The U.S. Securities and Exchange Commission has stopped enforcement of a rule requiring companies to disclose information about their efforts to fight climate change, pending the outcome of lawsuits filed in Louisiana and elsewhere.
The SEC made the announcement on April 4 in response to multiple lawsuits filed in federal courts of appeals. Among those lawsuits was one filed in the Fifth Circuit Court of Appeals by the National Legal and Policy Center and the Oil and Gas Workers Association, which are represented by the Pelican Institute for Public Policy in New Orleans and the Chicago-based Liberty Justice Center.
The policy center is a nonprofit group that advocates for shareholder interests.
In an order announcing the agency’s decision, SEC Secretary Vanessa Countryman said the SEC was exercising its discretion to halt recent final rules until the courts could conduct a full judicial review.
“In issuing a stay, the commission is not departing from its view that the Final Rules are consistent with applicable law and within the commission’s long-standing authority to require the disclosure of information important to investors in making investment and voting decisions,” Countryman said.
The Pelican Institute lawsuit contends that the SEC Final Rule Release No. 33-11275 is unconstitutional because it mandates companies to endorse opinions on climate change that remain topics of public debate. In addition, the SEC is overstepping its authority in advancing the rule because federal laws do not empower the agency to seek such disclosures on environmental matters, according to the Liberty Justice Center.
“We are glad to see the SEC recognize the need to halt enforcement of its disclosure rule and look forward to continuing to fight this overreach in court,” Sarah Harbison, general counsel at Pelican Institute’s Center for Justice, said in a statement emailed to the Louisiana Record.
The Fifth Circuit lawsuit, which was filed on March 21, was transferred and consolidated with another lawsuit in the Eighth Circuit on April 1, according to Countryman's order.
A letter the SEC sent to the Eighth Circuit earlier this month further explains the agency’s reasoning for pausing the rule’s enforcement.
“As the commission explains, particularly given the procedural complexities of this litigation, a stay will facilitate this court’s orderly resolution of petitioners’ challenges and will avoid potential regulatory uncertainty ‘if registrants were to become subject to the Final Rules’ requirements during the pendency of the challenges to their validity,’” the letter states.
Among the information the rule requires companies to disclose in their annual reports is their greenhouse gas emissions, renewable energy credits, severe weather event mitigation and how they manage climate-related risks, according to the Liberty Justice Center.
“These rules aim to place a scarlet letter on those who work in the oil and gas industries,” Harbison said. “Issuing this rule is not just beyond the SEC’s scope of authority, but also a slap in the face to hundreds of thousands of hardworking blue-collar Americans.”
Critics say the rule is unworkable, based on questionable science and has no relation to the SEC’s efforts to protect investor interests. It also duplicates actions being carried out by the federal Environmental Protection Agency, they say.