In response to an SEC request for public input regarding climate change disclosures, a group of 16 State Attorneys General challenged the SEC's authority to mandate climate-related disclosures where the required disclosures are not material to the economic value of the issuer's securities.

In their letter to SEC Chair Gary Gensler, the Attorneys General disputed the legal theory advanced by SEC Commissioner Lee, among others, that public interest in a topic is sufficient for the SEC to justify compelling issuers to make public statements on a topic unless the subject of the disclosure is otherwise within the scope of the SEC's authority.

Further, the Attorneys General argued that:

• the SEC's authority to require disclosure under the Exchange Act is limited to mandating public reporting that is "necessary or appropriate for the proper protection of investors and to insure fair dealing in the security" under Section 13(a) of the Exchange Act; and

• there is a high First Amendment threshold for forcing issuers to make public statements (compelled speech) so as to determine whether issuers' practices are "consistent with federally encouraged social views."

The Attorneys General urged Chair Gensler to "act mindful" of these "statutory and constitutional guideposts," particularly as to requiring "detailed emission metrics," that the Attorneys General described as not necessary to protect market participants. The Attorneys General urged the SEC to move forward "with a commitment to the rule of law and reasoned administrative decision-making."