Opponents of SEC climate rule use Chevron's death to fight regulation

Fracking companies asked the Eighth Circuit to reject the SEC's claim of authority to issue emissions disclosure rules after the U.S. Supreme Court ended judicial restraint on some agencies' rulemaking.

The Securities and Exchange Commission lacked flexibility in securities law to require companies to report greenhouse gas emissions and other climate information, Liberty Energy Inc. and Nomad Proppant Services LLC he said in a brief to the U.S. Court of Appeals for the Eighth Circuit on Tuesday. Bloomberg Law reviewed the brief, which the court has not yet made public.

The Supreme Court’s ruling in June in Loper Bright Enterprises v. Raimondo raised his Chevron v. Natural Resources Defense Council Decision that gave judicial deference to the agency's reasonable interpretations of ambiguous laws. A court has yet to rule on whether climate change disclosure requirements are permissible under the general securities laws that the SEC uses to compel reporting it believes is important to investors.

The lawsuits by Liberty Energy and Nomad Proppant Services came after the SEC declared in an August court order that the climate regulations would remain in effect even after Loper Bright. The Eighth Circuit consolidated nine lawsuits filed by oilfield service providers, the U.S. Chamber of Commerce, Republican attorneys general and others challenging the rules issued in March. The agency had suspended the rules in April pending litigation.

“The agency’s interpretation of a law is not entitled to deference,” Liberty Energy and Nomad Proppant Services said in their brief.

Check arguments

The fracking companies' filing was part of the second of two series of briefs the Eighth Circuit has solicited from opponents of the climate change provisions as the court begins reviewing the provisions. In addition to the SEC's August filing, the court also received amicus curiae briefs from supporters and opponents of the provisions.

Opponents of the climate rule filed their first briefs on June 14, two weeks before the June 28 deadline. Loper Bright decision. Their arguments included claims that the SEC had brushed aside a 2022 Supreme Court decision that ChevronThe Supreme Court in West Virginia v. Environmental Protection Agency supported the “big questions” doctrine, which states that agencies need clear permission from Congress to issue rules that have significant economic or political impact.

The SEC followed suit West Virginia v. EPA when it passed the regulations, the agency said in its August letter. The agency issued the rules under the Securities Act of 1933 and the Securities Exchange Act of 1934, which it said clearly allow the agency to require disclosures to protect investors.

Republican attorneys general from West Virginia, Iowa and other states on Tuesday disputed the SEC's allegations.

The authority does not have the express authority to issue the regulations, it said in a court letter dealing with West Virginia v. EPA and did not mention Loper Bright by name. The rules address climate change, which is a significant political and economic issue, they said. That letter was also reviewed by Bloomberg Law but not made public by the court.

“In arguing to the contrary, the SEC misapplies its own history, abuses its statutory power, and misunderstands the novelty of the rule,” the Republican officials said.

The plaintiffs have received support from numerous groups, including more than 30 Republican members of Congress, as well as advocacy groups with ties to former Vice President Mike Pence and petrochemical billionaire Charles Koch. The groups filed amicus curiae briefs in support of the lawsuits in the Eighth Circuit in June.

Support for the climate rules came from Democratic Senators Sheldon Whitehouse (Rhode Island) and Brian Schatz (Hawaii), Representatives Sean Casten (Illinois) and Juan Vargas (Calif.), and California Attorney General Rob Bonta (D-CA). They were among several climate regulation supporters who filed amicus curiae briefs defending the SEC in the Eighth Circuit in August.

Democratic attorneys general in 18 states and the District of Columbia are also arguing for rules to intervene in the litigation. The Securities Act and Exchange Act give the SEC “clear” authority to mandate climate disclosures and other reports it deems necessary for investors, they said in a brief filed in August with the Eighth Circuit.

The Eighth Circuit has not requested further briefs in the litigation and is expected to hold oral arguments in the coming months. It is unlikely that the court will rule on the case this year.

The lead case is Iowa v. SEC, 8th Circuit, No. 24-1522, briefs filed 9/17/24.