Introduction

“‘[I]ncreases in heat-related deaths,’ ‘coastal inundation and erosion,’ ‘more frequent and intense hurricanes, floods, and other extreme weather events,’ ‘drought,’ ‘destruction of ecosystems,’ and ‘potentially significant disruptions of food production.’ ”^[3] The U.S. Supreme Court has not minced words in outlining climate change’s potential threats. Climate change’s ubiquity and potentially expansive impacts mean that the federal administrative state, with a presence that spans every state and every industry, will need to confront what it means to fulfill its missions in a changing world. This is not news to agencies: the Bureau of Reclamation is evaluating drought’s impact on recreation in the West;^[4] the Federal Emergency Management Agency is questioning its ongoing ability to underwrite flood insurance;^[5] the Department of Defense is contemplating rising sea levels’ risk to military bases and our nation’s security.^[6] Agencies know climate change is their present and their future.

But this is a potential challenge for an administrative state that has siloed out responsibility for approaching the nation’s challenges. The Centers for Disease Control can respond to a pandemic, but not housing.^[7] The Occupational Safety and Health Administration can regulate workplace safety, but not pandemic responses.^[8] This siloed authority may pose a barrier when it comes to climate change: how much latitude will agencies have in their attempts to protect their missions from climate change? The Supreme Court’s recent elucidation of the major questions doctrine, in particular, contemplates whether climate change might be considered an issue of such major and political importance that agencies, beyond maybe the Environmental Protection Agency (“EPA”), lack the authority to boldly integrate climate change into their operational planning and regulation sans an explicit congressional authorization.

The Securities and Exchange Commission (“SEC”)—the main agency tasked with regulating the investment market^[9]—is on track to find out. On March 21, 2022,^[10] the SEC announced its new proposed rules, the Enhancement and Standardization of Climate-Related Disclosures for Investors (hereinafter the “Proposed Rule”).^[11] The Proposed Rule would require companies subject to SEC regulation to disclose material information about their climate-related risks and their greenhouse gas (“GHG”) emissions.^[12]

The Proposed Rule will be challenged in court, if the attention it has received is any indication. During the rulemaking process, the SEC received over 10,500 form letters, 3,200 individual comment letters, and over 900 letters from companies, trade organizations, and other organizations.^[13] By comparison, when the SEC promulgated the thirty-seven rules required in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the congressional response to the 2008 financial crisis and arguably one of the most significant financial reform bills in American history, the rules, on average, received ninety-two comments each.^[14] One need only look to the previous Ranking Member of the Senate Banking Committee (which oversees the SEC), Senator Pat Toomey,^[15] for indication that not all the comments received on the Proposed Rule were positive. In his opening statement for the Oversight of the U.S. Securities and Exchange Commission hearing, Senator Toomey stated, “[t]he SEC is wading into controversial public policy debates that are far outside its mission and its expertise and without the legal authority to do so. In doing so, the SEC risks politicizing the agency, slowing economic growth, increasing inflation, and even undermining national security.”^[16]

While litigation is almost certain, the outcome is not. This Proposed Rule is developing amidst shifts in courts’ deference to agency action. One of the most notable shifts is the major questions doctrine, a doctrine envisioned as a check against excessive agency action.^[17] This Note seeks to evaluate the gauntlet the SEC will likely face when defending the Proposed Rule against a backdrop of the major questions doctrine and the potential implications for how agencies without traditional environmental roles can incorporate climate change into their missions.

Part I of this Note will provide the context for the Proposed Rule, first outlining the SEC’s historic role and how it regulates the investor market and then exploring how the investor market is currently discussing climate change. Part II will provide a high-level overview of the Proposed Rule and detail the SEC’s justification, substantively and legally, for the Proposed Rule’s promulgation. Part III will detail the federal administrative state’s rise and the courts’ traditional approach to agency expertise and action. This Part will also consider how the major questions doctrine’s application in environmentally related cases is altering deference to agencies. Lastly, Part IV will apply the existing major questions doctrine to the Proposed Rule and evaluate the future outlook for the Proposed Rule under existing precedent.

I. SEC and Investor Background

The Proposed Rule does not exist in a vacuum. Rather, the Proposed Rule is a combined result of the evolution of the SEC’s regulatory role and the shifting investor market that is highlighting sustainability more than ever before. Thus, this Part provides the foundational background to the Proposed Rule’s creation.

A. The SEC’s History and Regulatory Authorities

On “Black Thursday,” October 24, 1929, the start of the Great Depression, the Dow Jones Industrial Average (“the Dow Jones”) dropped nearly thirteen percent.^[18] By the summer of 1932, the Dow Jones was closing at eighty-nine percent of its pre-crash highs; the economy did not recover these losses until November 1954.^[19] While only ten percent of Americans were invested in the stock market at the time, the crash destroyed confidence in the economy.^[20] Consumers stopped spending money, banks stopped lending it, and the country entered a severe economic depression.^[21]

On the heels of this crisis, seeking to protect investors and restore their trust in the economy, Congress passed two pieces of legislation to regulate the securities^[22] industry: the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”). Together, the Securities Act and the Exchange Act provide a comprehensive regulatory scheme over companies’ information disclosure. The first law, the Securities Act, referred to as the “truth in securities” law, established a system to “provide full and fair disclosure of the character of securities . . . and to prevent frauds in the sale [of securities].”^[23] Under the Securities Act, every offer and sale of a security must be registered with the SEC or except from the registration process.^[24] The registration process requires that companies provide in-depth details about the company and the securities for sale, ensuring investors have the information necessary to make an informed decision about whether to buy said security.^[25]

The SEC has significant discretion in determining what and how much information companies must provide in their registration documents. Notably, the Securities Act’s regulatory system does not determine whether a security is a wise investment; rather, the Securities Act simply establishes a way for investors to have the information necessary to evaluate the investment for themselves.^[26] This is evidenced by an exchange during the bill’s passage:

Mr. Pettengill: “In other words, if a man wants to invest money to make gold out of sea water, we do not want to stop it.”

Mr. Thompson: “I should think that is true.”

Mr. Pettengill: “As long as he knows what he is putting his money into and wants to take the risk.”

Mr. Thompson: “Yes.”^[27]

Rounding out the Securities Act’s key components is the liability provisions. The Securities Act makes high-ranking employees at a company liable for any misrepresentation or fraud in the information that companies share in their disclosure documents.^[28]

Passed a year after the Securities Act, the Exchange Act established the SEC and tasked the Agency with regulating the securities industry and enforcing both the Securities Act and the Exchange Act.^[29] Significantly, Section 13(a) of the Exchange Act requires companies who registered under the Securities Act to provide ongoing information disclosure.^[30] First, companies must keep current all information provided during registration.^[31] Second, companies must file annual, quarterly, and event-triggered (i.e. the resignation of a board member, errors in audited financial documents, mine closures, and other defined qualifying events^[32]) disclosure forms with the SEC, which in turn makes these forms publicly available.^[33] Section 13(a) grants the SEC broad authority to require the disclosure of virtually any document, report, or type of information.^[34] The information includes standard financial information requirements such as audited financial statements or significant forecasts of company profits.^[35] It can also include a wide range of other information, such as whether the company has ties to Iran^[36] or whether the company’s products contain minerals whose sales fuel conflict in the Democratic Republic of the Congo.^[37] Broadly, the SEC has required disclosures that many see as “for ‘public policy’” reasons, rather than to inform investors.^[38]

As a result of the SEC’s broad authority to issue new disclosure requirements under the Exchange Act, over time the disclosure requirements have expanded, both through congressional mandates and SEC rulemaking. Congressional mandates are straightforward: when Congress directs the SEC to promulgate a new disclosure requirement, the SEC must comply. The Conflict Minerals Rule is such an example. In 2010, Congress passed the Dodd-Frank Act, the previously noted congressional response to the 2008 financial crisis. The Dodd-Frank Act also contained a smaller provision that required the SEC to promulgate regulations mandating that companies disclose their use of “conflict minerals.”^[39] The goal was to provide investors with information on whether the products they purchased fueled conflict, directly or indirectly, in the Democratic Republic of the Congo.^[40] In theory, investors knowing this information would decrease the use of conflict minerals, thereby pressuring armed groups in the Democratic Republic of the Congo to end the conflict and the human rights abuses.^[41] While the rule faced lawsuits under the Administrative Procedure Act and First Amendment, other than a few narrow provisions, the rule largely remained intact because of the explicit congressional authorization.^[42]

The SEC has also promulgated new disclosures sans additional direction from Congress, instead relying on authorizing language in both the Securities and Exchange Acts. Broadly, the Securities Act decrees, “[t]he Commission shall have authority from time to time to make . . . such rules and regulations as may be necessary to carry out the provisions of this subchapter.”^[43] In regards to registration statements, the Securities Act provides that “[a]ny such registration statement shall contain such other information, and be accompanied by such other documents, as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.”^[44] Similarly, three separate Exchange Act sections provide the SEC with authority to issue rules and regulations that are “necessary or appropriate in the public interest or for the protection of investors.”^[45]

Underlying both statutes is the requirement that, “[w]henever . . . the Commission is engaged in rulemaking . . . [it is] required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.”^[46] These provisions, which are duplicated across both acts, provide the SEC with its authorization to promulgate new rules to regulate the securities industry.

