Recently, we syndicated a blog from TheCorporateCounsel.net that discussed the recent SCOTUS ruling in Loper Bright Enterprises v. Raimondo, overruling the 40-year precedent of “Chevron Deference.” In a nutshell, prior to Loper, if there was ambiguity in how a statute governing the actions of a regulatory agency should be interpreted, the regulatory agency’s interpretation was given deference. Now, the Courts will be required to resolve any ambiguities, taking some power away from regulatory agencies. In the wake of the Loper decision, many questioned how this change might affect the SEC’s ongoing litigation regarding the Climate-related Disclosures Rule. While many assumed that it would make it considerably harder for the SEC to prevail, a recent article from Responsible Investor gives a different perspective stating:
“Lawyers working in the regulatory and litigation space note that agencies had largely pre-empted the Supreme Court’s decision in their rulemaking activities and litigation defences. David Petron, a partner in the securities enforcement and regulatory practice at Sidley, said the SEC ‘has recognised for some time that they were not going to be able to rely on Chevron deference to help support their rules.’”
It seems that the SEC read the writing on the wall. SCOTUS telegraphed their desire to end Chevron for several years and the SEC took note. As such, when drafting the Climate-related Disclosures Rule, the SEC did not rely on Chevron to support their position. Similarly, thus far in the ongoing litigation surrounding the Rule, the SEC has not cited Chevron in its briefs. This isn’t to say that the Climate-related Disclosures Rule is out of the woods; it still faces an uphill battle in the courts, but smart maneuvering by the SEC means that the overruling of Chevron Doctrine won’t be dispositive of the issue.
Our members can learn more about Loper and its potential effects on ESG here.
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