On Wednesday, West Virginia Attorney General Patrick Morrisey revealed that 10 states, under the leadership of Republican officials, are initiating legal action to obstruct the newly issued Securities and Exchange Commission (SEC) regulations necessitating businesses to declare their carbon discharges.
The Attorney Generals of West Virginia and Georgia lodged a petition for review in the US Court of Appeals for the Eleventh Circuit. Emanating from the states of Alabama, Alaska, New Hampshire, Indiana, Oklahoma, South Carolina, Wyoming, and Virginia, this action drives home a solid protest against the SEC’s directive, which Morrisey labeled as a “back door move to undermine the energy industry.”
The coalition’s legal action comes amid reports that the SEC’s regulations do not involve the controversial provision mandating revelation of so-called Scope 3 emissions from indirect sources like consumers or supply chain providers.
A spokesperson for the SEC asserted that “the Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process and will vigorously defend the final climate risk disclosure rules in court.”
Despite the contentions stirred by the recently rolled out policies, SEC Chair Gary Gensler maintains that the rules have been carefully devised considering the economics of climate disclosures, public feedback, as well as the Administrative Procedure Act which directs agency rulemaking.
In his critique of the rule, Morrisey points to potential infringements on First Amendment rights, in addition to questioning its connection to clear statutory authority. Critiques argue that the rule establishes a structure where a federal agency is compelling companies to promote initiatives and unveil information they may not wish to disclose.
Bloomberg Law also suggests that the SEC could face additional legal challenges from environmental outfits like the Sierra Club and Earthjustice, as these groups called for more stringent reporting requirements, and are currently exploring their legal options in response to the recently released rules.
According to Morrisey, the implications of this action extend far beyond the SEC, stating “If the SEC wants to remove Scope 3 reporting requirements, then ‘we say, ‘Thank you,’ and we will be pleased to limit the scope of our litigation against them,” hinting at the possibility of scaling back their legal incursion if the SEC decides to scrap the controversial provisions.
The case is West Virginia v SEC , 11th Cir., 3/6/24.