Ten states, led by West Virginia and Georgia, are gearing up to contest a recent Securities and Exchange Commission decision mandating public companies to disclose climate-related risks and greenhouse gas emissions.
Republican West Virginia Attorney General Patrick Morrisey announced the coalition's intention to challenge the rule, which was approved by a narrow 3-2 vote Wednesday, The Hill reported.
The regulation, set to take effect in 2026, faced considerable resistance from the business community, prompting delays in its completion as the SEC sifted through a deluge of feedback following its proposal in 2022.
Morrisey asserted the legal challenge seeks to prevent what he perceives as an attempt to undercut the energy sector.
"This is a backdoor move to undermine the energy industry," Morrisey said, emphasizing concerns about overreach and First Amendment implications. "This rule also appears to have some serious First Amendment problems."
The coalition's other states are Alabama, Alaska, Indiana, Oklahoma, New Hampshire, South Carolina, Wyoming, and Virginia.
Business groups and Republicans swiftly denounced the rule, citing fears of added compliance burdens and adverse effects on market competitiveness. The U.S. Chamber of Commerce signaled its intent to scrutinize the rule's legal foundation and impact on businesses and investors.
Republican lawmakers, including Sen. Tim Scott, R-S.C., ranking member of the Senate Banking Committee, and House Financial Services Committee Chair Patrick McHenry, R-N.C., vowed to challenge the rule through legislative avenues, decrying what they perceive as regulatory overreach.
SEC Chair Gary Gensler defended the rule as a measure benefiting investors and companies by standardizing reporting practices already adopted by many firms. However, opponents argue it could stifle market participation, escalate compliance costs, and erode American business competitiveness.
Republican SEC commissioners joined the fray, lambasting the rule as an attempt to impose a progressive climate agenda outside the commission's purview. Sen. Kevin Cramer, R-N.D., branded it as federal overreach.
Cramer, a member of the Banking Committee, called the rule "the definition of federal overreach," adding "Congress didn’t give the SEC any authority for this mandate, nor is the Commission an environmental regulator."
Gensler's tenure at the SEC has seen heightened confrontation with corporate interests, with industry figures predicting a surge in legal challenges against the agency.
"Not only is this outside their legal bounds, forcing publicly traded companies to report their emissions data opens them up to new liabilities while giving a competitive edge to dirtier foreign producers who have no such burdensome requirements," Cramer said.
Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.
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