The Democratic Party’s obsession with stopping climate change has undermined its ability to govern, especially in areas that otherwise have nothing to do with carbon emissions. Nowhere is that more true than at the Securities and Exchange Commission, where Biden’s appointees pushed through a costly climate risk reporting rule last year that was both unnecessary and far outside the agency’s proper jurisdiction.
Fortunately, President-elect Donald Trump’s pick to become the new chairman of the agency, former SEC Commissioner Paul Atkins, is an opponent of the climate reporting rule and will doubtless reverse it.
Created in the wake of the stock market crash of 1929, the Securities Act of 1933 requires firms that want to raise capital by issuing stock to file periodic reports to the SEC containing any relevant information to an investor making an informed investment decision.
The types of information required in these reports are largely set by the SEC, but federal courts have intervened in the past, finding that the agency had overstepped its bounds in what it demanded that firms include.
The SEC may require companies to report any “material” information that the Supreme Court says includes facts upon which there is “a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.” Relevant to the SEC’s climate rule, courts have held that a firm’s position on a controversial public policy matter is not “material” information the SEC can require.
Former President Barack Obama’s SEC noted in 2016 that “disclosure relating to environmental and other matters of social concern should not be required of all registrants unless appropriate to further a specific congressional mandate.”
Biden’s SEC appointees gave themselves more latitude to interpret the law, introducing a rule requiring companies to disclose an estimate of their carbon emissions, emissions goals, and expenditures on mitigating current and future climate change-related losses. By the SEC’s own admission, the new reporting requirements would have inflicted billions in higher compliance costs on consumers.
Atkins, thankfully, has voiced opposition to Biden’s climate reporting rule. He has also called out the agency’s deceptive lack of candor about its true motives.
“The SEC’s proposal would tee up shifts of capital from fossil-fuel-based industries, such as oil production and heavy manufacturing, toward industries that are supposedly greener,” Atkins wrote in a 2022 op-ed. “By departing from the materiality standard, the commission would set itself up to compel whatever disclosures it likes, without any standards against which the need for disclosures may be measured.”
In a think tank panel on the rule, Atkins added, “It’s a roundabout way through regulation of disclosure to try to regulate or influence greenhouse gas emissions by themselves, which is delegated by Congress to another agency of the United States government, and that’s namely the EPA.”
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Atkins is 100% correct on all counts. The SEC has no authority to issue its climate rule, it is not designed or intended to regulate carbon emissions, and Biden’s climate reporting rule would have shifted capital away from fossil-fuel production, which would raise energy costs for everyone.
We trust that rescinding Biden’s climate reporting rule will be among Atkins’s first orders of business once he is confirmed.
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This article was originally published at www.washingtonexaminer.com
