© William Cho
The US Securities and Exchange Commission (SEC) has insisted it has the authority to issue mandatory climate disclosure rules, in a court document filed in response to a slew of lawsuits that forced the regulator to hit pause on the requirements.
The hotly contested rules would oblige public companies to publish transition plans and details of their climate-related risks, as well as reporting their greenhouse gas emissions. However, the requirements were put on hold in April pending a barrage of litigation that calls them into question.
Most of the nine petitions before the US Court of Appeals for the Eighth Circuit were launched by business groups and Republican states that claim the SEC does not have the authority to impose the rules, although two are from environmental groups arguing the package does not go far enough.
Filed on 8 August and seen by Green Central Banking, the SEC’s legal brief sets out in the most detailed terms yet the key legal arguments defending its imposition of the rules as within its statutory authority.
They also dismiss the notion that a key decision by the supreme court in June to overturn a 40-year-old legal principle known as the Chevron doctrine – under which US courts were previously expected to defer to administrative agencies – is relevant in this case.
“It is not an argument that the Commission lacks statutory authority to promulgate the Rules,” the brief says, adding that the SEC is acting within “the boundaries of the delegated authority” granted to it under “core provisions of the securities laws that expressly authorize it to promulgate disclosure requirements to protect investors”.
Specifically, the SEC argues in the document that the 1933 Securities Act and 1934 Securities Exchange Act empower it to require the disclosures so that investors can make informed decisions.
Whether or not the court accepts this argument will be key to the outcome of the litigation and to the future of US environmental disclosure regulations more broadly.
The SEC rules on the table are themselves a watered-down version of the original proposal, following significant lobbying by US conservative and business groups.
This page was last updated August 19, 2024
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Katy Lee has been a writer for Green Central Banking since early 2024, focused on our Asia coverage. A Paris-based journalist who has written for major international titles for more than a decade, she is the co-host of The Europeans, an award-winning podcast about Europe which often covers environmental issues.
