SEC Climate Reporting Rules Move Toward Early March Release Date - Bloomberg Law

SEC Climate Reporting Rules Move Toward Early March Release Date

The SEC is expected to give companies watered-down greenhouse gas emissions disclosure requirements as soon as early March before a government shutdown threatens to freeze most agency work indefinitely.

Congress must reach a deal to fund the Securities and Exchange Commission and several other agencies to keep them open past March 8. The SEC is unlikely to vote to adopt the climate regulations next week, making the week of March 4 the last chance to deliver them ahead of a potential agency closure. The agency typically holds public votes to issue rules on Wednesdays, raising the odds the regulations will arrive March 6.

The SEC has pushed back its target date to finish the rules several times since they were proposed in March 2022. Republicans, companies and some Democrats have pushed to weaken the proposed regulations, especially the portion addressing so-called Scope 3 emissions, which come from indirect sources such as supply chains or consumers of companies’ products. Environmental and investor advocates have been bracing for months for weaker requirements than planned.

The agency’s latest regulatory agenda targets April for completion of the climate rules.

“It looks like they’re getting close,” said Steven Rothstein, managing director of Ceres Accelerator for Sustainable Capital Markets, who has met frequently with SEC officials to lobby for robust climate reporting.

An SEC spokesperson declined to confirm the timing of the regulations’ release, saying the agency “moves to adopt rules only when the staff and the Commission think they are ready to be considered.” The spokesperson added the agency also doesn’t “comment on speculation about what may be in or out of a rulemaking.”

Legal Threats

The SEC’s climate proposal has faced legal threats from the US Chamber of Commerce, National Association of Manufacturers, American Farm Bureau Federation and West Virginia Attorney General Patrick Morrisey (R), among others. They’ve raised concerns about Scope 3 requirements in particular. Some moderate Democrats, including Sens. Joe Manchin of West Virginia and Jon Tester of Montana, have also shared worries about the impact of requiring Scope 3 disclosures on farms and other businesses.

Business and agricultural groups in late January sued to stop California from implementing its first-in-the-nation emissions reporting law, offering a preview of what might be in store for the SEC if it includes Scope 3 emissions in its regulations.

SEC Chair Gary Gensler has publicly acknowledged concerns about the Scope 3 reporting and has said changes are possible.

The agency could see its rules tossed if it fails to approve them in the next few months, possibly as early as April. A Republican-controlled House and Senate in the next Congress could quickly revoke regulations issued in early-to-mid 2024 under the Congressional Review Act, unless the president stops them with a veto. The exact timing of when the review act will come into play remains unclear.

A formal announcement on a public vote to release the climate rules is expected as soon as next week. The SEC must give one week’s notice before the commission votes on regulations publicly.

To contact the reporter on this story: aramonas@bloomberglaw.com

To contact the editors responsible for this story: agrubercohn@bloombergindustry.com; jharrington@bloombergindustry.com

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