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The University of Chicago Business Law Review

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193

Abstract

On the heels of the U.S. Supreme Court’s decision in West Virginia v. Environmental Protection Agency, the “major questions” doctrine quickly came to be perceived as a significant impediment to the finalization of the Securities and Exchange Commission’s proposed rule on climate-related disclosures.

This Article presents a new argument against finalization, an argument that does not require the application of the major questions doctrine. This argument finds its authority in the policy objectives and the one policy constraint found in the statutes that underlie the proposed rule. These policy standards, referred to as ascertainable standards in the Article, not only provide guidance to the SEC in its rulemaking, including the promulgating of rules on climate-related disclosures, but also identify the boundaries of authority that the SEC must not cross.

The SEC has exceeded its delegated authority in promulgating its proposed rule on climate-related disclosures by not adhering to the ascertainable standards found in the 33 and 34 Acts: “for the protection of investors,” promoting “efficiency, competition, and capital formation,” and “materiality.” These ascertainable standards are identified through the application of the “intelligible principle” test of the nondelegation doctrine and apply to all SEC rulemaking promulgated under these Acts, not just the proposed climate-related disclosures. Moreover, it would not be surprising to find that if a review of all SEC rules and interpretations were to occur, many of them would be found to violate the boundaries of the SEC’s discretionary authority.

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