Mark Uyeda, acting chair of the Securities and Exchange Commission, said Tuesday the agency will not defend a "deeply flawed" rule enacted by the Biden administration that requires publicly held companies to disclose climate-related risks and, in some cases, the details of their emissions.
"The Rule is deeply flawed and could inflict significant harm on the capital markets and our economy," Uyeda said in a news release.
Uyeda's decision follows an Inauguration Day executive order by President Donald Trump that calls for, in part, the head of relevant federal agencies "to revoke or rescind policies that were implemented to advance the International Climate Finance Plan" created during the Biden administration.
The SEC rule was adopted last March after two years of public debate, during which the SEC said it received more than 24,000 comment letters. As soon as the rule was enacted, it was immediately challenged in court, including lawsuits by numerous coalitions of Republican states attorney general and the U.S. Chamber of Commerce.
The cases were consolidated to the 8th U.S. Circuit Court of Appeals in St. Louis, which designated a lawsuit brought by Iowa and eight other states as the lead case. In April, the SEC voluntarily stayed the rule pending litigation.
"The Commission's briefs previously submitted in the cases consolidated in the Eighth Circuit do not reflect my views," Uyeda said. "The briefs defend the Commission's adoption of the Rule, but I continue to question the statutory authority of the Commission to adopt the Rule, the need for the Rule, and the evaluation of costs and benefits. I also question whether the agency followed the proper procedures under the Administrative Procedure Act to adopt the Rule.
"The lack of statutory authority is a weighty factor. Commissioners have a constitutional obligation to determine the bounds of the agency's statutory authority, and my views on the Commission's authority here were the result of lengthy study and research informed by many comments on all sides of the issue."
Uyeda, who was appointed by President Joe Biden in June 2022, was one of two commissioners, both Republicans, to vote against the rule, which was passed by the three Democrat commissioners. Hester Peirce, who was appointed during the first Trump administration, also voted no.
"Commissioner Peirce said that then-existing disclosure rules were sufficient and that the 'rule's anticipated benefits do not outweigh the costs,'" Uyeda said. "She argued that 'only a mandate from Congress should put us in the business of facilitating the disclosure of information not clearly related to financial returns.'
"I stated that the Commission was without statutory authority or expertise to address climate change issues and that this rule is climate regulation promulgated under the Commission's seal."
The Sierra Club was among many environmental groups that filed an amicus brief in the 8th Circuit in support of the Biden-era rule.
"The SEC has full legal authority to require climate risk disclosures to protect investors and improve market transparency," Ben Cushing, the Sierra Club's Sustainable Finance Campaign director, said in a news release. "Rescinding this rule would be a significant setback, further isolating the U.S. on the global stage as climate-related financial risks continue to grow.
"The climate crisis and the transition to net-zero are already reshaping the economy, and jurisdictions from California to the European Union to countries across Asia are moving forward with disclosure requirements — meaning that many companies will report this information regardless. The SEC's retreat will only make capital markets less efficient and allow corporate polluters to conceal risks from investors."