Billie Grace Ward

On April 16th, The Hill published an op-ed by ATR Federal Affairs Manager Bryan Bashur. The op-ed outlines the procedural faults within the Securities and Exchange Commission’s recent climate disclosure rule, as well as its adverse economic impact on affordable energy production. 

Firstly, the SEC, under Chair Gary Gensler, is alleged to have overstepped its authority in the creation of this rule, which Bashur notes prompted swift outcry from Congress:  

“House and Senate Republicans have vocalized their opposition to the rule. Reps. Ted Budd (R-N.C.) and Ralph Norman (R-S.C.) sent a letter, along with 40 House members, urging the SEC to withdraw the rule. Sen. Kevin Cramer (R-N.D.) also led a group of Republicans requesting that the SEC rescind the rule. Both letters argue that the SEC has superseded its statutory authority and failed to establish that the disclosures required in the rule are material and ‘have been viewed by the reasonable investor as having significantly altered the “total mix” of information available.’”  

In addition, the SEC has repeatedly sought to expedite the rulemaking process for complex and controversial regulation, providing inadequate time to consider public feedback. As Bashur details: 

“Under Gensler’s leadership, the SEC has published most of its rulemakings with a comment period of fewer than 60 days. According to data compiled by Center Forward, 74 percent of Gensler’s rules have comment periods of 30 days and only 11 percent are 60 days. Stakeholders have explicitly stated that the short comment periods are unworkable. The Office of the Federal Register’s Guide to the Rulemaking Process has also written that federal agencies may want to provide comment periods of ‘180 days or more’ for complex rules. Clearly, the SEC is trying to ride roughshod over the public and craft consequential rulemakings without regard to the substantial impacts they have on households, retail investors and the economy as a whole.” 

The present rule falls into just such a category, with broad intent, scope, and cost that are challenging even to approximate. Bashur goes on to say that: 

“A report issued by the Bank for International Settlements discusses the difficulty of calculating climate risk information and how unreliable it can be. The report states that as a practical matter, ‘the range of impact uncertainties, time horizon inconsistencies, and limitations in the availability of historical data on the relationship of climate to traditional financial risks, in addition to a limited ability of the past to act as a guide for future developments, render climate risk measurement complex and its outputs less reliable as risk estimators.’” 

This comes as other federal agencies are also crafting rules outside of their purview to quantify climate risk estimates, in lock step with the Biden administration’s stated policy objectives. Bashur concludes by reiterating the harmful economic effects of this rule on consumers: 

“The Democrats’ full-court press on the climate agenda will keep energy prices at historically high levels and impose burdensome disclosure and reporting requirements on public companies. At the end of the day, all this rule will do is make it more expensive for businesses to operate, which will pass the costs of goods and services down to individuals and households.” 

Click here to read the full op-ed.