West Virginia Attorney General Patrick Morrisey reacts to states legally challenging the SEC’s climate disclosure rule on ‘The Bottom Line.’
A federal appeals court paused financial rules issued by the Securities and Exchange Commission (SEC) that will force private companies to publicly disclose their carbon emissions and risks climate change poses to their business.
In a short ruling issued Friday, the U.S. Court of Appeals for the Fifth Circuit paused the SEC’s climate disclosure rule, but declined to offer any explanation for the decision. The ruling, though, came in response to petitions for review filed by energy companies Liberty Energy and Nomad Proppant Services, the states of Louisiana, Mississippi and Texas, and business groups Chamber of Commerce, Texas Alliance of Energy Producers and Domestic Energy Producers Alliance.
“For two years now, the U.S. Chamber of Commerce has raised significant concerns about the scope, breadth, and legality of the SEC’s climate disclosure efforts,” Tom Quaadman, the executive vice president of the Chamber of Commerce’s Center for Capital Markets Competitiveness, said in response to the SEC’s disclosure rules.
“The Chamber 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,” he continued.
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SEC Chairman Gary Gensler and President Biden (Getty Images / Getty Images)
Under the leadership of Chairman Gary Gensler, whom President Biden appointed to the role, the SEC approved the climate disclosure rules on March 6 in a 3-2 vote after nearly two years of heated deliberations.
The SEC said in a statement that the rules reflect “investors’ demand for more consistent, comparable, and reliable information about the financial effects of climate-related risks.” And Gensler said they will further guarantee companies “produce more useful information than what investors see today.”
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However, the rules were blasted by business groups and Republican lawmakers, who argued they would harm Americans and represent an attempt to further the Biden administration’s climate goals.
“In the two years since the climate disclosure rule was proposed, we have witnessed an unprecedented assault on our capital markets,” House Financial Services Chairman Bill Huizenga, R-Mich., said during a hearing Monday. “The Commission finalized the climate rule despite no clear congressional authorization. Although Chair Gensler has repeatedly reminded the public that he is not a ‘climate regulator,’ under his leadership, the SEC has strayed far from its clear statutory mission.”
Rep. Bill Huizenga participates in a House Financial Services Committee hearing on May 17, 2023. (Kevin Dietsch/Getty Images / Getty Images)
“Investors should know that the SEC’s overreach will significantly hurt our economy while serving as a boon for special interest groups and far-left activists,” Huizenga said. “Unless he radically alters this approach to our capital markets, Gary Gensler’s legacy will be of an overzealous bureaucrat who was repeatedly reined in by the courts.”
The Michigan Republican also noted the Fifth Circuit decision, saying it “signals the SEC’s authority to develop, finalize, and implement a climate disclosure rule is in jeopardy.”
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In addition, more than a dozen states have filed federal lawsuits challenging the SEC disclosure rules while environmental groups have also sued, arguing the rules don’t go far enough.
