Republican AGs Object to SEC Climate Change Reporting Proposal

Bernard Nash
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  • A Republican group of 24 AGs, led by Patrick Morrisey of West Virginia and Mark Brnovich of Arizona, sent a letter to Secretary of the Securities and Exchange Commission, Vanessa Countryman, expressing opposition to the proposed rule entitled “The Enhancement and Standardization of Climate-Related Disclosures for Investors.” The proposed 500-page rule would increase the requirements for publicly-traded companies to provide regulators with information regarding a broad range of climate change-related activities, topics, and projections, including describing “any climate-related risks reasonably likely to have a material impact” on the company.
  • The letter identifies three principal objections to the proposed rule:  “First, the Commission lacks statutory authority to issue it. Second, the rule would violate First Amendment rights. And third, the rule does not reflect reasoned decision-making and so would fail arbitrary-and-capricious review. Standing alone any one of these problems would be reason enough to reject the Proposed Rule.”  It goes on to discuss each of these reasons in turn, parsing the Securities Act and the Securities Exchange Act to demonstrate that it does not empower the SEC to enact the proposed rule, impermissibly requires speech in violation of the First Amendment, and is not rooted in a sound cost-benefit analysis, among other things.
  • In addition, the letter’s signatories also painted a broader picture of the Biden Administration using the SEC’s regulatory powers to promote and enact regulations that would “[regulate] disfavored industries into oblivion.”
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