Three senior members of the House Financial Services Committee are setting the battle lines for the coming fight on the SEC’s authority on climate regulations
Washington, D.C.— U.S. Representative Andy Barr (R-KY), U.S. Representative French Hill (R-AR) and U.S. Representative Bill Huizenga (R-MI) penned a letter to U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler pushing back on the SEC plans to develop climate risk disclosure standards for public and private companies. Barr, Hill and Huizenga are pushing for an explanation from the SEC regarding their recent public Request for Comment (RFI) on climate disclosures targeting private companies that are not under the jurisdiction of the SEC. Politico first broke the news of this letter in their Morning Money newsletter.
Among other things, the RFI asks respondents whether the SEC, which is charged with regulating the market for public securities, should address climate risk disclosures by private companies.
The joint letter rejects the jurisdiction of the SEC in creating and implementing policies that affect private, non-market companies. “We are unaware of any commenters who provided citations to statutory authority for such an unprecedented move. We believe the reason for this omission is simple: the SEC lacks any such authority. Lest there be any doubt, we wish to emphasize that the SEC has no authority to impose public disclosure obligations—regarding climate or otherwise— on private businesses that have not accessed the public capital markets,” the Members wrote.
Reps Barr, Hill, and Huizenga further asserted that, “we likewise believe the SEC should devote its limited resources to other pursuits that are more likely to benefit Main Street investors. We see no good public policy reason to increase the cost of capital to small businesses and saddle them with additional compliance costs while providing no discernable benefit to investors or the capital markets more broadly… Rather than wade into social and environmental policy, the SEC should be focused on what benefits investors—the fair and orderly allocation of capital, and the efficient operation of our capital markets.”
Rep. Barr has been a vocal opponent against using government regulation to achieve climate goals. In December, Rep. Barr led a letter to Federal Reserve Chairman Jerome Powell signed by over 40 of his colleagues cautioning the Fed not to inject climate change scenarios into supervisory stress tests on lenders.