No. 24-1522 and all consolidated cases: Nos. 24-1624, 24-1626, 24-1627, 241628, 24-1631, 24-1634, 24-1685, and 24-2173
IN THE UNITED STATES COURT OF APPEALSFOR THE EIGHTH CIRCUITSTATE OF IOWA, ET AL.,
Petitioners,
v.
UNITED STATES SECURITIES & EXCHANGE COMMISSION,
Respondent,
DISTRICT OF COLUMBIA, ET AL.,
Intervenors.
On Petitions for Review of an Order of the
Securities and Exchange Commission
BRIEF OF AMICUS CURIAE BUSINESS ROUNDTABLEIN SUPPORT OF ALL PETITIONERS’ REQUEST FOR VACATUR
Leon F. DeJulius Jr.
Traci L. Lovitt
Howard F. Sidman
JONES DAY
250 Vesey St.
New York, NY 10281
Liz Dougherty
Business Roundtable
1000 Maine Ave., SW
Washington, DC 20024

Noel J. FranciscoCounsel of Record
Brinton Lucas
Brett A. Shumate
Christopher PagliarellaThomas A. Wilson
JONES DAY
51 Louisiana Ave. NW
Washington, DC 20001
Telephone: 202-879-3939
njfrancisco@jonesday.com

Counsel for Amicus Curiae Business Roundtable

CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1 and Eighth Circuit
Local Rule 26.1A, amicus curiae Business Roundtable is an association of chief
executive officers of leading U.S. companies. It has no parent corporation, andno publicly held company owns 10% or more of it.

-i-TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT............................................. i
INTEREST OF AMICUS CURIAE .............................................................. 1
INTRODUCTION ..................................................................................... 2
BACKGROUND ....................................................................................... 4
ARGUMENT ............................................................................................ 7
I.

II.

THE RULE EXCEEDS THE SEC’S STATUTORYAUTHORITY. .................................................................................. 7.

The Rule requires clear statutory authority. ................................ 7.

Congress did not provide any authority for the Rule, letalone a clear delegation of power. .............................................. 91.

The Rule does not rest on a specific congressional
mandate. ....................................................................... 112.

The Rule compels disclosures that are not material.......... 15

THE RULE IS NOT REASONABLY EXPLAINED. ...................... 20.

The SEC failed to adequately address numerous key costs. ....... 21.

The SEC failed to quantify the Rule’s purported benefits andto consider downstream costs imposed on investors.................. 24.

The SEC’s analysis of statutorily mandated factors isinadequate. ............................................................................. 26