From its foundations in the Great Depression, the SEC has expanded its authority, reaching into new areas of regulation and subjecting companies to new requirements. It has responded, either through independent rulemaking or congressionally-directed rulemaking, to new challenges in the securities industry by adapting its regulations accordingly.

B. Current Investing Market

Today, the securities industry is interested in climate change and sustainability. In 2020, investments in sustainable assets grew ninety-six percent compared to 2019 levels.^[47] One year later, BlackRock, one of the world’s largest investment management companies with over $8 trillion in assets under management,^[48] stated it was “explicitly asking that all companies disclose a business plan aligned with . . . the goal of net zero greenhouse gas emissions by 2050 or sooner.”^[49] BlackRock’s actions are not solely grounded in altruistic interest in addressing climate change. While Larry Fink, BlackRock’s current chairman and CEO, in a “Letter to CEOs” noted the “mounting physical toll of climate change in fires, droughts, flooding and hurricanes,” he concluded that “[n]o issue ranks higher than climate change on our clients’ lists of priorities. They ask us about it nearly every day.”^[50] BlackRock is simply meeting investor demand.

Nor is BlackRock the only institution taking note. In recent years, over 3,000 global investors representing over $100 trillion in combined assets have signed commitments to include environmental, social, and governance (“ESG”)^[51] considerations in their investment decisions.^[52] In 2020, ninety-two percent of the S&P 500 companies published a sustainability report of some variety.^[53] Ten years ago, only twenty percent of companies published such reports.^[54] This change, the Governance & Accountability Institute states, demonstrates that “sustainability reporting has clearly become a best practice among the largest U.S. public companies.”^[55]

While sustainability reporting may be the best practice, there are significant gaps in the ESG information corporations provide. As Senator Sherrod Brown, the Chair of the Senate Committee on Banking, Housing, and Urban Affairs, noted “[if] only a subset of companies provides disclosure and they do so in whatever form they want, that doesn’t serve anyone.”^[56] As a result of the minimal regulatory requirements, companies have provided a “hodgepodge” of ESG data that is “incomplete, unreliable, and difficult to compare across firms.”^[57] Among the six most prominent ESG rating providers, a company’s ESG rating can vary greatly.^[58] Even climate change-related information already provided to the SEC can be poor quality. The Government Accountability Office noted that companies’ filings often include boilerplate climate change language that is not company specific.^[59] Or, if a company does include information, the information provided will be unquantified.^[60] For example, one oil and gas company said that greenhouse gas reduction initiatives would “severely and adversely” impact their industry and would significantly reduce the value of their business; however, the company failed to provide any quantitative information backing this assertion.^[61]

There are two pressing concerns about the gaps in sustainability information: information that is not shared in documents filed with the SEC and information shared outside of the SEC reporting structure. The first challenge is the lack of information shared in an SEC filing. If a company includes climate change-related comments, such as net-zero emissions promises, in their SEC-required documents, the Securities and Exchange Acts’ criminal and civil liability provisions against misrepresentations apply. Thus, the concern is what companies are not including in their SEC documents to avoid triggering those liabilities. Right now, a company may be entirely truthful when they write in their SEC documents that “[w]e could incur significant costs to improve the climate-related resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate the effects of climate change.” ^[62] The use of “could” covers all bases. If something climate related happens, investors are considered warned. But unless the company has already incurred significant costs or are actively making decisions and/or changes that materially impact their business operations, the company has limited obligation to go beyond this type of boilerplate language about its climate risks. Further, because statements on climate change impacts are “forward-looking statements” (certain statements that would be unreasonable for an investor to rely on), these statements potentially trigger safe harbor provisions, creating a shield from the Securities and Exchange Acts’ liabilities.^[63]

The second challenge is when companies make claims outside of SEC documents that cannot be verified. When companies make misleading or false statements about their ESG standards to artificially boost their sustainability metrics, they are engaging in “greenwashing.”^[64] The investor interest in sustainability incentivizes strong sustainability metrics. Without the proper regulatory safeguards to ensure accurate and complete information disclosure, there is no way to verify that the metrics match the practices. Instead, lawsuits are the status quo solution to getting the data needed to verify sustainability claims. “Being sued . . . seems to be probably the best mechanism to make sure that [companies] really report honestly.”^[65] Accordingly, companies such as Shell, Coca-Cola, Exxon Mobil, and Nestlé have all faced lawsuits for alleged misstatements about their businesses’ climate operations.^[66]

Amidst this backdrop, the SEC released its nearly 500-page Proposed Rule. Law firms, accounting firms, academic departments, and the SEC itself have provided ample summaries of the Proposed Rule’s nuanced and detailed requirements.^[67] The next Section will provide a brief overview of the Proposed Rule.

II. The Current Investor Market and the SEC’s Authority

A. The Proposed Climate Risk Disclosure Rule

The SEC released the Enhancement and Standardization of Climate-Related Disclosures for investors to fill a gap in wanted-but-not-provided disclosure information. The Proposed Rule would require companies to include specific climate-related disclosures in both their registration documents filed pursuant to the Securities Act and in their reports filed under the Exchange Act.^[68] The Proposed Rule can be broken down into three categories of information: 1) granular disclosures about a company’s climate risks, both physical and transitional, and how the company is conceptualizing climate risk within its management and operations; 2) how the company is governing with climate risk in mind; and 3) a company’s GHG emissions, including their directly created emissions, emissions generated from their energy usage, and emissions from their downstream and upstream supply chains and consumers.

The first information category is the granular details of the company’s perspective of its own climate risk and its incorporation of that risk into its operations. Details must include the climate risks the company has identified and whether/how that risk will manifest in the short, medium, and long term.^[69] The company also must outline what those risks will mean for the company’s strategy, business model, and outlook.^[70] Climate risks include both physical risks, such as a hurricane flooding an oil company’s Louisiana refinery, and transitional risks, such as a municipality in which the company is operating setting net zero emissions requirements.^[71] This also includes past-looking disclosure requirements, such as whether the company experienced a climate-related impact on their financial statements or whether a catastrophic storm temporarily disrupted its supply chains.^[72]

The second category of information disclosure is how the company is incorporating climate risk into its operations. This includes the oversight and governance changes that the company has made in response to climate risk, such as how much time a board spends discussing climate risks or whether anyone on the board has expertise on climate issues.^[73] The Proposed Rule will also require the company to share its internal carbon price system and scenario analysis programs, if it uses them.^[74] Finally, the Proposed Rule requires companies to disclose their transition plans and climate risk management plans.^[75]

The final category of information disclosure is GHG emissions. Under this section, companies must share their direct GHG emissions (“Scope 1”), their indirect emissions from their energy use (“Scope 2”), and their indirect emissions from upstream and downstream activities in their value chain (“Scope 3”).^[76] Scope 3 can include everything from the GHG emissions from a raw material’s extraction to the GHG emitted by consumers visiting one of the company’s stores.^[77]

Feedback on the rule is wide-ranging. For example, BlackRock stated, “[because] we firmly believe that climate risk is investment risk, we also write to express our strong support for the Commission’s goal of implementing a framework for public issuers to provide investors with more comparable and consistent climate-related disclosures.”^[78] In regards to GHG emissions, Ernst & Young, an accounting firm, noted, “[w]e support the SEC’s proposal regarding disclosure of [GHG] emissions and obtaining assurance over those disclosures from an independent third party.”^[79] Greenpeace, an environmental non-profit, wrote, “[c]limate-related risks, as any other risks with tangible impacts on companies and the economy, have identifiable financial impacts. Allowing the continued obfuscation of these risks does not serve the SEC’s mission and puts ordinary investors at increased risk.”^[80]

However, not all feedback was positive. McCormick & Company, known for their spices, stated in their comment letter that the Proposed Rule “would require registrants to produce overwhelming amounts of information that we do not believe would be comparable, reliable, meaningful, or material for investors.”^[81] Mountain States Legal Foundation noted, “[a]nother central focus of Mountain States’ is defense of the First Amendment right to freedom of speech. On this front, too, the proposed rule is unlawful.”^[82] The Texas Pipeline Association stated that “[t]here is no indication that Congress delegated to the SEC the power to act as a quasi-environmental agency.” ^[83] In a letter to the SEC, nineteen U.S. Senators wrote,

[t]he proposed rule is not within the SEC’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It is unclear from where the SEC has derived this drastic change in authority. The SEC is not tasked with environmental regulation, nor has Congress amended the SEC’s regulatory authority to pursue the proposed climate disclosures.^[84]

These attacks reflect the challenges the SEC should expect as it defends the Proposed Rule’s legitimacy. While they might arise later, the granular details about the climate risk management plans or the need to share how many board minutes are spent on climate change discussion are not the heart of the Proposed Rule’s critiques. Rather, it is the big picture consideration of whether this is an area of regulation the SEC can even address through rulemaking. Consequentially, the SEC’s claimed authority to issue the Proposed Rule will be an essential part of the Proposed Rule’s path.

