The Supreme Court took an important step toward restoring accountability and democratic control to the executive branch when it ruled the Environmental Protection Agency’s Clean Power Plan unlawful in West Virginia v. EPA, and the Securities and Exchange Commission should take note. The SEC’s proposed climate disclosure rule would expand its authority in a way that is almost indistinguishable from the EPA’s failed attempt to seize more power than it was due. The SEC would be wise to retract and rethink its planned disclosure rule now.
In its June decision, the high court ruled that the Clean Power Plan was out of bounds for the EPA under the “major questions” doctrine. Agencies have power to regulate only because Congress gives them that power, so the choice of Congress constricts their ability to regulate. Agencies may not lightly presume that the legislature has delegated to them the most important policy questions of our day and simply decide those questions themselves. Allowing the Clean Power Plan would have meant giving the EPA authority to resolve a major policy question—the composition of U.S. energy production—that Congress is expected to decide for itself. The EPA could point to no clear statutory authorization for the agency to decide that question, and that led the Supreme Court to rule that the plan was unlawful.