When the Securities and Exchange Commission (SEC) announced their proposed “climate disclosure rule” back in March, many took to their comment docket to express their opinions and criticisms. Benjamin Zycher, Senior Fellow at American Enterprise Institute, was one of many who shared a common view on the issue.
Zycher summarized the rule to be an overstep of the SEC stating that the rule is an “obvious circumvention of the formal policymaking process,” and going on to explain that this field of governance is authorized solely by Congress. The SEC should be nowhere near this area of jurisdiction and with the West Virginia v. EPA ruling, it couldn’t be more obvious.
Following the ruling, Zycher also wrote an op-ed that explained the inherent similarities between the SEC’s proposed rule and the implications of the decision in the West Virginia v. EPA case. He explained that the conclusion reached in the case alludes to the suggestions of the major questions doctrine. The major questions doctrine envelops the SEC rule and deems it nearly unconstitutional for the Commission to creep outside of its congressional authority. An overreach that, with the proposed climate disclosure rule, would be outside of the scope of the SEC’s mandate.
On top of being nearly illegitimate, the rule would also harm the businesses that keep the American economy alive. The rule would especially strain small businesses and farmers who can’t afford the means necessary to carry out the non-material reporting requirements argued in the proposal.
The SEC continues to creep into areas of regulation in which it has no authority. Zycher emphasizes that point stating that, “such analyses [in the proposed rule] would have little to do with science, but instead would be politicized.”
The mere existence of this rule would be a tremendous overstep by the SEC, would do more harm than good, and provide little benefit to investors.