SEC Climate Regulations Spared in Chevron Ruling, Agency Says

SEC corporate emissions reporting requirements should still be allowed after this summer’s Chevron rollback, the agency has told a federal court for the first time since the Supreme Court decision that makes it easier for challengers to fight some agency regulations.

The Supreme Court’s June decision upending the decades-old Chevron legal doctrine gives the Securities and Exchange Commission and other agencies flexibility with rulemaking when laws clearly delegate discretionary authority to them, the SEC told the US Court of Appeals for the Eighth Circuit on Monday.

The ruling in Loper Bright Enterprises v. Raimondo limits the ability of federal agencies to defend some regulations in court by rolling back judicial deference to rulemaking decisions. Another 1984 case, called Chevron v. Natural Resources Defense Council, had empowered regulators to interpret vague laws.

At issue in the climate rules litigation is whether the SEC can rely on securities laws that give the agency broad authority to require corporate disclosures that it deems are important to investors’ investment and voting decisions.

The 1933 Securities Act and 1934 Securities Exchange Act empowered the SEC to require corporate greenhouse gas emissions disclosures and other climate reporting because investors need the details to make informed decisions, the agency said in a court brief.

The filing is the SEC’s most extensive response yet to nine lawsuits challenging the rules in the Eighth Circuit. The US Chamber of Commerce, 25 Republican state attorneys general, a conservative think tank, and fracking company Liberty Energy Inc. are among those seeking to toss the rules, saying the SEC overstepped its authority. The agency issued the regulations in March and paused them in April amid the litigation.

“It is not an argument that the Commission lacks statutory authority to promulgate the Rules,” the SEC said in its brief, adding “the Commission reasonably explained the Rules and the basis for them.”

West Virginia v. EPA

Loper Bright is expected to play a significant role in efforts to topple the rules as the litigation advances.

The Chamber, Republican attorneys general, and others fighting the regulations in the Eighth Circuit previously urged the Supreme Court to end Chevron deference to regulators in the Loper Bright case. But they haven’t yet raised that decision with the Eighth Circuit.

Challengers filed their opening briefs in the climate regulation litigation before the Supreme Court’s June 28 ruling. The challengers are expected to bring up the decision when they respond to the SEC’s claims in briefs due by Sept. 17.

Challengers previously cited a 2022 Supreme Court decision limiting agencies’ rulemaking power as they argued the SEC lacked the authority to adopt its climate regulations. The high court in West Virginia v. Environmental Protection Agency ruled that agencies need clear permission from Congress to create regulations that have major economic or political effects, backing what’s known as the major questions doctrine.

The SEC “strained” its reading of the precedent established under West Virginia v. EPA, the Chamber and conservative think tank National Center for Public Policy Research said in a joint opening brief they filed June 14.

Like with Loper Bright, the rules were permissible after West Virginia v. EPA , the SEC said in its brief on Monday.

“The Commission invoked core provisions of the securities laws that expressly authorize it to promulgate disclosure requirements to protect investors,” the agency said.

Lawyers for the Chamber and the National Center for Public Policy Research didn’t immediately respond to a request for comment.

The lead case is Iowa v. SEC, 8th Cir., No. 24-1522, SEC brief filed 8/5/24.