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GOP kicks off anti-SEC campaign

Mar 19, 2024
Illustration of a pattern of the SEC logo with abstract clouds of smoke.

Illustration: Shoshana Gordon/Axios

House Republicans' new oversight campaign against the SEC's climate disclosure rule will add to the pressure the agency faces in the courts.

Why it matters: We're seeing the opening shots in what promises to be a lengthy fight on the Hill over the rule as court challenges play out.

Driving the news: At a Financial Services oversight subcommittee field hearing Monday, Republicans celebrated Friday's federal court ruling that temporarily blocked the rule.

  • Republicans have also lined up a separate subcommittee hearing Wednesday on a slate of bills that would require the SEC to do cost-benefit analyses in its rulemakings and limit its ability to write sweeping regulatory proposals.
  • While the legislation isn't directly targeted at the climate rule, it will certainly become part of the broader Hill conversation about emissions disclosure.
  • That adds to a flurry of GOP-led oversight requests on climate disclosures and a larger slate of anti-ESG bills that the committee has tried to push this Congress.

What they're saying: Rep. Bill Huizenga previewed the oversight plans: "Given this lack of cooperation and the content of the material turned over to the committee, I can only conclude that Chair [Gary] Gensler does not really want us to see the flimsy basis on which he has crafted this rule."

  • The SEC "flooded committee staff with tens of thousands of pages of unresponsive documents" in response to oversight requests, he said during the field hearing.
  • In response, the SEC offered a March 6 statement from Gensler providing a justification for his agency's approach to the climate rule.

Between the lines: Congress isn't going to successfully repeal the rule via the Congressional Review Act in the near term, but these kinds of pressure campaigns can influence how agencies act.

  • "You can be certain that any efforts to restrict the SEC's authority will get a lot of attention, I think both from the SEC as well as from the administration," said John Kostyack, an environmental attorney who consulted for the Sierra Club on the disclosure rule.

Zoom in: This is all simmering alongside the legal battles, which lawmakers will do their best to influence.

  • Expect amicus briefs from the Hill in the lawsuits filed by GOP states and the U.S. Chamber of Commerce.
  • This fight also shows how Republican-led states will use the major questions doctrine, established in West Virginia v. EPA, to take a whack at environmental rulemakings.

The other side: We're seeing some crossed battle lines here, with the Sierra Club launching its own lawsuit that argues the final rule is too weak.

  • Sen. Sheldon Whitehouse told reporters he could see Democrats intervening via amicus briefs.
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