Earlier this week, SEC Commissioner Mark Uyeda--one of the two Republican appointees to the SEC--delivered remarks at the Practising Law Institute in which, in the context of a broader discussion concerning the SEC's rule-making process, he recommended that “the Commission . . . should seriously consider re-proposing the [climate-related disclosure] rule with revised rule text and an updated economic analysis.” The stated purpose of such a “re-proposing” would be to “provide the public with an opportunity to focus on aspects of the proposal that they did not initially consider . . . [and] submit feedback on any revised requirements.” Commissioner Uyeda further suggested that a failure to do so “might be indicative of a flawed process that raises the question of whether the rule is arbitrary and capricious under the Administrative Procedure Act”--in effect, recommending a legal tactic for any challenges to the climate disclosure rule after it is promulgated.
Of course, one of the key practical effects of such “re-proposing” would be to extend the already-delayed timeline for the promulgation of the SEC's proposed climate disclosure rule. (The climate disclosure rule was originally proposed in March 2022, and still has not been promulgated more than eighteen months later.) If the SEC re-proposed the climate disclosure rule, there would need to be a further period for comment, and the promulgation of the rule would be delayed for months--indeed, it could even be delayed beyond the next election in November 2024, at which point it is possible that an incoming Republican administration would shelve the proposed climate disclosure rule entirely.
Perhaps recognizing the practical impact of such a delay, SEC Chair Gensler, when asked at SIFMA about these remarks by Commissioner Uyeda, stated that the SEC was still forging ahead on the proposed climate disclosure rule. He noted that a failure by the SEC to act would render this area a “fragmented space” due to regulatory initiatives by, among others, Europe and California. Gensler further said that the rules were intended to “bring some consistency and comparability” to the array of extant climate disclosures by public companies.
It is clear that the proposed climate disclosure rule is still the focus of significant attention by the SEC; however, it remains unclear when this rule will ultimately be promulgated.
Before the Commission adopts any final rule that significantly deviates from the [climate-related disclosure] proposal, it should seriously consider re-proposing the rule with revised rule text and an updated economic analysis. Doing so would provide the public with an opportunity to focus on aspects of the proposal that they did not initially consider, and perhaps more importantly, submit feedback on any revised requirements. Such a re-proposal may ultimately help the Commission craft a better rule for all market participants. The Commission should do everything possible to not promulgate a rule that is costly and ineffective, as doing so might be indicative of a flawed process that raises the question of whether the rule is arbitrary and capricious under the Administrative Procedure Act.
https://www.sec.gov/news/speech/uyeda-remarks-practicing-law-institute-110723
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