Dive Brief:
- Three more states — Ohio, Kentucky and Tennessee — have entered the arena to block the Securities and Exchange Commission’s climate disclosure rule, building on similar efforts from other Republican-led states that seek to prevent the regulation from being implemented.
- The March 13 lawsuit, spearheaded by Ohio Attorney General Dave Yost on behalf of the Ohio Bureau of Workers’ Compensation, was filed in the U.S. Court of Appeals for the Sixth Circuit a week after the SEC finalized its climate rule. The suit is also backed by the attorneys general of Kentucky and Tennessee, Russell Coleman and Jonathan Skrmetti, respectively.
- Yost asked the Cincinnati-based federal court to review the rule and stop the agency from “overstepping its authority by meddling in environmental policy,” according to a press release. The Ohio lawmaker called the rule — currently temporarily halted due to a similar lawsuit in the Fifth Circuit Court of Appeals — an “unlawful attempt” by the SEC to grant itself broad oversight on matters that have nothing to do with financial markets.
Dive Insight:
The lawsuit is one of several legal challenges the SEC is facing over its climate disclosure rule. The agency has consistently come under fire for probing companies for climate-related disclosures by Congressional and state GOP members, who argue the agency is overstepping its authority. Ten Republican-led states filed a petition to block the SEC’s climate rule the same day it was finalized.
This lawsuit builds on similar allegations from federal and state Republican officials over the SEC’s remit as a financial regulator. While Ohio and Tennessee are led by Republican governors, Kentucky’s governor, Andy Beshear, is a Democrat — however, the state’s attorney general and both General Assembly chambers are run by Republicans.
“This isn’t a debate about protecting the environment — it’s a question of federal overreach,” Yost said in the press release announcing the suit. “The regulator of the stock market has no business setting environmental policy for the country.”
Yost also expressed concerns over the SEC’s plan to “impose immense compliance burdens” on publicly traded companies, and how this would “injure” financial markets, industries and investments — especially those of Ohio pensioners.
Much of Yost’s lawsuit consisted of the SEC’s final 866-page rule — a pared down version of its original proposal from two years ago — which scrapped scope 3 emissions disclosures entirely and scaled back scope 1 and scope 2 reporting requirements.
The SEC filed paperwork to a judicial panel in Washington D.C. on Tuesday for a lottery to select a court to hear the several lawsuits that have been filed over its climate disclosure rules. The agency currently faces nine legal challenges that have been submitted in the U.S. courts of appeal for the second, fifth, sixth, eighth, eleventh and District of Columbia circuits, according to a report by Bloomberg Law.
