National Center for Public Policy Research v. Securities and Exchange Commission
CASE SUMMARY
The Securities and Exchange Commission has issued new rules that would require public companies to disclose their climate-related business risks and mitigation procedures. The agency exceeded its statutory authority by making these intrusive rules, which run roughshod over core constitutional rights. Representing the National Center for Public Policy Research, NCLA demands an immediate end to this illegal SEC pursuit of climate activism at the cost of civil liberties.
The SEC rules would force public companies to reveal a broad swath of climate-related risks and their associated impacts, including potential “changes in law or policy,” “reduced market demand for carbon-intensive products,” and “litigation defense costs.” In other words, the government is trying to require companies to guess how the government will regulate in the future, how consumers will respond to hypothetical government regulations, and how courts will rule with respect to those theoretical regulations. One rule would also mandate that companies disclose greenhouse-gas emissions from their operations and the energy they consume, even if such emissions are untethered to a traditional understanding of financial materiality.
SEC only has authority to protect investors and foster fair markets in securities transactions. It does not have plenary power to regulate the economy, and certainly not the environment, through climate-focused rulemaking. To make matters worse, the rules violate the First Amendment, which limits compelled disclosures to “purely factual and uncontroversial information.” SEC has stayed implementation of the unlawful rules pending the resolution of multiple legal challenges.
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CASE STATUS: Active
CASE START DATE: April 29, 2024
COURT: U.S. Court of Appeals for the Third Circuit
CASE DOCUMENTS
April 29, 2024 | Petition for Review and Motion for Transfer
PRESS RELEASES
April 29, 2024 | NCLA Asks Appeals Court to Stop SEC’s Unconstitutional New Climate Disclosure Rules
Washington, DC (April 29, 2024) – Today, the New Civil Liberties Alliance filed a petition with the U.S. Court of Appeals for the Third Circuit requesting review of the Securities and Exchange Commission’s new rules that would require public companies to disclose their climate-related business risks and mitigation procedures. SEC has exceeded its statutory authority by making these intrusive rules, which run roughshod over core constitutional rights. Representing the National Center for Public Policy Research, NCLA demands an immediate end to this illegal SEC pursuit of climate activism at the cost of civil liberties.
SEC passed the new rules by a 3-2 vote in March after two years of rulemaking and over 20,000 comments. They would force public companies to reveal a broad swath of climate-related risks and their associated impacts, including potential “changes in law or policy,” “reduced market demand for carbon-intensive products,” and “litigation defense costs.” In other words, the government is trying to require companies to guess how the government will regulate in the future, how consumers will respond to hypothetical government regulations, and how courts will rule with respect to those theoretical regulations. One rule would also mandate that companies disclose greenhouse-gas emissions from their operations and the energy they consume, even if such emissions are untethered to a traditional understanding of financial materiality.
SEC only has authority to protect investors and foster fair markets in securities transactions. It does not have plenary power to regulate the economy, and certainly not the environment, through climate-focused rulemaking. To make matters worse, the rules violate the First Amendment, which limits compelled disclosures to “purely factual and uncontroversial information.” NCLA asks the Third Circuit to transfer this case to U.S. Court of Appeals for the Eighth Circuit, where other challenges to the illegal rules are already pending. SEC has stayed implementation of its rules pending the resolution of these challenges.
NCLA released the following statements:
“It’s hard to count all the ways the SEC rules violate the law. They were created through an unlawful process; they far exceed the Commission’s statutory authority; and they violate constitutional rights beginning with the First Amendment. The rules should be set aside.”
—Andrew Morris, Senior Litigation Counsel, NCLA
“Congress created SEC in the 1930s to protect investors and ensure fair securities transactions. It did not give that agency power to regulate climate change. Nor can SEC give itself power to enact environmental regulations by claiming that some investors care about the environment. If that were so, the agency would have power to regulate any social issue that some investors purport to care about, from war in the Middle East to border control.”
—Sheng Li, Litigation Counsel, NCLA
For more information visit the case page here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.