B. SEC Claimed Authority to Promulgate the Proposed Rule

In issuing the Proposed Rule, the SEC preemptively addressed some of the attacks on its authority, outlining its claim to issue a rule requiring climate-related information disclosure. In the press release announcing the Proposed Rule the statement from SEC Chair Gary Gensler provides a telling summary of how the SEC sees the Proposed Rule as part of their regulatory delegation:

Our core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure and are truthful in those disclosures. Today, investors representing literally tens of trillions of dollars support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions. Today’s proposal would help issuers more efficiently and effectively disclose these risks and meet investor demand, as many issuers already seek to do.^[85]

Chair Gensler’s statement mirrors the justifications the Proposed Rule lays out. The Proposed Rule starts by noting that the SEC has broad authority to promulgate disclosure requirements that are “necessary or appropriate in the public interest . . . [or for] the protection of investors” and the newly proposed disclosure requirements “will promote efficiency, competition, and capital formation.”^[86] In short, this is a standard SEC rulemaking.

The Proposed Rule explains how the proposed climate disclosure furthers the SEC’s mission to protect investors and promote efficiency, competition, and capital formation. First, the SEC notes that investors are already asking for this information and many companies are already providing variations of this information, but there are no obligations about the quality and content of the information.^[87] This, the SEC says, raises concerns investors are not receiving consistent, comparable, and reliable climate-related information, which in turn is increasing investors’ costs and lowering the quality of their decisions.^[88] For example, if climate-related information about companies cannot be reasonably and reliably compared, the SEC argues this information has capital allocation implications or can alter how an investor views voting decisions.^[89]

Beyond the immediate investor impact, the SEC also outlines specific ways that climate risks have direct financial implications for companies. This includes natural disasters that can “damage assets, disrupt operations, and increase costs.”^[90] The Proposed Rule also includes concerns about climate change impacting regulations, consumer preferences, and other market forces.^[91] The SEC concludes its authorization analysis by noting its existing guidance on climate-related disclosures, saying the Proposed Rule is consistent with the SEC’s previous actions.^[92] Taken together, the SEC states, “because climate-related risks have present financial consequences that investors in public companies consider in making investment and voting decisions . . . it is squarely within the Commission’s authority to require such disclosure in the public interest and for the protection of investors.”^[93]

The Proposed Rule has drawn substantial commentary from many sectors of the American economy. In issuing this Proposed Rule, the SEC has drawn on its Great Depression era foundations to ensure the securities industry is regulated in a manner that protects investors and builds trust in the investment market. Yet, as the SEC moves forward in defending the Proposed Rule, the question remains whether its claimed authority is sufficient to survive shifts in the legal doctrine on deference to agencies’ claimed authority.

III. The Rise and Potential Decline of Agency Deference

In 1789, Congress created the first federal administrative agency.^[94] Today, while there is debate over how many federal agencies exist, the number may be as high as 450.^[95] The specific number aside, the point is clear: the American administrative state has grown significantly since 1789. This expansion of administrative presence has spurred legal questions about the proper balance of agencies’ power—namely about when and why an agency’s interpretation of their authority should be given deference or when doing so violates the separation of powers the Founders envisioned. While traditionally courts have granted agencies wide deference, in the more recent terms, the Court articulated a legal doctrine, the major questions doctrine, indicating a major curtailment of agency deference may be on the horizon. Significantly for this Note, the precedent leading up to this articulation of the major questions doctrine includes a notable number of cases dealing with environmental regulatory authority, creating a useful framework through which to consider the Proposed Rule.

A. Rise of Agency Deference

As part of the “New Deal” vision response to the Great Depression, Congress created the SEC and forty-one other agencies.^[96] This explosion of the administrative state and implementation of ambitious social welfare programs coincided with a view that agencies had specialized, technical knowledge beyond the judiciary’s expertise.^[97] This perception of agencies created a showdown for how judges would approach agency actions when these actions were challenged in court and whether the courts would defer to agencies. One legal mind at the time presented this new consideration as a “titanic battle” between agencies and courts.^[98]

As the 1940s approached, a shift toward favoring agencies’ expertise occurred.^[99] Much of this shift stemmed from the increasing influence of President Franklin Delano Roosevelt’s appointees on the federal judiciary, who often espoused more favorable views of the agency technocracy.^[100] For example, in 1936, the Court declared the Federal Trade Commission was “the expert body to determine what remedy is necessary.”^[101] In another case, Justice Frankfurter, a Roosevelt appointee, wrote that the case’s controversy was a “fresh reminder that courts must not substitute their notions of expediency and fairness for those which have guided the agencies to whom the formulation and execution of policy have been entrusted.”^[102]

The deference to agencies crystalized decades later in the most classic of agency deference cases: Chevron, U.S.A. v. Natural Resources Defense Council, Inc.^[103] In 1981, the EPA adopted a regulation that interpreted “stationary source” under the Clean Air Act to apply on a plantwide level, which would allow existing power plants to modify their plants without meeting permit conditions, provided that the alteration did not increase a plant’s total emissions.^[104] The Natural Resources Defense Council challenged this interpretation as unreasonable.^[105]

In upholding the EPA’s interpretation, the Court established what has lived on as the Chevron test: (1) whether Congress has spoken directly to the question at issue; and if not, (2) whether the agency’s interpretation is reasonable.^[106] The Court rationalized, “[i]f Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation.”^[107] This test provides a framework for courts as they contemplate whether an agency’s action is a legitimate exercise of their delegated authority. The Chevron test has guided decisions on a myriad of society’s big questions, ranging from taxes, labor law, environmental protection, immigration, drugs, and highway safety.^[108]

B. The Potential Decline: the Major Questions Doctrine

Chevron’s ubiquity does not make the doctrine untouchable. Instead, recent Supreme Court cases have indicated the potential creation of an off-ramp to avoid invoking Chevron deference: the major questions doctrine. While previously implied, the Court explicitly articulated the major questions doctrine for the first time in West Virginia v. EPA.^[109] The major questions doctrine is grounded in the idea that Chevron should not be invoked when the issue at hand is of such major significance that Congress could not have implicitly intended for an agency to gap-fill.^[110] Rather, agencies need a clear, explicit directive from Congress to legitimately address the issue.^[111]

While there is debate over whether a truly distinct major questions doctrine exists,^[112] as opposed to simply being a form of statutory interpretation, the major questions doctrine as cited in West Virginia v. EPA dates back to the early 1990s.^[113] While some of these cases involve agencies such as the Department of Justice^[114] and the Internal Revenue Service,^[115] a significant number of cases involve the EPA, most recently with West Virginia v. EPA. Comparing the two earliest cases in the evolution of the major questions doctrine, MCI Telecommunications Corp v. AT&T Co.^[116] and FDA v. Brown & Williamson Tobacco Corp.,^[117] with the line of major question EPA cases, provides an understanding about what the doctrine might mean for environmental cases moving forward.

1. Foundational Cases

The modern early foundations of the major questions doctrine was first articulated in MCI Telecommunications and FDA v. Brown & Williamson. While these cases are often grouped in the same line of precedent, each takes a nuanced approach to agency deference. MCI Telecommunications informs situations when a regulatory scheme that otherwise would be within the agency’s expertise is beyond a permissible realm of Chevron deference. FDA v. Brown & Williamson elucidates what issues cannot be addressed through implicit language.

