Republicans on the Senate Banking Committee took aim at Securities and Exchange Commission Chair Gary Gensler’s plan to implement a new rule requiring disclosure of climate change risks during a hearing Thursday.
The SEC voted in March to propose a new rule requiring public companies to report risks related to climate change and their own greenhouse gas emissions, in an effort to standardize such disclosures and provide investors with useful information.
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Sen. Pat Toomey of Pennsylvania, the committee’s top Republican, admonished Gensler for failing to provide “real answers” to written questions submitted to the SEC by GOP senators on how the agency developed the proposal. He also predicted that the Supreme Court would toss out the rule if it is ultimately implemented.
“The SEC may not want to answer to Congress on its climate disclosure rule,” Toomey said, “but, ultimately, the SEC will have to answer to the courts, which should make it nervous.”
Toomey pointed to the Supreme Court’s recent ruling in West Virginia v. EPA, which took aim at the ability of regulatory agencies to write rules on issues of major economic and political significance without clear statutory authorization.
The Supreme Court ruled that regulatory agencies “cannot use novel interpretations of existing law to pretend they have legal authority to support sweeping policy changes,” Toomey said. “Well, that’s precisely what the SEC appears to be doing with its climate disclosure rule.”
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Gensler argued against Toomey’s characterization, saying that the rule only requires companies to disclose climate risk if it is material to their business or if they have already decided to disclose the information.