The Securities and Exchange Commission in Washington, Sep. 23, 2022.
Photo:
Eric Lee for The Wall Street Journal
Justice
Antonin Scalia
cautioned more than 20 years ago that Congress doesn’t “hide elephants in mouseholes.” When Congress chooses not to pursue a certain policy or delegate a new authority, it isn’t inviting administrative agencies to step in and fill the empty space. But federal agencies are increasingly attempting to impose major climate regulations with no mandate from Congress.
In its June 2022 decision in West Virginia v. Environmental Protection Agency, the Supreme Court made clear that federal agencies may not assert “highly consequential power beyond what Congress could reasonably be understood to have granted.” The EPA couldn’t find a provision in the Clean Air Act in which Congress gave the agency sweeping authority to restructure the country’s mix of electricity generation with its Clean Power Plan. Under the so-called major-questions doctrine, an agency action of political and economic significance—such as regulating carbon emissions—requires clear congressional authorization. The EPA didn’t have it, so the Clean Power Plan had to go.
With its recently proposed climate change policies, the Securities and Exchange Commission is similarly trying to exercise authority it doesn’t have. In an April 2022 rulemaking, the SEC proposed a set of expansive and costly regulations that would require public companies registered with the SEC to publish information about “climate-related risks” in annual reports and audited financial statements if those risks are “reasonably likely to have a material impact” on a company’s “business, results of operations, or financial condition.” The SEC also proposed requiring disclosure of registrants’ direct greenhouse-gas emissions as well as those from its purchases of electricity and its supply-chain partners.
This isn’t mere “disclosure.” It’s a heavy regulatory…
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