In MCI Telecommunications, the Court overturned the Federal Communications Commission’s (“FCC”) efforts to improve competition in the telecommunications industry through Section 203 of the Communications Act of 1934, which allows the FCC discretion to “modify any requirement.”^[118] The Court stated the proposed system “may well be a better regime, but concluded the system was impressible because it was “effectively . . . a whole new regime of regulation,” separate from what Congress had prescribed in legislation.^[119] The majority and dissent’s approach to Chevron reflect a schism about whether an agency using its expertise and creating a better regulatory system can overextend its authority. The majority declined to invoke Chevron because “an agency’s interpretation of a statute is not entitled to deference when it goes beyond the meaning that the statute can bear.”^[120] In the dissent, Justice Stevens disagreed, stating that Chevron should have been applied and the FCC’s conclusions accepted because the “scheme is technical and complex” and was “in service of the goals Congress set forth in the Communications Act.”^[121] MCI Telecommunications reflects the true start of the modern consideration of whether an agency can impermissibly wield its expertise.

Four years later, FDA v. Brown & Williamson provided clarity on which regulatory issues are entirely beyond an agency’s discretion absent explicit authorization.^[122] In evaluating whether the Food and Drug Administration (“FDA”) had the statutory authority to regulate tobacco, the FDA’s expertise was essentially irrelevant.^[123] Rather, the Court concluded the FDA’s regulatory structure would require the FDA to ban tobacco.^[124] Given tobacco’s history in the United States and lengthy regulatory history, any regulation that required its banning was impermissible because it involved a major issue whose regulation could not be grounded in an implicit delegation.^[125] In deference to legislative drafting, the Court stated that “Congress is more likely to have focused upon, and answered, major questions” when creating a statute and that absence of an authorization is not an implicit yes.^[126] While there was discussion of Congress’s and FDA’s previous statements on tobacco, ultimately the case was decided on the premise that some issues are of “such economic and political significance” that no matter how “important, conspicuous, and controversial” the issue, Chevron is not the appropriate framework because questioning whether there is ambiguity in the statute misses the fundamental point that sometimes Congress must expressly delegate authority.^[127]

2. Environmental Cases

In the years following MCI Telecommunications and FDA v. Brown & Williamson, the Court has applied the rationale of each, clarifying what the nascent major questions doctrine meant. Often, these cases involved the EPA.

In Whitman v. American Trucking Ass’ns, the Court evaluated whether the EPA could consider costs when promulgating regulations for National Ambient Air Quality Standards (“NAAQS”) under the Clean Air Act.^[128] The Court extended the MCI Telecommunications reasoning and concluded that the EPA could not consider costs.^[129] Specifically, the majority noted that Congress “does not . . . hide elephants in mouseholes,” and that massively overhauling a regulatory regime cannot be implied through “modest words” from Congress.^[130] Similarly, while “Congress need not provide any direction to the EPA regarding” minute details, “it must provide substantial guidance on setting air standards that affect the entire national economy.”^[131] While this language appears in the opinion’s discussion of nondelegation, it reiterates the MCI Telecommunications conclusion that agencies can overreach even when they are regulating within their expertise.^[132] It also indicates that an overambitious regulatory scheme is not entitled to Chevron deference.

Massachusetts v. EPA continued the development of the major questions doctrine.^[133] In 1999, a coalition of private organizations petitioned the EPA to regulate carbon dioxide emissions from cars.^[134] The EPA denied the rulemaking petition, stating that the Clean Air Act did not authorize the EPA to issue GHG regulations.^[135] The Court disagreed with the EPA, stating it was well within the EPA’s statutory authorization to regulate carbon dioxide from cars.^[136] In doing so, the Court distinguished the facts from FDA v. Brown & Williamson. The Court said the EPA regulating in this space was not an extreme measure akin to banning tobacco because “EPA would only regulate emissions,” as opposed to banning emissions entirely.^[137] Further, the Court could not find congressional action that conflicted with the regulation of GHGs from cars.^[138] Finally, the Court rejected the EPA’s argument that their regulations would impact the Department of Transportation’s mileage standards.^[139] In reaching the opposite outcome as Whitman, Massachusetts v. EPA provides counter analysis to when the major questions doctrine can be discussed and rejected in the environmental sphere.^[140]

However, seven years later, in Utility Air Regulatory Group v. EPA, the Court added limits to when the EPA’s regulation of GHGs would cross the MCI Telecommunications threshold.^[141] The Court considered the permissibility of the EPA’s interpretation that the Clear Air Act’s Prevention of Significant Deterioration (“PSD”) program included GHG emissions.^[142] This case is particularly insightful because it invoked the major questions doctrine twice. In the first invocation, the Court said that the EPA’s broad application of PSD to any major source of greenhouse gas emissions was unreasonable and therefore impermissible “because it would bring about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization.”^[143] Citing to FDA v. Brown & Williamson, the Court noted that “[w]hen an agency claims to discover in a long-extant statute an unheralded power to regulate “a significant portion of the American economy . . . we typically greet its announcement with a measure of skepticism.”^[144] Because the EPA’s interpretation would “require permits for the construction and modification of tens of thousands, and the operation of millions, of small sources nationwide,” the Court was deeply skeptical, finding its action to be that of an “agency laying claim to extravagant statutory power over the national economy.”^[145]

The second application of the major questions doctrine in this case is more nuanced, but arguably more interesting for the Proposed Rule. In discussing whether the EPA can require sources already subject to PSD regulation to use the best available conventional technology to control GHGs, the Court said the EPA could.^[146] The Court’s reasoning runs parallel to its discussion about the broader PSD applicability, but reaches a very different conclusion:

[e]ven if the text were not clear, applying BACT to greenhouse gases is not so disastrously unworkable, and need not result in such a dramatic expansion of agency authority, as to convince us that EPA’s interpretation is unreasonable. We are not talking about extending EPA jurisdiction over millions of previously unregulated entities, but about moderately increasing the demands EPA (or a state permitting authority) can make of entities already subject to its regulation.^[147]

This shows the wide application of PSD needed congressional authorization not because it regulated GHGs, but because it was incompatible with explicit congressional statutes and because it brought new entities under significant, burdensome regulation.

Most recently, in West Virginia v. EPA, the Court indicated that regulating GHG emissions can fall outside the EPA’s permissible authority.^[148] Specifically, the Court considered whether the EPA had the authority to promulgate a rule under Clean Air Act that said the best system of emissions reduction (“BSER”) for existing power plants was to incorporate “generation shifting,” which required power plants to shift their energy production from high-emitting sources, like coal, to lower-emitting sources, like natural gas.^[149] The Court declared that “this is a major questions case” and ultimately determined that the EPA had exceeded its regulatory authority.^[150] The Court applied a similar logic as in MCI Telecommunication. The Court noted that “Congress intended a technology-based approach” but the EPA’s approach was nothing more than a “policy judgment” through a “fundamental revision of the statute.”^[151] The Court found little reason to think Congress had implicitly delegated authority to the EPA to decide where the nation gets its energy from.^[152]

Together, the major questions doctrine cases following MCI Telecommunications and FDA v. Brown & Williamson define the outer limits of EPA’s authority to regulate given the major questions doctrine. While the Court has recognized the EPA’s authority to regulate GHGs in certain situations, the Court has repeatedly expressed skepticism that the EPA’s expertise in this space should be considered, valued, and deferred to. With these cases serving as the foundation, as other agencies increasingly step into the climate arena they will face complicated questions as they attempt to justify their expertise in this space.

IV. The Major Questions Doctrine’s Implications for the Proposed Rule

The Proposed Rule could test how the major questions doctrine will guide the judicial deference to agencies’ climate change decisions. One could argue the SEC promulgated the Proposed Rule as a straightforward disclosure requirement, well within the SEC’s authority and thus requiring no further congressional authorization. Yet, as the major questions doctrine has evolved, the cases outlining its application reveal a court interested in avoiding agency deference, especially when it comes to agency efforts involving GHGs. Under a major questions analysis, the unknown is whether the Proposed Rule is a situation where the regulation is simply too large to pass scrutiny or whether climate risk and GHG emissions disclosures are a topic entirely beyond the SEC’s authority to address. While there are legitimate arguments that the Proposed Rule can survive (likely with some provisions removed), if the courts ultimately decide the SEC’s rule is more akin to the facts in FDA v. Brown & Williamson, there will be significant implications for how non-EPA agencies can incorporate climate change into their operations or even regulate novel issues, both of which would have implications for the broader administrative state.

