In a major end-of-term decision, the Supreme Court stopped the Environmental Protection Agency (EPA) from regulating carbon dioxide emissions because Congress had never authorized the agency to do so. The EPA is authorized to clean up pollution in the air, in the water and on land, and to clean up environmental damage. But Congress has simply never authorized the EPA to regulate carbon emissions.
It’s not about whether the Supreme Court believes in climate change — it’s about limited government. Federal agencies can’t just unilaterally decide to do things – they require congressional authorization. If the peoples’ elected representatives want the EPA to fight climate change, Congress can pass a law that authorizes it. If not, that’s also Congress’ choice.
Because the Constitution was written to guarantee the liberty of citizens by limiting government power, there have to be limiting principles for government. If a federal agency can do whatever it wants to do, government is unlimited and our liberty is in danger.
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If you think about it, the work of regulatory agencies should be boring and pedestrian. The sexy, controversial issues should be settled by Congress or the judicial branch. Unelected regulators should simply be carrying out Congress’ wishes. Regulators don’t get to change the country.
But at least the EPA’s mandate is in the neighborhood of regulating harmful emissions. What’s truly shocking is to see another federal agency, with a mandate that is in a completely different hemisphere, attempting to expand its mandate to fight climate change. And no, it’s not the Department of Energy, or the Department of the Interior, or the Bureau of Mines — it’s the Securities and Exchange Commission (SEC).
Congress and the courts often defer to federal agencies because they are supposed to have both knowledge and expertise to deal with certain issues. But if you were going to pick a federal agency that has zero expertise in environmental and climate issues, you’d probably pick the SEC. But the SEC, created and authorized to protect average investors from being taken advantage of by bad actors, has decided to fight climate change.
If you are a public company, or a mutual fund or other investment vehicle, it’s entirely reasonable for the SEC to require you to publicly disclose material data relevant to your performance, so that investors can make intelligent decisions. It’s enough for the SEC to do a competent job exercising its mandate “to protect investors; maintain fair, orderly, and efficient markets, and facilitate capital formation.”
But under Biden appointee and former Hillary Clinton adviser Gary Gensler, the SEC is now trying to enact a rule that would saddle public companies with enormous and unnecessary new disclosure requirements related to their carbon and greenhouse emissions.
Sorry, it’s worse than that — the proposed rule would actually require companies to disclose not only their own greenhouse gas emissions, but also those of their entire supply chain — the greenhouse gas emissions of their suppliers, and of their consumers.
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For one thing, this is impossible, which should matter. But for another thing, this is an extremely onerous regulation that will add enormous bottom-line costs to every regulated company.
Mostly, however, investors are not asking for this information. What investors want is for their investments to deliver maximum returns. And when new SEC regulations impose costly and impossible requirements on companies that will reduce returns, the SEC is not only exceeding its congressional mandate — it is violating its mandate to facilitate capital formation.
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Let’s remember who investors are: Anyone with a pension plan, public or private, a 401k, 403b, IRA, or any mutual funds in any investment vehicle. If that describes you, and it probably does, the SEC is seeking to impose an ideological agenda that will add costs and bureaucratic layers and thus lower the rates of return on your investments.
And you didn’t ask them to do that. No, this is being imposed on them by the Biden administration’s radical climate agenda. Investors don’t want it, the SEC doesn’t have the expertise to do it, and Congress didn’t authorize it.
Tom Giovanetti is president of the Institute for Policy Innovation, a public policy research organization based in Dallas, Texas.