CONCLUSION........................................................................................ 29
CERTIFICATE OF COMPLIANCE ........................................................ 30
EIGHTH CIRCUIT RULE 28A(H)(2) CERTIFICATION ........................ 31
CERTIFICATE OF SERVICE ................................................................. 32- ii -TABLE OF AUTHORITIESPage(s)CASES
Alabama Ass’n of Realtors v. HHS,
594 U.S. 758 (2021) ................................................................................. 8
Am. Equity Inv. Life Ins. Co. v. SEC,
613 F.3d 166 (D.C. Cir. 2010) ..................................................... 20, 27, 28
Am. Meat Inst. v. USDA,
760 F.3d 18 (D.C. Cir. 2014) (en banc) ................................................... 17
Basic Inc. v. Levinson,
485 U.S. 224 (1988) .................................................................... 11, 12, 16
Boykin v. K12, Inc.,
54 F.4th 175 (4th Cir. 2022) ................................................................... 22
Bus. Roundtable v. SEC,
647 F.3d 1144 (D.C. Cir. 2011) ................................................... 20, 24, 28
Bus. Roundtable v. SEC,
905 F.2d 406 (D.C. Cir. 1990) ................................................................ 12
Chamber of Com. of U.S. v. SEC,
85 F.4th 760 (5th Cir. 2023) ........................................................ 19, 27, 28
FDA v. Brown & Williamson Tobacco Corp.,
529 U.S. 120 (2000) ........................................................................ 4, 8, 15
Gustafson v. Alloyd Co.,
513 U.S. 561 (1995) ............................................................................... 13
IBEW Loc. 98 Pension Fund v. Best Buy Co.,
818 F.3d 775 (8th Cir. 2016) .................................................................. 22- iii -TABLE OF AUTHORITIES(continued)
Page(s)Jarecki v. G. D. Searle & Co.,
367 U.S. 303 (1961) ............................................................................... 14King v. Burwell,
576 U.S. 473 (2015) ............................................................................. 8, 9
Lippert v. Cmty. Bank, Inc.,
438 F.3d 1275 (11th Cir. 2006) ................................................................. 5
Matrixx Initiatives, Inc. v. Siracusano,
563 U.S. 27 (2011) ............................................................................ 16, 17
Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit,
547 U.S. 71 (2006) ................................................................................... 5
Michigan v. EPA,
576 U.S. 743 (2015) .......................................................................... 25, 26
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins.
Co.,
463 U.S. 29 (1983) ................................................................................. 20
Nat’l Ass’n of Mfrs. v. SEC,
800 F.3d 518 (D.C. Cir. 2015) ................................................................ 17
Nat’l Ass’n of Priv. Fund Managers v. SEC,
No. 23-60471, 2024 WL 2836655 (5th Cir. June 5, 2024) ........................ 19
NIFLA v. Becerra,
585 U.S. 755 (2018) ............................................................................... 17
NYSE v. SEC,
962 F.3d 541 (D.C. Cir. 2020) ................................................................ 12- iv -TABLE OF AUTHORITIES(continued)
Page(s)Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund,
575 U.S. 175 (2015) .......................................................................... 11, 16
Pub. Citizen v. Fed. Motor Carrier Safety Admin.,374 F.3d 1209 (D.C. Cir. 2004) .............................................................. 26
Rumsfeld v. FAIR,
547 U.S. 47 (2006) ................................................................................. 17
SEC v. W.J. Howey Co.,
328 U.S. 293 (1946) ............................................................................... 16
TSC Indus., Inc. v. Northway, Inc.,
426 U.S. 438 (1976) .......................................................................... passim
United Copper Sec. Co. v. Amalgamated Copper Co.,
244 U.S. 261 (1917) ................................................................................. 4
United Hous. Found., Inc. v. Forman,
421 U.S. 837 (1975) .................................................................... 12, 13, 14
Util. Air Regul. Grp. v. EPA,
573 U.S. 302 (2014) ................................................................................. 7
Wash. State Dep’t of Soc. & Health Servs. v. Guardianship Est. ofKeffeler,
537 U.S. 371 (2003) ............................................................................... 13
West Virginia v. EPA,
597 U.S. 697 (2022) .......................................................................... passim
Wolgin v. Simon,
722 F.2d 389 (8th Cir. 1983) .................................................................... 5-v-

TABLE OF AUTHORITIES(continued)
Page(s)STATUTES
15 U.S.C. § 77b .......................................................................................... 26
15 U.S.C. § 77g ..................................................................................... passim
15 U.S.C. § 77s .......................................................................................... 1515 U.S.C. § 78c-2 ....................................................................................... 1515 U.S.C. § 78c ..................................................................................... 20, 26
15 U.S.C. § 78l .............................................................................7, 11, 13, 15
15 U.S.C. § 78m.................................................................................... 12, 15
15 U.S.C. § 78w .................................................................................... 20, 26
15 U.S.C. § 80a-2 .................................................................................. 20, 27
42 U.S.C. § 7414 .......................................................................................... 8
OTHER AUTHORITIES
40 Fed. Reg. 51656 (Nov. 6, 1975) ...........................................................9, 10
89 Fed. Reg. 21668 (Mar. 28, 2024) ....................................................... passim
Business and Financial Disclosure Required by Regulation S-K,
81 Fed. Reg. 23916 (Apr. 22, 2016) ................................................... passim
Climate Risk Disclosure Act, S. 1217, 117th Cong. (2021) ............................. 8
Climate Risk Disclosure Act, H.R. 2570, 117th Cong. (2021) ......................... 8Fed. R. App. P. 29 ....................................................................................... 1- vi -TABLE OF AUTHORITIES(continued)
Page(s)Comm’r Hester M. Peirce, Green Regs and Spam: Statement on the
Enhancement and Standardization of Climate-Related Disclosures for
Investors (Mar. 6, 2024)...................................................................... passim
Report of the Advisory Committee on Corporate Disclosure to the
Securities and Exchange Commission, House Cmte. on
Interstate and Foreign Commerce, 95th Cong., 1st. Sess. (Nov.
3, 1977) ...................................................................................... 10, 12, 24
Comm’r Mark T. Uyeda, A Climate Regulation under theCommission’s Seal (Mar. 6, 2024) ........................................................ passim- vii -

INTEREST OF AMICUS CURIAE 1
Amicus curiae Business Roundtable is an association of chief executive officers of over 200 leading U.S. companies with over 10 million employees in the
U.S. and contributing over $3 trillion to the U.S. GDP. It believes that businesses should play an active role in formulating public policy.
Business Roundtable brings a unique perspective to this challenge. In its
view, good corporate governance can include proactive engagement with climate-related risks. But critically, corporate governance also benefits from a corporate board’s autonomy to pursue that proactive engagement without being
unnecessarily penalized by additional costs, a risk of increased liability, or compelled disclosure of proprietary information. By disproportionately elevating climate risk above all other governance considerations, however, the Rule raises
those precise concerns. Business Roundtable therefore submits this brief to shedfurther light on the ways the Rule actually penalizes proactive mitigation of climate-related risks and the SEC’s failure to consider these consequences.