A. The SEC’s Expertise on the Proposed Rule

The major questions doctrine’s potential application to the Proposed Rule will come down to whether the courts’ approach treats the Proposed Rule as an environmental regulation or a financial disclosure regulation. This scenario is a rehashed story of agencies in the New Deal era and the agency deference Chevron envisioned. The SEC has been tasked with the authority to regulate novel challenges that Congress may not have the expertise to address. Global investment markets are a complex and convoluted topic, and climate change is their novel challenge. Novel challenges are why the Securities Act and the Exchange Act gave the SEC broad authority to issue regulations that are “necessary or appropriate in the public interest or for the protection of investors.”^[153]

Ultimately, the SEC is an information agency. Securities’ regulation is not about forcing a company to undertake any specific underlying action. If a company wants to market itself as turning sea water into gold, it can do so. But, the company must disclose what it is doing. This is the SEC’s expertise: evaluating investor markets and determining where disclosure is necessary or appropriate to protect investors.

Here, the SEC has arguably identified a gap in existing regulation. The amount of capital flowing through sustainable investments, large investment management companies establishing ambitious climate goals, and the significant investor interest certainly places a climate disclosure requirement in the reasonable realm of “appropriate.”^[154] The lack of regulation, the SEC claims, is lowering the quality and content of information companies provide, harming investors, and raising the cost of voting decisions.^[155]

From this perspective, this is not a radical rule. The most parallel case is Massachusetts v. EPA because the SEC is merely regulating, not banning any action. As the Proposed Rule does not ban an important part of the economy, it is distinguishable from FDA v. Brown & Williams. At no point in the Proposed Rule does the SEC claim expertise in climate regulation. Nor does the Proposed Rule propose to solve climate change or its impacts. Here, the SEC is not regulating GHGs; it is merely requiring that GHG emissions be disclosed. Companies will be free to emit GHGs at any levels they prefer. The only caveat is that investors might prefer to invest in companies that emit less.

B. Regulation: Too Big?

FDA v. Brown & Williamson appears frequently in the line of EPA cases, but the Court’s rationale often more closely follows that of MCI Telecommunications in situations where an agency went too big in regulating something normally within its realm at a smaller scale. The EPA could administer the Clean Air Act’s NAAQS, the PSD program, air pollutants, or BSER standards. The problem was how the EPA chose to do so. Massachusetts v. EPA is arguably the outlier here in saying that EPA needed to go farther in flexing their regulatory muscles, but this case addresses the parameters in which an agency can exercise its expertise. Even West Virginia v. EPA recognized that EPA had the statutory authority and the expertise to determine the BSER. The Court just disagreed that “system” included the EPA’s plan.

The parameters these cases establish reasonably present a path forward for the Proposed Rule to survive a legal challenge. As previously mentioned, the Securities Act and the Exchange Act grant the SEC broad authority to issue regulations that are “necessary or appropriate in the public interest or for the protection of investors.”^[156] This is elephantine authorization language.^[157] The use of “appropriate” establishes a wide latitude for the SEC’s authority, harkening to its expertise to determine what information is important in protecting investors. The ubiquity of this language in SEC authority undermines the argument that SEC is using a “long-extant statute” to grant itself an “unheralded power.”^[158] The SEC articulates that the Proposed Rule is “appropriate . . . for the protection of investors” and is therefore squarely within its authority.^[159] The latitude of this language creates a very different path forward for the SEC compared to the EPA. The EPA’s most significantly challenged rules have come from smaller sections within massive pieces of legislation, like the Clean Air Act. Here, the SEC is relying on arguably its most fundamental delegations of power.

Similarly, Utility Air Regulatory Group v. EPA’s second application of the major questions doctrine indicates another way for the Proposed Rule to be a permissible use of the SEC’s power. In the first application, the Court said that EPA’s rule would bring too many previously unregulated entities under EPA jurisdiction and thus the rule could not stand. In the second application, however, the Court upheld EPA’s application of PSD greenhouse gas standards to entities already subject to the EPA’s PSD regulation. This was permissible because it was “not so disastrously unworkable” and would not extend “EPA jurisdiction over millions of previously unregulated entities.”^[160] The Proposed Rule is more closely akin to the second application. The only companies who will have to comply with the climate disclosure regulations will be the companies that already file SEC disclosures and, as such, must already meet broad reporting requirements. This application arguably “moderately increase[s] the demands” the SEC “can make of entities already subject to its regulation.”^[161]

The nuance of this argument, however, will likely require the SEC to sacrifice portions of the Proposed Rule to avoid invoking a major questions analysis. The Scope 3 emissions, companies’ indirect emissions from upstream and downstream activities in their value chain, might face the most scrutiny under this line of reasoning. For example, farmers may be implicated in this Proposed Rule, despite often not being subject to SEC regulation in the status quo. In a comment letter, U.S. Senator Jon Tester, a senator from Montana and a farmer himself, expressed concerns that the Scope 3 disclosures would create reporting requirements for farmers.^[162] Because Scope 3 disclosures include the entirety of a company’s supply chain, companies required to report their Scope 3 emissions might require their farmer suppliers to also supply their farms’ emissions. This sentiment is echoed in comment letters from other agriculture entities.^[163] While the Proposed Rule does not target producers without existing disclosure requirements with the SEC, an incidental expansion of who the Proposed Rule implicates would result in the SEC regulating “a significant portion of the American economy,” and potentially trigger judicial skepticism.^[164]

Similarly, assuming the SEC can tailor the Proposed Rule to ensure minimal or nonexistent spillover to nonregulated entities, the Proposed Rule avoids the pitfalls of West Virginia v. EPA. In West Virginia v. EPA, the EPA went too far in its development of BSER standards under the Clean Air Act. Here, the SEC is not shifting resources from one sector of the economy to another. Rather, the SEC is providing investors the information to shift their resources if they desire. In fact, the SEC’s existence is predicated on the assumption that more information is better. Thus, even the most significant curtailment of EPA’s authority might not be a death knell for the Proposed Rule.

If the courts interpret the Proposed Rule as an ordinarily-promulgated rule, the EPA line of cases paves a route for the Proposed Rule’s survival. In contrast with the EPA, the SEC has elephant-sized regulatory authority. By imposing additional disclosure requirements on companies already facing regulation, the SEC is not rewriting its authority or expanding its jurisdiction. Thus, if the court is inclined to view the Proposed Rule as within the SEC’s realm of expertise, the SEC may survive a major questions analysis.

C. Regulation: Too Impermissible?

While the EPA cases give the Proposed Rule potential paths to survive, the other track of the major questions doctrine following FDA v. Brown & Williamson will be a significantly harder standard for the SEC to overcome, with far wider implications. On this track, the court would confront whether requiring companies to make climate-related disclosures is a question of economic and political significance entirely beyond the agency’s capacity to regulate. Unlike the first track, where the question was whether the EPA went too far in its regulatory sphere, the question here would be whether the SEC entirely lacks the authority to address the issue in any capacity. An invocation of FDA v. Brown & Williams could establish a precedent that, unless the EPA is acting (even then, maybe not), climate change, a core environmental issue, is inherently too major a political and economic question for other agencies to address through their respective regulatory lenses.

First, it is possible to distinguish the Proposed Rule from the FDA’s attempts to regulate tobacco. In FDA v. Brown & Williamson, the major political and economic significance was that the FDA would have to ban tobacco to avoid upsetting its existing regulatory regime.^[165] The Court determined that tobacco was a “significant portion of the American economy” and that “owing to its unique place in American history and society, tobacco has its own unique political history.”^[166] Further, Congress had created an alternative regulatory scheme for tobacco that explicitly precluded the FDA.^[167] Thus, the Court was hesitant to allow the FDA to claim the authority to regulate and potentially ban tobacco without a clear congressional authorization.^[168] Similarly, in West Virginia v. EPA, the regulation’s impact was an overhaul of the nation’s electricity sourcing.^[169] Both the regulations in FDA v. Brown & Williamson and West Virginia v. EPA would have reshaped how entire markets in the economy operate.

In contrast, the Proposed Rule’s impacts will be far less reaching. No company or economic sector is facing a complete ban. Even in a worst-case scenario, the Proposed Rule would only entail higher costs, greater legal liability, and increased reporting obligations.^[170] These impacts are more a regulatory overstep, at worst, not an implicit seizing of legislative authority that would undermine an entire sector of the economy. Further, Congress has not created an alternative regulatory scheme for securities information disclosures. Without a conflicting scheme, it will be harder to argue that the agency is attempting to undermine Congress’s work. Nor does the Proposed Rule in some way invalidate other mandated disclosures.

