still has to pull state-by-state.

The SEC climate rule: stayed, then abandoned

The SEC's path was different but the endpoint is similar. On March 6, 2024, the Commission adopted Release No. 33-11275, "The Enhancement and Standardization of Climate-Related Disclosures for Investors," requiring climate risk disclosures and, for larger filers, Scope 1 and Scope 2 greenhouse-gas emissions on a phased schedule. The rule was published at 89 Fed. Reg. 21668 on March 28, 2024.

Petitions for review were filed across multiple circuits and consolidated in the Eighth Circuit under Iowa v. SEC, No. 24-1522. On April 4, 2024, the Commission itself stayed the rule pending judicial review, while continuing to defend it on the merits.

After the change of administration, Acting Chair Mark Uyeda directed the staff on February 11, 2025 to notify the Eighth Circuit that the Commission was reconsidering its position and to request the court hold the case in abeyance. On March 27, 2025, the Commission voted 3-1 to end its defense of the rule, withdrawing from the litigation rather than seeking to rescind the rule through a new notice-and-comment process. The practical effect is the same as a rescission: the rule remains stayed, no one at the SEC is defending it, and the Eighth Circuit will resolve the petitions without agency support for the rule.

Public issuers that had begun building Scope 1 and Scope 2 inventories for the larger-filer compliance date should not abandon the work entirely, but they should stop treating the SEC rule as the forcing function. The forcing function is now state law and, for anyone with European operations, the Corporate Sustainability Reporting Directive.

California's climate statutes are the new floor

California passed two climate-disclosure laws in October 2023 and has not repealed either.

SB 253, the Climate Corporate Data Accountability Act, adds § 38532 to the Health & Safety Code and requires U.S. entities doing business in California with annual revenue above $1 billion to disclose Scope 1 and Scope 2 emissions beginning in 2026 for fiscal year 2025, with Scope 3 following in 2027. Roughly 5,300 companies fall within the statutory scope based on the legislature's own estimates. SB 261, at § 38533, requires companies above $500 million in revenue to publish biennial climate-related financial risk reports aligned with TCFD (or a successor framework such as IFRS S2), with the first report due January 1, 2026. Both statutes were amended by SB 219 in September 2024 to give CARB an additional six months to adopt implementing regulations and to clarify consolidation rules, but the reporting dates held.

AB 1305, the Voluntary Carbon Market Disclosures Act, is already in force. Companies operating in California that make net-zero, carbon-neutral, or similar claims, and companies that purchase or sell voluntary offsets, must post specified disclosures on their website. The statute took effect January 1, 2024, with enforcement discretion signaled for 2024 filings; by April 2025 the posting obligations are live and the Attorney General has authority to seek civil penalties.

CARB published an information solicitation in December 2024 and is expected to propose SB 253 and SB 261 regulations during 2025. The Chamber of Commerce and allied plaintiffs challenged both statutes in the Central District of California in Chamber of Commerce v. CARB, No. 2:24-cv-00801; the court denied a preliminary injunction on the First Amendment claim in late 2024 and the case is proceeding on the merits. The statutes remain on the books and operative.

For a publicly traded issuer that is also doing business in California above the revenue thresholds, the compliance calendar now reads: SB 261 climate-risk report by January 1, 2026; SB 253 Scope 1 and 2 reporting in 2026 for 2025 data; SB 253 Scope 3 in 2027. The SEC rule is not part of that calendar.

The second-order effects

Two patterns deserve attention as this plays out through the spring.

The first is that agency rulemaking without durable statutory authority is now an unreliable way to change national private-ordering rules. The FTC tried to convert Section 6(g) into a substantive rulemaking power and lost in the district court on APA grounds before it could defend the theory at the Fifth Circuit. The SEC wrote a disclosure rule that required extensive interpretation of the materiality standard and chose not to defend it when the political cost rose. In both cases the actual regulation of the conduct, noncompetes and climate disclosure, has migrated back to states with the appetite and statutes to do it.

The second is that the compliance work does not disappear, it just reallocates. Human-resources teams at multi-state employers still need to know which state's noncompete law governs each hire and how SB 699 reaches into out-of-state contracts. Sustainability and legal teams at large issuers still need to build emissions accounting and climate-risk reporting, because California, the EU, and lender covenants are asking for it even if the SEC is not. The vacated and abandoned federal rules did not create those underlying pressures; they reflected them.

For a formation lawyer fielding questions this month, the short answer to an operating client is this: keep your state-law noncompete playbook because the federal rule is dead, and keep building your climate-reporting function because California has taken the hand-off. The federal picture may look quiet by summer. The state picture will not.

Sources

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