The GOP is once again stepping up its attack on climate-related initiatives, this time with a lawsuit against the Securities and Exchange Commission.
Ten states have filed a lawsuit against the agency’s climate disclosure rule, acting only hours after the SEC approved the rules on Wednesday, which require public companies to disclose their climate-related risks and direct greenhouse gas emissions.
West Virginia and Georgia lead the coalition that filed the petition in the 11th Circuit Court of Appeals that asks the court to vacate the rule. Alabama, Alaska, Indiana, Oklahoma, South Carolina, Wyoming, Virginia and New Hampshire are co-plaintiffs in the case.
“Petitioners will show that the final rule exceeds the agency’s statutory authority and otherwise is arbitrary, capricious, an abuse of discretion, and not in accordance with law,” the petition states.
Just hours after the SEC voted to approve the new rules on Wednesday, West Virginia Attorney General Patrick Morrisey held a press conference to announce that the states had filed a lawsuit to stop the rule.
“Biden’s administration is once again placing its agenda onto an unwilling public by forcing unrelated federal agencies and private companies to press its anti-energy agenda,” Morrisey said, as reported by the West Virginia Record.
“This is yet another attempt to advance an agenda without statutory authority, and I, for one, am not going to let that happen,” he added.
The SEC voted 3-2 on Wednesday to approve the climate disclosure rule, which will go into effect in 2026. SEC Chair Gensler said at the meeting that the regulator “is agnostic with regard to climate risk. But we’re not agnostic about disclosure of material risk—and that’s what we’re doing here.”
The agency received more than 15,000 comment letters on the rule, which was proposed in 2022, SEC officials said at the Investment Adviser Association’s annual compliance conference in Washington, D.C., yesterday.
IAA leadership said during the conference that they are supporting the rule, now that it has been scaled back and does not include requirements regarding to Scope 3 emissions disclosures, which the trade group representing registered investment advisors said would be difficult to comply with, given current data limitations and lack of standardized measurement methods.
The association also revealed that it is relieved that the SEC did not push the agency's advisor-centric ESG disclosure proposals to the top of its agenda, although the trade group is aware the rule is coming, IAA General Counsel Gail Bernstein said.
“We appreciate the SEC's decision to prioritize climate-related disclosure rules for public companies before those focused on ESG factors for investment advisors and funds. This sequential approach will allow investment advisors and funds to have access to climate information from companies that will be necessary to inform related ESG disclosure requirements on them,” Bernstein added.
Republican Congressional leaders vowed to fight the rule.
“The Securities and Exchange Commission is not a climate regulator. No matter how badly Chair Gensler wants to inflate his job description, that fact is undeniable,” House Financial Services Committee Chairman Patrick McHenry said in a statement almost immediately upon the SEC’s passage of the rule.
“Despite what Chair Gensler says, this rule will still have immense consequences for our capital markets and economy as a whole," he said. "When fewer companies are entering our public markets than any time in recent memory, we should be making it easier for firms to go and stay public. Instead, Chair Gensler is overstepping his statutory authority, piling on massive new compliance costs that will be destructive to workers, investors, and job creators alike."
McHenry also announced that the House Financial Services Subcommittee on Oversight and Investigations will hold a hearing on March 18th “to hear directly from Americans who will be impacted by this disastrous rule.”
The full House Financial Services Committee will then hold a hearing on April 10 “to further explore the destructive impact of this rule on our economy, capital markets, job creators, and families,” he said.