Republican attorneys general are threatening legal action against the Securities and Exchange Commission over its proposed rule for climate-related disclosures on the grounds that it contravenes the Supreme Court‘s recent ruling in West Virginia v. EPA.
The 24 state officials submitted new comments on the SEC rule on Wednesday, arguing that its proposal to require corporations to disclose climate change-related risks to their business constitutes a “major question,” meaning it deals with a policy of major political, economic, or social significance. The Supreme Court just limited the Environmental Protection Agency’s authority to regulate power sector greenhouse gas emissions, saying that Congress, not an administrative agency, has the authority to decide such a major question.
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If the commission doesn’t change course on its proposed rule in light of the recent ruling, the officials said, they would be “ready to act once again” as they did in the case against the EPA. West Virginia led the petition in that case, and a number of states co-signed amicus briefs in support.
“If this sort of regulatory overreach does not constitute a sweeping policy judgment on a major question, then we struggle to see what would,” said the attorneys general, led by Patrick Morrisey of West Virginia and Mark Brnovich of Arizona.
They also criticized the SEC’s “paternalistic” reading of its statutory authority on disclosures, adding, “Environmental regulation is outside the Commission’s area of expertise; if anything, the Commission is even less equipped to regulate in areas concerning climate change than EPA.”
The SEC’s proposed rule, which was first introduced on March 21, would require publicly traded corporations to disclose various risks related to climate change, including the greenhouse gas emissions resulting from their business footprints.
Republicans and many business groups, including the oil and gas industry, oppose the rule, arguing that requiring such disclosures is beyond the commission’s authority. They’ve also said the proposal is already discouraging investment in fossil fuels at a time when more investment is necessary to increase production and bring down prices.
The SEC’s proposal has widespread support among Democrats and environmental groups who want to fight climate change more aggressively by reducing investments in fossil fuels, with some wanting the commission to be even more aggressive than its proposed rule.
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SEC Chairman Gary Gensler has defended the proposed rule from criticism, saying it falls in line with the commission’s history on disclosures and would help better inform investors.