Of course, the danger of courts invoking FDA v. Brown & Williams is that it could result in courts determining that non-EPA agencies incorporating climate change into regulations is inherently an agency addressing a question of economic or political significance. Here, the SEC would be precluded from requiring climate-related disclosures because the mere discussion of climate is too critical an issue to be settled through implicitly delegated authority. If the courts determine this Proposed Rule is not a standard disclosure requirement but is in fact “environmental regulation” as the U.S. senators wrote, it will indicate that no agency can address climate-related implications within their otherwise clear regulatory lane. Instead, much like the FDA regulating tobacco, the SEC would lack all authorization to act on climate change sans an explicit congressional authorization.

Accordingly, this will set the stage for climate change to inherently be too major of a question for any non-EPA agency to incorporate into regulation without explicit authorization. As a result, any agency that seeks to insulate its mission and operations against climate change will have to seek Congress’s blessing though explicit authorizing language. This would be a sharp contrast to the vision of the New Deal Era where agencies assumed broad delegations of authority from a largely non-expert body, Congress, and used their expertise to implement and execute the laws. In requiring clear congressional authorization for every climate-related action, non-expert elected officials will serve as the arbiters of how agencies can adapt and adjust their operations to climate change impacts. With 139 elected officials in the 117th Congress who deny climate change, including the majority of members of one of the major parties, the outlook is not promising down this path.^[171] The ossification of agency action on climate change could significantly impair their operations.

Justice Gorsuch’s concurrence in West Virginia v. EPA in particular raises another nuanced concern about agencies attempting to incorporate climate change into their rulemaking. Gorsuch indicates that the major questions doctrine would apply when it is a matter of political significance or when the agency’s actions “end an earnest and profound debate across the country.”^[172] If this interpretation is expanded, any potentially politically contentious issue will fall out of reach from agencies’ regulatory realm. Even if a president is elected on a promise that their agency will undertake X and Y administrative actions and an opposing entity can demonstrate significant controversy in the court of public opinion, the agency will be denied the opportunity to effectively act without explicit authorization because it will simply be too significant of an issue. Thus, while the major questions doctrine has implications beyond the ones immediately addressed here, as applied to the Proposed Rule, further judicial action on the doctrine has the potential to massively impact the administrative state.

Conclusion

The SEC’s origins are that of a nation in crisis. With the economy collapsing, Congress created agencies to help provide relief to the American people and prevent a similar economic crash from occurring. The resulting rise of the administrative state coincided with the vision that agencies have specialized, technical expertise that equips them to best solve the nation’s problems. The SEC’s role in this vision was to ensure that investors had the information necessary to make informed investing and voting decisions to prevent fraud and instability in financial markets.

Now, the country is facing a new crisis. Climate change is impacting every aspect of society and the economy, including where investors are putting their money. With increasing interest in sustainable funds and investment firms requiring companies to meet certain sustainability benchmarks, the SEC saw a regulatory gap in the information that companies were providing to investors. Drawing on its expertise as an information agency, the SEC is mandating that companies disclose certain information about their climate-related risks and their greenhouse gas emissions.

The big (some might say major) question for this Proposed Rule will be whether, and if so, how, the courts conclude that the SEC has the authority to act. It is possible the SEC could keep the Proposed Rule intact. It is also possible courts would only marginally curtail certain nuanced details, leaving the rest of the Proposed Rule to be finalized. Or the Proposed Rule could skate below the threshold of major economic or political impact, earning the SEC Chevron deference, paving the way for the Proposed Rule’s implementation. Of course, another potential outcome is that the courts use the Proposed Rule as a foundation to strike down key elements of the administrative state, particularly as it relates to agencies acting on climate change. This potential implication of the Proposed Rule is a far cry from the world in which the SEC arose, where New Deal legislation sought to invoke and utilize deep agency expertise to guide the nation. Today, the SEC will find itself defending that expertise in court. But, all indications show litigation is not more than the SEC bargained for, yet, and that the agency is prepared to go down swinging to maintain the agency’s ability to protect investors.^[173]

