SEC votes to stop defending climate disclosure rules

Wall Street’s top regulator said on Thursday it had voted to cease legal efforts to defend regulations that require companies to disclose climate-related emissions, risks and spending, and had been hotly contested by industrial lobby groups.

The decision by the Republican-dominated U.S. Securities and Exchange Commission had been widely expected following public remarks last month by its acting chairman, Mark Uyeda.

Since taking office, President Donald Trump has acted to roll back virtually all of the prior administration’s efforts to address climate change.

“The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules,” Uyeda said in a statement.

The Commission adopted the rule last year, aiming to give investors information about the buildup of climate risk and associated costs in the financial system. The agency cited strong demand from investors for such disclosures.

However, lobby groups and Republican state attorneys general immediately sued, charging that the regulations overstepped the SEC’s legal authority and would burden businesses. That case is now pending before U.S. Court of Appeals for the Eighth Circuit.

The SEC’s lone Democratic member, Caroline Crenshaw, denounced the decision, saying it unlawfully sought to undo valid regulations by ceasing to defend them in court, rather than following procedure to change them or create new ones.

“In effect, the majority of the Commission is crossing their fingers and rooting for the demise of this rule, while they eat popcorn on the sidelines,” she said in a statement. “The court should not take the bait.”

Crenshaw called on the court to appoint lawyers to defend the rule in the SEC’s absence “on behalf of investors, issuers and the markets.”

The SEC had been facing a self-imposed deadline of Friday to tell the court of its planned course of action. The agency had asked the court early last month not to schedule oral arguments while it considered what to do.