Republican attorneys general are threatening legal action against the SEC if the agency proceeds with its climate change disclosure regulations, which they argue will violate a recent U.S. Supreme Court ruling.

The 24 state officials said yesterday in comments submitted to the SEC that the recent Supreme Court ruling limiting the scope of the EPA's powers confirmed that only Congress—not a federal administrative agency—has the power to decide major issues like greenhouse gas emissions requirements. The high court ruled that the EPA must point to clear congressional authorization for the power it claims—a requirement the SEC can’t meet, they argued.

If the SEC does not rework its proposed rule in light of the Supreme Court’s ruling, the officials said they stand "ready to act once again" to litigate the matter, as West Virginia did against the EPA in the Supreme Court case. The state led the petition with a number of states supporting its challenge.

"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 West Virginia Attorney General Patrick Morrisey and Arizona’s Mark Brnovich.

“Several years ago, many of us warned EPA that it was headed down an unlawful path. The Supreme Court has now agreed. If the commission insists on taking the same inappropriate course, we will be ready to act once again. We urge you to save everyone years of strife by abandoning the proposed rule,” officials said.

The SEC's proposed rule, introduced in March, would require publicly traded companies to disclose various risks related to climate change, including the greenhouse gas emissions and their likely impact on their business, strategy and outlook.

The officials accused the SEC of adopting “a paternalistic reading of its mandate,” concluding “it can constrain how public companies function simply because influential institutional investors think it best to squeeze out disfavored, carbon-based energy sources.”

The attorneys general also argued that “based on vague text, the SEC claims the right to reorder how publicly-registered companies can operate. Businesses would be compelled to subordinate the shareholders’ interests to those of the regulators and their powerful backers.”

All of the factors present in the Supreme Court’s finding that the EPA lacked authority to promulgate greenhouse gas requirements are also present in the SEC’s proposal, officials said.

The “SEC has never applied its authority to require disclosures in this way. It has rarely, if ever, required disclosures focused on non-material, non-financial matters like those found in the proposed rule,” they said.

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