Nine more states, led by Iowa Attorney General Brenna Bird, have filed a lawsuit against the Securities and Exchange Commission’s (SEC) controversial climate disclosure regulations.
The lawsuit was filed in the U.S. Court of Appeals for the Eighth Circuit on March 13 and challenges an SEC rule requiring publicly traded companies to reveal to investors any climate-related risks that have or are “reasonably likely” to have a material impact on the business.
The rule, which was first proposed by the agency two years ago, also requires some large and midsize companies to disclose how much carbon dioxide is emitted by their operations. The SEC voted 3-2 last week to approve the climate disclosure rule.
It is set to go into effect in 2026.
Iowa was joined by Arkansas, Idaho, Missouri, Montana, Nebraska, North Dakota, South Dakota, and Utah, as well as a group called the American Free Enterprise Chamber of Commerce in the lawsuit challenging the SEC mandate.
Collectively, the states argued the SEC exceeded its rule-making authority in requiring public companies to disclose climate-related risks as part of their registration statements and annual filings; having failed to first gain congressional approval.
The states further argue the mandate is part of President Joe Biden’s broader environmental push to ensure investment decisions are based on climate change considerations as opposed to financial returns. The rule also creates unnecessary and costly “red tape” on businesses, according to the states.
‘Climate Risks Can Pose Significant Financial Risks’
The SEC, which estimates that about 2,800 U.S. companies will be subject to the climate-related disclosure requirements, has argued investors are pushing for new standards in how companies communicate about greenhouse gas emissions as well as weather-related risks.
“Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions,” SEC Chairman Gary Gensler said in a statement after the vote.
An SEC spokesperson told The Hill the commission “undertakes rule-making consistent with its authorities and laws governing the administrative process and will vigorously defend the final climate risk disclosure rules in court.”
The latest lawsuit marks the second state-led challenge to the SEC mandate after Alabama, Alaska, Georgia, Indiana, New Hampshire, Oklahoma, South Carolina, Wyoming, Virginia, and West Virginia filed suit against the measure in the U.S. Court of the Appeals for the 11th Circuit last week.
The plaintiffs in that lawsuit also challenged the SEC’s authority in mandating the rule, arguing it serves as a “backdoor move to undermine the energy industry.”
More Republican-led states are widely expected to join the lawsuits opposing the SEC rule.
‘Biden Has Turned His Back on the Heartland’
“Biden has, once again, turned his back on the heartland and Iowa farmers with his latest climate scheme,” said Attorney General Bird in a statement announcing the lawsuit. “He knows his radical climate agenda doesn’t have support from Congress, so he illegally sidesteps our lawmakers to force his mandate on Iowans.”
“Not only will this mandate impose costly red tape on businesses, but it will devastate our supply chain and hurt Iowa family farms. I’m suing because, unlike Biden, I am committed to supporting Iowa’s farmers and businesses and upholding the rule of law,” Attorney General Bird added.
Meanwhile, the new rule could also face a legal challenge by environmental groups Sierra Club and Earthjustice, who argue it does not go far enough.
“Although the rule represents an important step forward for investors seeking greater transparency on companies’ handling of climate risks, the rule is significantly weaker than the proposed version from March 2022,” the group said in a joint statement earlier this month, shortly after the SEC committee’s vote.
The groups said they are “considering challenging the SEC’s arbitrary removal of key provisions from the final rule,” namely the so-called “Scope 3” provisions that would have required companies to disclose emissions from their supply chains and the use of their products.
“The SEC took an important and long overdue step to protect investors, the integrity of our markets, and the retirements of everyday Americans,” said Hana Vizcarra, senior attorney at Earthjustice. “But the SEC is condoning misleading and incomplete disclosures that open investors to risk by dropping the Scope 3 emissions disclosure requirements. Investors deserve better than where the SEC landed with its disclosure rule.”
The Epoch Times has contacted an SEC spokesperson for further comment.
Tom Ozimek contributed to this report.
From The Epoch Times
