The Liberty Justice Center and the Pelican Institute for Public Policy have jointly filed a lawsuit against the U.S. Securities and Exchange Commission to challenge recent regulations that force public companies to make extensive disclosures related to climate change. The legal organizations represent the National Legal and Policy Center, a nonprofit organization that advocates for shareholder interests and opposed the rule in public comments, and the Oil & Gas Workers Association, a nonprofit trade association that represents workers in the oil and gas industry, whose livelihoods are threatened by the SEC’s rules.
On March 6, the U.S. Securities and Exchange Commission (SEC) issued a climate “disclosure rule” that requires all companies registered with the SEC to provide a broad swath of information related to climate change in their annual reports.
These requirements include a company’s “climate-related target or goal” and any progress towards meeting it; greenhouse gas emissions; the impact of severe weather events; carbon offsets or renewable energy credits; and processes of identifying, assessing, and managing climate-relate risks.
The Liberty Justice Center and the Pelican Institute argue that the rule should be set aside because the federal laws creating and empowering the SEC do not authorize it to require such detailed disclosures on environmental matters, which will burden companies and alter their behavior far more than ordinary financial disclosures. The lawsuit also argues that the rules unconstitutionally compel speech in violation of the First Amendment—requiring companies by law to implicitly endorse viewpoints on climate change that are the subject of intense public debate.
“The SEC didn’t enact these rules to protect investors’ financial interests—it enacted them to pursue an ideological agenda and influence companies’ decisions to favor that agenda. Worse yet, the rules force companies to file reports that implicitly endorse the SEC’s views on climate change in violation of the First Amendment. We look forward to seeing these rules struck down,” said Jacob Huebert, President of the Liberty Justice Center.
“These rules aim to place a scarlet letter on those who work in the oil and gas industries. 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,” said Sarah Harbison, General Counsel at the Pelican Institute’s Center for Justice.
“This disclosure rule not only exceeds the SEC’s statutory authority, but is also marred by a host of additional issues,” said Paul Kamenar, Counsel to the National Legal and Policy Center, which filed a public comment opposing the rule with the SEC. “The rule is unnecessary and unworkable, relies on questionable science, duplicates EPA requirements, does not protect investors’ interests, and will harm businesses and the American economy.”
The legal filings in National Legal and Policy Center v. Securities and Exchange Commission are available here.