As written, the S.E.C.'s position was probably unconstitutional.
This isn't just an icebreaker for tonight's soirée, although in some circles it might be the perfect conversation starter. Rather, the regulator's position would seem to fly in the face of last year's Supreme Court ruling on the extent of the Administrative State's powers:
"Supreme Court curbs EPA climate authority"
The headline is a bit of a mischaracterization. The Court ruled the EPA did not have the authority it claimed to have, a different situation from reining in an existing authority, and that the EPA could not simply adopt the Affordable Clean Energy rule, that the agency had exceeded its mandate under the Clean Air Act with the proposal and that if Congress wanted the outcome of the Rule under CAA it would have to legislate same rather than have the administrative state simply write rules.
However, as the Washington Post quoted a proponent of the EPA's action:
Richard Lazarus, a Harvard environmental law professor, said in a statement that by insisting that an agency “can promulgate an important and significant climate rule only by showing ‘clear congressional authorization’ at a time when the Court knows that Congress is effectively dysfunctional, the Court threatens to upend the national government’s ability to safeguard the public health and welfare at the very moment when the United States, and all nations, are facing our greatest environmental challenge of all: climate change.”It is not the Court's place to solve the problem of Congress being dysfunctional....
And the headliner from The Wall Street Journal, February 3:
Wall Street regulator is revisiting how proposals would affect financial reporting
The Securities and Exchange Commission is considering a softening of planned rules requiring companies to disclose the effects of extreme weather and other costs related to global warming when the regulator completes its climate-change proposals, people close to the agency said. The Wall Street regulator is looking again at the financial reporting aspect of the climate-disclosure plan it issued last year, following pushback from investors, companies and lawmakers, the people said.
The final version of the SEC rules, expected this year, will likely still mandate some climate disclosures in financial statements, according to the people close to the agency. But the commission is weighing making the requirements less onerous than originally proposed, the people said, such as by raising the threshold at which companies must report climate costs.
President Biden is unlikely to push significant additional climate legislation through a divided Congress, which has added pressure on regulatory agencies to address the issue. In addition to the financial-reporting rules, SEC Chair Gary Gensler ‘s climate proposals would require publicly traded companies to disclose the greenhouse-gas emissions from their operations, energy consumption and—in some cases—suppliers and customers.
The climate package, a signature measure of Mr. Gensler’s SEC leadership, is expected to face legal challenges from industry groups or Republicans. Dialing back the financial-reporting rules could bolster the agency’s legal defense by allowing it to demonstrate that it has listened to business concerns and reduced the forecast multibillion-dollar annual cost of the new system. Evan Williams, senior director at the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, said the SEC needs to adjust the proposal if it wants to produce “a court-durable final rule.”
The proposed reporting rules would require public companies to include a raft of climate data in their audited financial statements. The mandated disclosures cover everything from costs caused by wildfires to the loss of a sales contract because of climate regulations, such as a cap on carbon emissions.
Companies would have to analyze climate-related costs and risks for each line item of their financial statements, such as revenue, inventories or intangible assets. Any climate costs that are 1% or more of each line item total would have to be reported.....
....MUCH MORE
I'm guessing some bright young staff attorney told her boss "If we push this through it will be challenged, go to the Supreme Court and we'll lose.
To which Mr. Gensler responded: "Okay, half a loaf it is! [sotto voce: for now bwah hah hah hah]
If interested here's one of our posts from that long-ago summer of '22, with a first rate analysis of the what's-what and who's-who featuring The American Academy of Arts & Sciences journal, Dædalus, Summer 2021 issue
Background On The Supreme Court's EPA/CO2 Ruling: The Administrative State