1. Fall Out Boy, Sugar, We’re Goin Down (Island Def Jam Music Group 2005). ↑
2. *J.D. Candidate, 2024, University of Colorado Law School. I would like to thank this Volume’s Formatting Editor for their attention to detail and dedication. I would also like to express my gratitude to David Hamm for sparking my interest in securities regulation and for suggesting this topic. ↑
3. West Virginia v. EPA, 142 S. Ct. 2587, 2626–27 (2022) (Kagan, J. dissenting) (citing Am. Elec. Power Co., Inc. v. Connecticut, 564 U.S. 410, 417 (2011)). ↑
4. See Bureau of Reclamation, Water Reliability in the West – 2021 SECURE Water Act Report (Jan. 2021), https://www.usbr.gov/climate/secure/docs/2021secure/ 2021SECUREReport.pdf. ↑
5. See Diana Olick, FEMA overhauls the National Flood Insurance Program for climate change, CNBC (Aug. 18, 2021), https://www.cnbc.com/2021/08/17/fema-overhauls-national-flood-insurance-program-for-climate-change.html. ↑
6. See Quil Lawrence, The U.S. military takes measures to protect bases from flooding, NPR (Nov. 25, 2022), https://www.npr.org/2022/11/25/1139231006/the-u-s-military-takes -measures-to-protect-bases-from-flooding. ↑
7. See Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct. 2485 (2021). ↑
8. See Nat’l Fed’n of Indep. Bus. v. Dep’t of Labor, Occupational Safety & Health Admin., 595 U.S. 109 (2022). ↑
9. Mission, U.S. Sec. and Exch. Comm’n, https://www.sec.gov/about/mission (last modified Dec. 29, 2023). ↑
10. On March 6, 2024, the SEC finalized the Climate Disclosure Rule (“Final Rule”). The Final Rule, while limited in scope compared to the Proposed Rule, still requires certain companies to report certain greenhouse gas emissions and material climate impact information in their registration statements and annual reports filed with the SEC. Notably, the Final Rule dropped Scope 3 greenhouse gas emissions reporting requirements, as will be discussed later in this Note. For summaries of the finalized rule, see Fact Sheet: The Enhancement and Standardization of Climate-Related Disclosures: Final Rules, U.S. Sec. and Exch. Comm’n, https://www.sec.gov/files/33-11275-fact-sheet.pdf (last visited March 19, 2024); Feldis et al., The SEC’s Climate Disclosure Rule Has Arrived: Scope 3 Is Out—But What Is In?, PerkinsCoie (March 18, 2019), https://www.perkinscoie.com/ en/news-insights/the-secs-climate-disclosure-rule-has-arrived-scope-3-is-outbut-what-is-in.html). The Final Rule is available here: The Enhancement and Standardization of Climate-Related Disclosures for Investors, 89 Fed. Reg. 21668 (March 6, 2024) (to be codified at 17 C.F.R. pts. 210, 229, 230, 232, 239, and 249). Due to the publication timeline, this Note does not incorporate the Final Rule and instead is focused on the proposed rule. ↑
11. Press Release, U.S. Sec. and Exch. Comm’n, SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors (March 21, 2022), https://www.sec. gov/news/press-release/2022-46. ↑
12. Id. ↑
13. Lee Reiners and Morgan Smith, Summary of Comment Letters for the SEC’s Proposed Climate Risk Disclosure Rule, Duke Dep’t of Econ. (Aug. 2022), https://econ. duke.edu/dfe/climate-risk/2022/08/summary-comment-letters-secs-proposed-climate-risk-disclosure-rule. ↑
14. Id. ↑
15. Senator Toomey retired at the end of the 117th Congress. See TOOMEY, Patrick Joseph, Biographical Directory of the U.S. Cong., https://bioguide.congress.gov/ search/bio/T000461 (last visited Feb. 17, 2024). ↑
16. Oversight of the U.S. Securities and Exchange Commission Before the S. Comm. on Banking, Hous., and Urb. Affs., 117th Cong. 42 (2022) (statement of Sen. Pat Toomey, Ranking Member, S. Comm. on Banking, Hous., and Urb. Affs.). ↑
17. Thomas B. Griffith and Haley N. Proctor, Deference, Delegation, and Divination: Justice Breyer and the Future of the Major Questions Doctrine, 132 Yale L.J. Forum 693, 697–98 (2022). ↑
18. Gary Richardson et al., Stock Market Crash of 1929, Fed. Rsrv. Hist. (Nov. 22, 2013), https://www.federalreservehistory.org/essays/stock-market-crash-of-1929. ↑
19. Id. ↑
20. Cameron Addis, Stock Market Crash & Great Depression, History Hub, https://sites.austincc.edu/caddis/stock-market-crash-great-depression/. ↑
21. Id. ↑
22. “The term ‘security’ means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a ‘security,’ or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.” Securities Act of 1933, 15 U.S.C. § 77b(a)(1) (2024). ↑
23. Laws that Govern the Securities Industry, Investor.gov, https://www.investor. gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry; Securities Act of 1933, official title, https://www.govinfo.gov/content/pkg/COMPS-1884/ pdf/COMPS-1884.pdf. ↑
24. David Michael Love & John Gillies, What Constitutes a Security and Requirements Relating to the Offer and Sales of Securities and Exemptions From Registration Associated Therewith, Am. Bar Ass’n (April 27, 2017), https://www.americanbar.org/groups/business_law/resources/business-law-today/2017-april/what-constitutes-a-security-and-requirements-relating-to-the-off//. ↑
25. Laws that Govern the Securities Industry, Investor.gov, https://www.investor. gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry. ↑
26. The Securities Act of 1933, 33 Colum. L. Rev. 1220–48 n.43 (1933) (citing Message of the President to the H. Comm. on Interstate and Foreign Com., Hearing on H.R. 4314, 73rd Cong). ↑
27. Id. ↑
28. 15 U.S.C. § 77l(a)(2) (2024). ↑
29. Laws that Govern the Securities Industry, Investor.gov, https://www.investor. gov/introduction-investing/investing-basics/role-sec/laws-govern-securities-industry. ↑
30. 15 U.S.C. § 78m. ↑
31. Gary M. Brown, Securities Law and Practice Deskbook 9–8 (6th ed. 2012). ↑
32. Form 8-K, https://www.sec.gov/files/form8-k.pdf. ↑
33. Gary M. Brown, Securities Law and Practice Deskbook 9–8 (6th ed. 2012). ↑
34. Id. ↑
35. See 17 C.F.R § 210 (2024). ↑
36. 15 U.S.C. § 78m(r)(1). ↑
37. 15 U.S.C. § 78m(p)(1)(A). ↑
38. Gary M. Brown, Securities Law and Practice Deskbook 9–8 (6th ed. 2012). ↑
39. U.S. Gov’t Accountability Off., GAO-2531, Conflict Minerals: 2020 Company SEC Filings on Mineral Sources Were Similar to Those from Prior Years 1 (2021), https://www.gao.gov/assets/gao-21-531.pdf. ↑
40. Id. ↑
41. Id. ↑
42. See Nat’l Ass’n of Mfrs. v. S.E.C., 800 F.3d 518 (D.C. Cir. 2015). ↑
43. 15 U.S.C. § 77s(a) (2024). ↑
44. 15 U.S.C. § 77g(a)(1). ↑
45. 15 U.S.C. §§ 78l, 78m, 78o (2023). ↑
46. 15 U.S.C. § 77b(b); 15 U.S.C. § 78c(f). ↑
47. Larry Fink, Larry Fink’s 2021 letter to CEOs, BlackRock (2021), https://www. blackrock.com/us/individual/2021-larry-fink-ceo-letter. ↑
48. Financial highlights, BlackRock, https://www.blackrock.com/corporate/investor-relations/2020-annual-report/financial-highlights (last visited Mar. 16, 2024). ↑
49. Net zero: a fiduciary approach, BlackRock, https://www.blackrock.com/us/individual/2021-blackrock-client-letter (last visited Feb. 17, 2024). ↑
50. Larry Fink, Larry Fink’s 2021 letter to CEOs, BlackRock (2021), https://www. blackrock.com/us/individual/2021-larry-fink-ceo-letter. ↑
51. ESG investing looks at how a public company operates in relation to the environment and the communities where they work. This can include looking at board membership, carbon footprint plans, or general social advocacy. E. Napoletano and Benjamin Curry, Environmental, Social And Governance: What Is ESG Investing?, Forbes (Feb. 24, 2022), https://www.forbes.com/advisor/investing/esg-investing. ↑
52. Florian Berg et al., Aggregate Confusion: The Divergence of ESG Ratings, 26 Rev. of Fin. 6, 1315, 1316 (Nov. 2022). ↑
53. Press Release, Governance & Accountability Institute, Inc., 10th Anniversary Report Finds All-Time Highs for Sustainability Reporting of Largest U.S. Public Companies (Nov. 16, 2021), https://www.ga-institute.com/nc/storage/press-releases/article/92-of-sp-500r-companies-and-70-of-russell-1000r-companies-published-sustainability-reports-in-202.html. ↑
54. Id. ↑
55. Id. ↑
56. Oversight of the U.S. Securities and Exchange Commission Before the S. Committee on Banking, Hous., & Urb. Affs., 117th Cong. 3 (2022) (statement of Sen. Sherrod Brown, Chair, S. Committee on Banking, Housing, and Urban Affairs). ↑
57. Addisu Lashitew, The coming age of sustainability disclosure: How do rules different between the US and the EU. Brookings Inst. (June 6, 2022), https://www.brookings.edu/blog/future-development/2022/06/06/the-coming-of-age-of-sustainability-disclosure-how-do-rules-differ-between-the-us-and-the-eu/. ↑
58. Florian Berg et al., Aggregate Confusion: The Divergence of ESG Ratings, 26 Rev. Fin. 6, 1315, 1316 (Nov. 2022). ↑
59. U.S. Gov’t Accountability Off., GAO-18-188, Climate-Related Risks: SEC Has Taken Steps to Clarify Disclosure Requirement 19 (Feb. 2018). ↑
60. Id. ↑
61. Id. ↑
62. Booz Allen Hamilton Holding Corporation Annual Report (Form 10-K), U.S. Sec. Exch. Comm’n (May 20, 2022), https://investors.boozallen.com/static-files/abb7df94-3c5d -4afe-a92c-b6763fd7dc28. ↑
63. Id. ↑
64. Courtney Lindall, What is Greenwashing?, NRDC (Feb. 9, 2023), https://www. nrdc.org/stories/what-greenwashing?/. ↑
