Republican lawmakers ask 8th Circuit to vacate SEC climate disclosure rule

A group of 35 Republican lawmakers are urging the 8th U.S. Circuit Court of Appeals in St. Louis to vacate the SEC’s climate disclosure rule, according to an amicus brief filed June 25.

The lawmakers — which include Sen. Tim Scott, R-S.C., the Senate Banking Committee’s top Republican, and Rep. Ann Wagner, R-Mo., chair of the House Financial Services Capital Markets Subcommittee — contend that “The SEC, as a securities regulator, is not empowered to impose sweeping climate-related regulations on publicly-traded companies,” the brief said.

The SEC finalized its controversial climate disclosure rule March 6, requiring public companies to divulge a host of climate-related information in their periodic reports and registration statements. After the rule faced nine lawsuits filed against it, all challenges against the rule were combined to be heard by the 8th Circuit on a consolidated basis.

“Congress has demonstrated historical reluctance to pass broad climate legislation, particularly legislation that would dramatically impact federal securities law disclosure requirements,” according to the brief. “The SEC’s overreach into climate regulation does not respect the separation of powers and runs afoul of the major questions doctrine, warranting the rule’s invalidation.”

The major questions doctrine is the idea that “if an agency seeks to decide an issue of major national significance, its action must be supported by clear congressional authorization,” according to a 2022 Congressional Research Service report.

Furthermore, the rule “contravenes the principle of materiality,” according to the brief, as its “expansive disclosure obligations risk overwhelming investors with irrelevant information, contrary to judicial precedents which define material information as that which would significantly alter the ‘total mix’ of information available to a reasonable investor.”

On April 17, Scott introduced a resolution to overturn the rule via the Congressional Review Act, with the support of 32 Republicans and Sen. Joe Manchin, I-W.V. That same day, GOP members of the House Financial Services Committee advanced a companion resolution introduced by Rep. Bill Huizenga, R-Mich.

The Congressional Review Act allows Congress to overturn, by a simple majority vote, a federal agency final rule if the rule has not been in effect for more than 60 legislative days.

Earlier on June 25, former SEC Chair Jay Clayton, who served under the Trump administration, also criticized the SEC’s climate disclosure rule, contending that climate change is an issue “that Congress should tackle.”