Pursuant to Federal Rule of Appellate Procedure 29(a)(4)(E), amicus states thatno party’s counsel authored this brief in whole or in part and that no party,
party’s counsel, or other person—other than amicus, its members, or its counsel—contributed money that was intended to fund preparing or submitting thisbrief.
1

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INTRODUCTIONAs two current Commissioners have observed, the SEC’s climate-disclosure rule—The Enhancement and Standardization of Climate-Related Disclosures for Investors, 89 Fed. Reg. 21668, 21671 (Mar. 28, 2024) (the Rule)—reflects an “extraordinary exercise of regulatory authority” requiring “clear congressional authorization.” 2 Yet the SEC can point to no such authorization, oreven justify its authority to issue the Rule under ordinary principles of statutory
interpretation.
The Rule also compels, among its required disclosures, the release of certain information that is not material to a reasonable investor’s understanding ofa corporation’s financial performance and track record. The Rule is quite candid
on this score, expressly disclaiming the basic materiality threshold for particularcompelled disclosures. Instead, it mandates that companies disclose all information, material or not, about its board of directors’ oversight of climate-relatedrisks. But forcing boards to publicly disclose their confidential governance decisions—and duly increase their attendant risk of liability—may well penalize theirComm’r Mark T. Uyeda, A Climate Regulation under the Commission’s Seal (Mar.
6, 2024), https://www.sec.gov/news/statement/uyeda-statement-mandatoryclimate-risk-disclosures-030624 (Uyeda Dissent); see Comm’r Hester M. Peirce,
Green Regs and Spam: Statement on the Enhancement and Standardization of ClimateRelated Disclosures for Investors (Mar. 6, 2024), https://www.sec.gov/news/statement/peirce-statement-mandatory-climate-risk-disclosures-030624 (Peirce Dissent) (“only a mandate from Congress” would permit disclosure regime).
2

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thoughtful and robust engagement with climate risk, and divert resources fromother important risks to managing these costly disclosures.
Moreover, the SEC barely considered these predictable, tangible costs toboard oversight and corporate management. Even where the Commission nominally limited its disclosure requirements to material information, it ignored significant compliance costs associated with those mandates. And despite its obligation to conduct a rigorous cost-benefit analysis, the SEC did not make a serious effort to quantify its benefits apart from repeatedly reverting to the generalpremise that more government-mandated information is necessarily beneficial
to investors. But that questionable premise is plainly insufficient to justify thisRule in many of its details—much less satisfy the required cost-benefit analysis.
Indeed, the Commission does not meaningfully contend that the longstanding
absence of these specific new climate-related disclosures harmed investors, nordoes it explain why existing enforcement tools have proven insufficient. And theSEC offers little more than unsupported conjecture about what impact the Rule
“could,” “can,” or “might” have on efficiency, competition, and capital formation—the statutory factors Congress ordered it to analyze. Such inadequate
efforts to explain this consequential rulemaking do not qualify as reasoned decisionmaking.

