Should the SEC adopt this proposal, it will be challenged in court. Arguments would likely focus on (i) the SEC's authority to adopt disclosure requirements that may not be material as a matter of the economics of the investment and (ii) the quality of the SEC's cost-benefit analysis. (See Senate Republicans Question SEC on Proposed Climate Disclosure Rule).

Even assuming that the SEC should win (and it is not obvious that the SEC would win on either of these issues), the implementation of the rule would be left to the next administration. There are many potential obstacles to implementation, such as the lack of political commitment to the rule, the state of the economy and the demand for energy at that time, to name a few. It is not obvious that anything would prevent the next SEC Chair from putting an adopted rule on pause and re-examining it. Indeed, SEC Chair Gensler established the precedent for "regulatory nullification" of an adopted SEC rule by stating that the SEC would not enforce certain rules governing proxy advisors that had been adopted under the prior administration. (See generally SEC Proposal to Deregulate Proxy Voting Advice.)

In short, even assuming that the SEC adopts this rule proposal, it will be years before we know whether it might actually be implemented.

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