Senate Republicans blast Gensler for cold shoulder on climate oversight

WASHINGTON — Top Republicans on the Senate Banking Committee rebuked the chair of the Securities and Exchange Commission for declining to address their concerns about proposed climate risk disclosure regulations.

In a letter Thursday to SEC Chair Gary Gensler, Republicans led by Sen. Pat Toomey of Pennsylvania accused the agency of poor public transparency and a “disregard for a significant congressional oversight request” in connection with the SEC’s efforts to introduce climate disclosure requirements for publicly traded companies.

Without support from their Democratic colleagues in a 50-50 Senate, Republicans have few formal powers to investigate federal regulators. But with the 2022 midterm elections fast approaching, the letter offers a preview of the aggressive oversight that Biden administration regulators will likely face next year should control of either the House or Senate flip.

Bloomberg

“We requested that you provide certain records concerning the climate disclosure rule, but you have not provided a single requested record,” the lawmakers wrote. The letter was signed by all 12 Republican members of the Senate Banking Committee.

Thursday’s letter follows another one from mid-June, when the committee’s Republicans first requested that the SEC answer a number of questions about the agency’s proposed rulemaking and preserve “all records” related to the process. The follow-up letter argued that the SEC’s response was late, “wholly inadequate and unacceptable.”

“A member of the public who submitted a Freedom of Information Act (FOIA) request would be entitled to receive more records from the SEC than what the SEC has given members of the Senate committee overseeing the commission,” the lawmakers wrote.

Rather than offering substantial written records, Gensler offered Republican committee staff a briefing, according to the letter. The lawmakers wrote that the proposed briefing was “not a substitute” for the records.

The GOP lawmakers also pointed to a recent Supreme Court decision — West Virginia v. the Environmental Protection Agency — in which the nation’s highest court imposed new limits on federal regulatory agencies’ ability to write rules without clear authority from Congress to do so.

“The Supreme Court ruled that the executive branch and its agencies, including financial regulators, cannot use creative, new interpretations of existing law to pretend they have legal authority to support sweeping policy changes that Congress never intended,” the Republican senators wrote. “Unfortunately, the SEC appears to be trying to act in precisely this way with its climate disclosure rule.”

Regulation and compliance

Can SEC’s climate rule survive the Supreme Court’s tough new standard?

After the Supreme Court struck down an Environmental Protection Agency rule, legal observers are wondering how far the justices will go to rein in the authority of financial regulators. A Securities and Exchange Commission proposal on climate risk disclosures could become a test case.

By Jordan Stutts

July 7

Proponents of the SEC’s emerging climate risk framework have argued that expanding financial disclosures for investors is solidly within the agency’s existing authority.

Bank industry groups, meanwhile, have asked the SEC to scale back its proposal. One particular area where some banks have expressed concern involves the proposal’s treatment of Scope 3 emissions, which stem from business-related assets and activities not owned or controlled by firms.

Banks have argued that the SEC’s proposed requirements for Scope 3 emissions could cause a significant reporting burden if the disclosures include their borrowers.

The SEC did not respond to a request for comment about the letter.