RPublic officials and corporate lobbyists are launching a multifaceted legal attack on the Biden administration’s efforts to help investors hold public companies accountable for carbon emissions and other climate change risks.
US Securities and Exchange Commission (SEC) Suggestion New climate disclosure rules in March that will require public companies to report climate-related impacts and risks on their businesses.
Since then the organizer Receive Over 14,500 comments. Reports from 24 Republican state attorneys general and some of the country’s most powerful industry associations suggest that these groups are preparing for a series of legal challenges after the regulation is finalized, which could potentially is happening As soon as next month.
“I expect a lawsuit will be filed as soon as the final rule is out,” Jill E. Fish, professor of business law at the University of Pennsylvania, told The Guardian. “It is possible that their complaints have already been formulated, and they are willing to file them.”
some opponents Claim that require companies to publish climate-related information violating on their right to freedom of expression. others (mostly the same) Say That rule goes beyond the statutory authority of the Supreme Education Council.
Both criticisms feature prominently in comments from Republican attorneys general and the American Chamber of Commerce spend More than $35 million to lobby the federal government in the first half of 2022, according to OpenSecrets. The Republican letter warns that if the new disclosure requirements are finalized, “capitalism will fall by the wayside.”
The SEC proposal does not establish an environmental policy or require companies to take any climate action other than making more information available to the public.
Objections to freedom of expression and legal authority have been met with depth Doubt From legal experts and former officials of the Supreme Education Council.
In a letter to the committee, John Coates, a Harvard Law School professor and former general counsel for the SEC, He said that instead of challenging the climate disclosure rule on its merits, “critics have resorted to mischaracterizing the proposal, and inventing their own imaginary rule.”
In another letter, she drew a bipartisan group of former Securities and Exchange Commission officials, legal scholars, securities law experts and corporate attorneys. pointed that “the Securities and Exchange Commission has mandated environmental disclosure at least since the Nixon administration.” Although not all of the letter’s authors supported the rule-making content, they agreed without exception that “there is no legal basis to doubt the Commission’s authority to authorize public company climate-related disclosures.”
“The Securities and Exchange Commission issues a square disclosure rule within its command room,” said Fish, of the University of Pennsylvania. “It’s exactly what Congress has asked you to do, and it has consistently done since 1933.”
But accusations of legal authority and free speech, however weak, are not the only reasons opponents of the climate disclosure rule have hinted at litigation.
at recent days AnalyticsThe Guardian has revealed how the Business Roundtable, a lobby group for CEOs of the largest US companies, is opposing a key clause in the SEC proposal that would require some large companies to measure and report emissions generated through their supply chains – known as Scope 3 emissions.
In addition to challenging the core of the base, the Business Roundtable is also He refuses The Securities and Exchange Commission (SEC) estimate of how much corporate compliance costs. (The organization said in an email that its comments”[are] Focus on identifying the challenges in the proposed rule in the hope that the Securities and Exchange Commission will address them.”)
The SEC expects companies to face compliance costs of between $490,000 and $640,000 in the first year of climate reporting, and lower in subsequent years. (By comparison, the 2019 study expect Climate change could cost companies around $1 trillion over the next five years.)
Detailed evaluation from Shivaram Rajgopal, Professor of Accounting and Auditing, Columbia Business School, is over even without taking into account Which Taking advantage of the climate disclosure rule, the costs will be minimal for most companies. “The loss in market capitalization, if any, from compliance costs is likely to be so small that no outside party can detect it and separate it from the daily fluctuations in stock returns for unrelated reasons,” Rajgopal wrote.
ExxonMobil’s last quarter happened Nearly $18 billion in earnings, the largest quarterly dividend in the company’s history. During the same period, General Motors I was born More than 35 billion dollars in revenue, while Wal-Mart mentioned Revenues of approximately $153 billion. The Economist recently mentioned After-tax corporate earnings as a share of the US economy have jumped to their highest level since the 1940s.
ExxonMobil, GM and Walmart are members of the American Chamber of Commerce and Business Roundtable. according to Report From the nonprofit Center for Political Accountability, during the 2020 election cycle, each company donated at least $125,000 to the Republican Attorney General’s Association, which supports the political campaigns and legal agendas of Republican attorneys general across the country.
In their letter to the Securities and Exchange Commission, 24 of these prosecutors Call The panel’s cost-benefit analysis was “unfortunately incomplete” and it warned that finalizing climate disclosure rules “will undoubtedly raise legal challenges”.
Meanwhile, the Business Roundtable, describe it The analysis called it “fundamentally flawed” and said its member firms “believe [the costs of the rule] They will be orders of magnitude larger than the Securities and Exchange Commission estimates.” The room export Similar condemnation, writing in its voluminous report that “the economic analysis of the SEC … is incomplete and greatly underestimates the costs of compliance.”
When asked for comment, neither organization specifically responded to questions about whether it plans to pursue legal action against the Securities and Exchange Commission if the final rule is not changed significantly.
Trade unions may be expected to instinctively oppose new regulations, but in the past such statements have proven to be more than routine political rhetoric. On multiple occasions in response to previous rule-making, the Chamber and Business Roundtable successfully Securities and Exchange Commission on cost-benefit bases.
In 2011, following a lawsuit filed by the two groups, the Capital Circuit subtracted The SEC rule that would have made it easier for shareholders to consider new board members for public companies, deeming the rule “arbitrary and capricious.” The decision in the Business Roundtable v SEC said the commission had “neglected its legal obligation to assess the economic consequences of its rule,” citing, among other numbers, a cost estimate submitted to the Securities and Exchange Commission by the chamber.
In their comments on the climate disclosure proposal, both the Republican attorney general and the Chamber cite Business Roundtable against the SEC in claiming that the SEC’s cost-benefit analysis is flawed.
Co-leading the Republican message is Patrick Morrissey, the West Virginia attorney general who recently led a Successful legal challenge To the Environmental Protection Agency (EPA).
In West Virginia v. Environmental Protection Agency, Supreme Court supported A relatively new legal idea – the so-called “Doctrine of Key Questions” – to halt the EPA’s efforts to regulate greenhouse gas emissions from power plants. as atomic scientists bulletin explained“Under this principle, when a regulation exceeds a certain threshold of being ‘major’–a line that remains poorly defined–the Court rejects the regulation unless it is expressly authorized by Congress.”
Doctrine of the main questions look To be the basis of Morrissey’s campaign against the climate disclosure rule. In a TV appearance in July, Morrissey He said That the Biden administration “can’t get a majority in Congress behind its policies, so they’re trying to turn to [regulations]. But as we’ve seen with West Virginia v EPA, I don’t think the courts will allow that to happen.” (Morrissee’s office did not respond to emails seeking comment.)
I don’t think there is any natural reason to infer the court’s decision [in West Virginia v EPA] “It would have no implications for the Securities and Exchange Commission,” said Jill Fish of the University of Pennsylvania. At the same time, you can read the West Virginia case, and you can say: This is part of the Supreme Court, and the federal courts in general, and take a different look at government agencies. This reduces the fourth branch, of the state’s administrative power. And if that’s true, in theory, everything is ready for grabs.”
“Historic legal precedent suggests that the SEC has a very strong case,” said Tyler Gelash, president and CEO of the nonprofit Health Markets Association. “But if you represent the Business Roundtable, you don’t necessarily need historical legal precedent on your part. You just need a court today. That seems more likely today than at any time in recent history.”
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”