In my blog last Monday, I included an excerpt from an ESG Clarity article about anticipated legal challenges to the SEC’s final climate disclosure rule (once issued). That excerpt included this statement:
“If the SEC loses in court after publishing its final rules, the agency has to wait five years to re-engage on the same rulemaking.”
I’m not an administrative law attorney (or an attorney of any type), but the reference to a five-year waiting period to “re-engage” in the rulemaking sounded odd to me. When a rule is challenged, the court decides what part(s) of the rule are problematic and then remands those sections back to the responsible agency to rework the language. That process must follow regular rulemaking procedures – publication of a proposal, soliciting public comment, then issuance as a final release (in the case of SEC, once the majority of Commissioners vote to pass it). There is no stand alone legislation for the climate rule that might create different timelines or procedures.
I asked others with experience in SEC rulemaking processes and none of them were familiar with a five-year waiting period in the event a court strikes down all or part of a final release. John Jenkins offered this: “what usually happens if a court invalidates a rule is consistent with this excerpt from a Federal Register publication on the rulemaking process:
‘If a court sets aside (vacates) all or part of a rule, it usually sends the rule back to the agency to correct the deficiencies. The agency may have to reopen the comment period, publish a new statement of basis and purpose in the Federal Register to explain and justify its decisions or restart the rulemaking process from the beginning by issuing a new proposed rule.'”
Even though the statement about the five year wait came from a third party, I wanted to clear it up for our readers. In another note, the link in the above excerpt seems not to relate to SEC’s climate disclosure rule. My apologies, but that is indeed the link contained in the original article so I left it intact.