RECORD SCRATCH — One of Washington policy nerds’ favorite parlor games — fighting over how U.S. regulators should finalize a long-awaited climate-risk disclosure rule — may have just reached a new level of complexity. Gary Gensler’s Securities and Exchange Commission is already facing a swirl of questions about what is arguably its most watched rule: Will the agency match California’s new climate disclosure law? Can it achieve equivalency with the European Union? And, of course, when is it coming out? Now, Republican SEC Commissioner Mark Uyeda is throwing yet another curveball into the mix, arguing that the agency might need to consider re-proposing the rule if the final version “significantly deviates” from the 20-month-old original, Declan reports. “The Commission should do everything possible to not promulgate a rule that is costly and ineffective, as doing so might be indicative of a flawed process that raises the question of whether the rule is arbitrary and capricious under the Administrative Procedure Act," Uyeda said in remarks prepared for a New York speech today. A re-proposal would almost certainly punt the final rule well into next year — a statement that is likely to increase the pressure from investors and lawmakers eager to see the finished product. But Uyeda warns that failing to take that step could bolster the arguments of business groups and Republican officials already threatening to shower the SEC with lawsuits over the rule. The commissioner’s comments offer a stark reminder that the SEC is wading into a legal landscape where suits challenging regulators are commonplace and more likely to succeed. Just days before Uyeda’s speech, for instance, a panel of judges in the Fifth Circuit Court of Appeals ordered the SEC to rework a stock buyback disclosure rule that the Chamber of Commerce sued over because the agency didn’t properly respond to certain comments or adequately justify the measure. The buyback decision, however, was not a complete loss for the SEC. The court notably dismissed arguments that the rule violated the First Amendment by compelling speech and that the 45-day comment period was not long enough — both of which have popped up in industry criticisms of the climate-risk disclosure rule. Uyeda alluded to the decision in the speech and said re-proposing the climate rule would allow the public to weigh in on the SEC’s latest thinking on how to mandate the disclosures. Since the proposal was issued, the Supreme Court has sparked a widespread debate over agency powers, while policymakers in California and the European Union have pushed ahead with climate disclosure laws of their own. Whether that’s enough to convince Gensler to re-propose is not clear, though. The SEC chair has said his priority is to land on a final rule that can survive legal challenges. But he will need support from two other commissioners — likely fellow Democrats Caroline Crenshaw and Jaime Lizárraga — to get it done.
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