65. Jennifer Hijazi, Shell Greenwashing Challenge Highlights Risk of ESG Claims, Bloomberg L. (Feb. 16, 2023), https://news.bloomberglaw.com/environment-and-energy/ shell-greenwashing-challenge-highlights-risk-of-esg-claims. ↑
66. Id. ↑
67. Summary of and Considerations Regarding the SEC’s Proposed Rules on Climate Change Disclosure, Gibson Dunn (April 15, 2022), https://www.gibsondunn.com/summary-of-and-considerations-regarding-the-sec-proposed-rules-on-climate-change-disclosure/; Lee Reiners & Morgan Smith, Summary of Comment Letters for the SEC’s Proposed Climate Risk Disclosure Rule, Duke Dep’t of Econ., https://econ.duke.edu/dfe/climate-risk/2022/08/summary-comment-letters-secs-proposed-climate-risk-disclosure-rule (last visited Feb. 17, 2024). ↑
68. Press Release, U.S. Sec. & Exch. Comm’n., SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors (Mar. 21, 2022), https://www.sec.gov/news/press-release/2022-46. ↑
69. The Enhancement and Standardization of Climate-Related Disclosures for Investors, 87 Fed. Reg. 21334, 21335 (Apr. 11, 2022) (to be codified at 17 C.F.R. pts. 210, 229, 232, 239, and 249). ↑
70. Id. at 21345. ↑
71. Id. at 21349. ↑
72. Id. at 21335. ↑
73. Id. at 21359. ↑
74. Id. at 21334. ↑
75. Id. at 21361. ↑
76. Id. at 21374. ↑
77. Id. at 21380. ↑
78. Black Rock, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https://www. sec.gov/comments/s7-10-22/s71022-20132288-302820.pdf. ↑
79. Ernst & Young, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https:// www.sec.gov/comments/s7-10-22/s71022-20131957-302416.pdf. ↑
80. Earthjustice, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https:// www.sec.gov/comments/s7-10-22/s71022-20131893-302348.pdf. ↑
81. McCormick & Company, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https:// www.sec.gov/comments/s7-10-22/s71022-20131943-302398.pdf. ↑
82. Mountain States Legal Found., Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https://www.sec.gov/comments/s7-17-22/s71722-20132531-303023.pdf. ↑
83. Texas Pipeline Ass’n, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https:// www.sec.gov/comments/s7-10-22/s71022-20131968-302428.pdf. ↑
84. Coalition of U.S. Senators, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https://www.sec.gov/comments/s7-10-22/s71022-20131192-301362.pdf. ↑
85. Press Release, U.S. Sec. & Exch. Comm’n., SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors (Mar. 21, 2022), https://www. sec.gov/news/press-release/2022-46-:~:text=. ↑
86. The Enhancement and Standardization of Climate-Related Disclosures for Investors, 87 Fed. Reg. 21334, 21335 (Apr. 11, 2022) (to be codified at 17 C.F.R. pts. 210, 229, 232, 239, and 249); 15 U.S.C. § 78c(f) (2023); 15 U.S.C. § 77b(b) (2023). ↑
87. The Enhancement and Standardization of Climate-Related Disclosures for Investors, 87 Fed. Reg. 21334, 21335 (Apr. 11, 2022) (to be codified at 17 C.F.R. pts. 210, 229, 232, 239, and 249). ↑
88. Id. at 21335. ↑
89. Id. at 21337. ↑
90. Id. at 21336. ↑
91. Id. ↑
92. Id. at 21337. ↑
93. Id. at 21335–36. ↑
94. Jeannie Ricketts, A Very Brief History of Federal Administrative Law, 88 Okla. Bar J. 2213 (Nov. 18, 2017). ↑
95. Jamelle Sharpe, administrative law: a lifecycle approach 39 (2021). ↑
96. Great Depression Facts, FDR Libr. & Museum, https://www.fdrlibrary.org/great-depression-facts. ↑
97. See Reuel E. Schiller, The Era of Deference: Courts, Expertise, and the Emergence of New Deal Administrative Law, 106 Mich. L. Rev. 399, 402–03 (2007). ↑
98. Id. at 420 (citing James M. Landis, The Administrative Process 123 (1938)) (Landis would go on to serve as one of the early SEC commissioners). ↑
99. Id. at 414. ↑
100. Id. at 430. ↑
101. Jacob Siegel Co. v. Fed. Trade Comm’n, 327 U.S. 608, 612–13 (1946). ↑
102. R.R. Comm’n of Texas v. Rowan & Nichols Oil Co., 310 U.S. 573, 581 (1940). ↑
103. 467 U.S. 837 (1984). ↑
104. Id. at 840. ↑
105. Eric R. Womack, Into the Third Era of Administrative Law: an Empirical Study of the Supreme Court’s Retreat From Chevron Principles in United States v. Mead, 107 Dick. L. Rev. 289, 295 (2002). ↑
106. Chevron, 467 U.S. 837, 842–43. ↑
107. Id. at 843–44. ↑
108. Cass R. Sunstein, Chevron Step Zero, 92 Va. L. Rev. 187, 189–90 (2006). ↑
109. 142 S. Ct. 2587 (2022); Kate R. Bowers, Cong. Rsch. Serv., IF12077, The Major Questions Doctrine 2 (Nov. 2, 2022). ↑
110. Jaclyn Lopez, The major questions doctrine post-West Virginia v. EPA, Am. Bar Ass’n (Jan. 3, 2023), https://www.americanbar.org/groups/environment_energy_resou-rces/publications/trends/2022-2023/january-february-2023/the-major-questions-doctrine/. ↑
111. Id. ↑
112. See West Virginia v. EPA, 142 S. Ct. 2587, 2634 (2022) (Kagan, J. dissenting). ↑
113. See Kate R. Bowers, Cong. Rsch. Serv., IF12077, The Major Questions Doctrine 2 (Nov. 2, 2022). ↑
114. See Gonzales v. Oregon, 546 U.S. 243 (2006). ↑
115. King v. Burwell, 576 U.S. 473 (2015). ↑
116. 512 U.S. 218 (1994). ↑
117. 529 U.S. 120 (2000). ↑
118. MCI Telecomm., 512 U.S. at 221–22. ↑
119. Id. at 234. ↑
120. Id. at 229. ↑
121. Id. at 245 (Stevens, J., dissenting). ↑
122. FDA v. Brown & Williamson, 529 U.S. 120 (2000). ↑
123. Id. at 139–40. ↑
124. Id. at 130. ↑
125. Id. at 159–60. ↑
126. Id. at 160 (citing Stephen Breyer, Judicial Review of Questions of Law and Policy, 38 Admin. L. Rev. 363, 370 (1986)) (“A court may also ask whether the legal question is an important one. Congress is more likely to have focused upon, and answered, major questions, while leaving interstitial matters to answer themselves in the course of the statute’s daily administration”). ↑
127. Id. at 160–61. ↑
128. 531 U.S. 457, 468 (2001). ↑
129. Id. ↑
130. Id. at 468. ↑
131. Id. at 475. ↑
132. Id. at 475. ↑
133. 549 U.S. 497 (2007). ↑
134. Id. at 510. ↑
135. Id. at 511. ↑
136. Id. at 532. ↑
137. Id. at 531 (emphasis added). ↑
138. Id. at 532. ↑
139. Id. ↑
140. Id. ↑
141. See 573 U.S. 302 (2014). ↑
142. See Id. ↑
143. Id. at 323–24. ↑
144. Id. ↑
145. Id. at 324. ↑
146. Id. at 331. ↑
147. Id. at 332. ↑
148. See generally 142 S. Ct. 2587 (2022). ↑
149. Id. at 2603. ↑
150. Id. at 2610. ↑
151. Id. at 2611–12 (in part citing 40 Fed. Reg. 53343 (1975)). ↑
152. Id. at 2613. ↑
153. 15 U.S.C. § 77g(a)(1); 15 U.S.C. §§ 78i, 78m, 78o. ↑
154. Larry Fink, Larry Fink’s 2021 letter to CEOs, BlackRock (2021), https://www. blackrock.com/us/individual/2021-larry-fink-ceo-letter; Net zero: a fiduciary approach, BlackRock, https://www.blackrock.com/us/individual/2021-blackrock-client-letter (last visited Feb. 17, 2024). ↑
155. The Enhancement and Standardization of Climate-Related Disclosures for Investors, 87 Fed. Reg. 21334, 21335 (Apr. 11, 2022) (to be codified at 17 C.F.R. pts. 210, 229, 232, 239, and 249). ↑
156. 15 U.S.C. § 77g(a)(1); 15 U.S.C. §§ 78i, 78m, and 78o. ↑
157. Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468–69 (2001). ↑
158. Utility Air Regulatory Group v. EPA, 573 U.S. 302, 324 (2014) (citing FDA v. Brown & Williamson, 529 U.S. 120, 159 (2000)). ↑
159. The Enhancement and Standardization of Climate-Related Disclosures for Investors, 87 Fed. Reg. 21334, 21335 (Apr. 11, 2022) (to be codified at 17 C.F.R. pts. 210, 229, 232, 239, and 249). ↑
160. Utility Air Regulatory Group v. EPA, 573 U.S. 302, 332 (2014). ↑
161. Id. ↑
162. U.S. Sen. Jon Tester, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (Nov. 17, 2022), https:// www.sec.gov/comments/s7-10-22/s71022-20150961-319959.pdf. ↑
163. Mich. Farm Bureau, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https:// www.sec.gov/comments/s7-10-22/s71022-20132178-302675.pdf; Okla. Farm Bureau, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https://www.sec.gov/comments/s7-10-22/s71022-20132279-302809.pdf; Cali. Farm Bureau, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (June 17, 2022), https://www.sec.gov/comments/s7-10-22/s71022-20132012-302483.pdf; Nat’l Ass’n of Egg Farmers, Comment Letter on Proposed Rule to for The Enhancement and Standardization of Climate-Related Disclosures for Investors (May 9, 2022), https://www.sec.gov/comments/s7-10-22/s71022-291221.htm. ↑
164. Utility Air Regulatory Group, 573 U.S. at 332. ↑
165. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 139 (2000). ↑
166. Id. at 159. ↑
167. Id. at 159–60. ↑
168. Id. ↑
169. 142 S. Ct. 2587, 2610 (2022). ↑
170. Taryn Zucker et al., West Virginia v. EPA Casts a Shadow Over SEC’s Proposed Climate-Related Disclosure Rule, Harv. Law Sch. F. on Corp. Governance (Aug. 3, 2022), https://corpgov.law.harvard.edu/2022/08/03/west-virginia-v-epa-casts-a-shadow-over-secs-proposed-climate-related-disclosure-rule/. ↑
171. Ari Drennen & Sally Hardin, Climate Deniers in the 117th Congress, Ctr. for Am. Progress (Mar. 30, 2021), https://www.americanprogress.org/article/climate-deniers-117th-congress/. ↑
172. 142 S. Ct. at 2621 (Gorsuch, J., concurring). ↑
173. Zoya Mirza and Lamar Johnson, SEC battles climate disclosure rule legal challenges, ESGDive (Mar. 29, 2024), https://www.esgdive.com/news/SEC-climate-disclosure -rule-legal-challenges-tracker-roundup-analysis/711313/. ↑