Senate Republicans and Democratic Sen. Joe Manchin have introduced a resolution to overturn the Securities and Exchange Commission’s controversial climate disclosure rule that was approved by the agency last month.
“The SEC’s final climate disclosure rule threatens economic opportunity across the country, and it must be overturned," resolution sponsor Sen. Tim Scott of South Carolina said in a statement on Wednesday.
“Over and over again, SEC Chair [Gary] Gensler has disregarded the real-world impacts of his aggressive regulatory agenda in his dogged pursuit of left-wing political priorities,” Scott added.
Co-sponsors of the bill include all 32 Republicans on the Senate Banking Committee and West Virginia Democrat Manchin, who plan to use the Congressional Review Act that allows Congress to block finalized federal regulations, Scott said.
The rule, which elicited 24,000 comment letters, was passed by SEC commissioners March 6 on a narrow 3-to-2 vote, with both Republican commissioners dissenting.
The agency said the rules are meant to give investors more information about to the impact climate-related risks have on company finances.
“These final rules build on past requirements by mandating material climate risk disclosures by public companies and in public offerings," Gensler said at the time. "The rules will provide investors with consistent, comparable, and decision-useful information, and issuers with clear reporting requirements."
It left out some of the more burdensome reporting requirements for greenhouse gas emissions, which would have required public companies to calculate and report emissions that occur throughout the entire supply chain of a product through its end use by consumers.
One of the dissenting commissioners, Hester Peirce, warned during public debate on the rule that the commission was likely to “trigger a hodgepodge of requirements tailored to meet the demands of a vast and ever-expanding panoply of special interests.”
The rule is facing a number of lawsuits, including legal challenges from oil and gas company Liberty Energy and Nomad Proppant Services, an oilfield service corporation. Both companies argued the rule would force companies to spend more than $4 billion to comply and also challenged the authority of the SEC to issue the rule.
The rule is also being challenged in court by 25 Republican state attorney generals who argue that it creates unnecessary burdens for businesses and forces them to reveal information, such a intellectual property secrets, they may be legally entitled to keep confidential.
“Not only will this mandate impose costly red tape on businesses, but it will devastate our supply chain and hurt Iowa family farms,” Iowa Attorney General Brenna Bird argued in a written statement.
In March, the Fifth Circuit Court of Appeals blocked the rule while it’s facing the legal challenges.
The SEC decided April 4 to suspend implementation of the rule pending the judicial review.
"The Commission has determined to exercise its discretion to stay the final rules pending the completion of judicial review of the consolidated Eighth Circuit petitions," the SEC said in a statement. The agency, however, also vowed to “continue vigorously defending the final rule’s validity in court and looks forward to expeditious resolution of the litigation."
The rule has also met objections from a wide array of environmental groups such as the Sierra Club, which is suing the SEC, alleging the rule will keep critical information from investors.