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Given these multiple, independent defects, the Rule must be set aside.
“[N]o matter how ‘important, conspicuous, and controversial’ the issue, … anadministrative agency’s power to regulate in the public interest must always be
grounded in a valid grant of authority from Congress.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 161 (2000). And, as justified, this Rule articulates no meaningful limiting principle on the SEC’s disclosure authority, goingwell beyond longstanding principles of materiality and deeply intruding into thepractices and workings of corporate boards. Short term, the Rule therefore will
penalize proactive engagement with climate risk; long term, its one-size-fits-all
approach risks chilling healthy and robust dialogue within corporate boards
across the Nation. And if the SEC can compel corporate boards to disclose concededly immaterial information, it is difficult to conceive of any limiting principle that would prevent the Commission from mandating disclosure of whatever
political issue might come next. The Rule should be vacated.
BACKGROUND
To protect the unencumbered exercise of robust corporate governance,
many features of the American legal system work together to ensure that corporate “matter[s] of internal management” are generally “left to the discretion of
the directors.” United Copper Sec. Co. v. Amalgamated Copper Co., 244 U.S. 261,
263-64 (1917). That principle is the foundation of legal doctrines like the4“business judgment” rule, which directs that “courts will not interfere” withmatters “call[ing] for the business judgment or discretion of a corporation’sboard of directors … so long as that judgment is exercised fairly and honestly.”
Wolgin v. Simon, 722 F.2d 389, 393 (8th Cir. 1983). It underlies multiple federal
statutes designed to protect boards of directors from being “chilled” in their open
discussion of strategic matters by the prospect of liability, since such liability can“deter[] qualified individuals from serving.” Merrill Lynch, Pierce, Fenner & Smith
Inc. v. Dabit, 547 U.S. 71, 81 (2006). And it supports the presumption that Congress is “reluct[ant] to interfere with, and potentially chill” boards’ ability to engage in “internal self-criticism” and candidly assess challenges as they serve corporate health. Lippert v. Cmty. Bank, Inc., 438 F.3d 1275, 1280 (11th Cir. 2006).
While petitioners have extensively catalogued the breadth of disclosuresrequired by the Rule—and those disclosures’ correspondingly high costs—theRule’s burdens on the discretion afforded to boards of directors merit special
mention. Notably, the Rule compels “disclosure of board-level governance … ofclimate-related risks irrespective of the materiality of those risks.” 89 Fed. Reg. at
21855 (emphasis added). Boards therefore must publicly describe (1) the “processes by which” the board is informed of risks, and by which management “assess[es] and manage[s]” such risks; (2) any committee charged with oversight;(3) “whether and how the board of directors oversees progress” of any “target or5goal or transition plan” the Rule mandates be disclosed; and (4) the “relevant
expertise” of management overseeing risks. Id. at 21915.
In addition to these board-level disclosures, the Rule also requires extensive public description of proprietary corporate strategy. To start, it mandates
disclosure of all “climate-related risks … reasonably likely to have a material
impact” on a business, including on its “strategy.” Id. But companies cannot
make such a disclosure without giving away the “strategy” itself.
The Rule then delves deeper into companies’ proprietary information, requiring descriptions of key internal analyses including the “parameters, assumptions, and analytical choices used” in climate-related risk scenarios, annual updates on any “transition plan to manage” relevant risks, discussion of how suchplans “relate to” a company’s overall “business model or strategy,” and“whether and how resources are being used to mitigate” risks. Id. at 21915-16.
And the Rule requires similarly detailed information about any “climate-related
target or goal” that “is reasonably likely to materially affect the registrant’s business,” with annual “update[s]” about all “actions taken during the year toachieve its targets or goals.” Id. at 21916.

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ARGUMENTI.

The Rule Exceeds the SEC’s Statutory Authority.
Claiming extraordinary powers based on modest residual clauses, the SEC

has imposed an unprecedented, sweeping disclosure regime laser-focused on asingle question—climate risk. See 15 U.S.C. §§ 77g(a)(1), 78l(b)(1), (g)(1). A regime of this magnitude requires a clear grant of authority from Congress. Yet nosuch foundation exists. While the SEC has been granted authority to compel
disclosure of certain material information, the Rule far exceeds that traditional
statutory constraint.
The Rule requires clear statutory authority.
A “plausible textual basis” may be enough to justify the typical technicalrule, but “there are ‘extraordinary cases’ … in which the history and the breadthof the authority that the agency has asserted, and the economic and politicalsignificance of that assertion” require “clear congressional authorization.” West
Virginia v. EPA, 597 U.S. 697, 721-23 (2022) (cleaned up). This Rule—in its particular overreach—is one of them.
First, in promulgating the Rule, the SEC has “claimed to discover in along-extant statute an unheralded power representing a transformative expansion in its regulatory authority.’” Id. at 724 (cleaned up). Courts apply “skepticism” to such claims, Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014)—

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especially where, as here, Congress has repeatedly “considered and rejected”
proposals to grant an agency the same authority it later asserts it already possessed, Brown & Williamson, 529 U.S. at 147; see, e.g., Climate Risk Disclosure
Act, S. 1217, 117th Cong. (2021); Climate Risk Disclosure Act, H.R. 2570,
117th Cong. (2021).
Second, where an agency has not been granted “a like authority” by statute,and other entities are more likely candidates for the job, “[t]here is little reason
to think Congress assigned” the task to the agency. West Virginia, 597 U.S. at
729-30 (noting the EPA had no “‘comparative expertise’” in energy policy); seeKing v. Burwell, 576 U.S. 473, 486 (2015) (“especially unlikely” that decision relating to “health insurance policy” was “delegated … to the IRS”); see also Alabama Ass’n of Realtors v. HHS, 594 U.S. 758, 764 (2021) (clear statement necessary
before health agency could regulate evictions). Here, when Congress has expressly assigned power to compel climate-related disclosures without regard tomateriality for investors, it has chosen the EPA as the more logical actor. See,e.g., 42 U.S.C. § 7414(a)(1) (authorizing EPA to impose emissions-disclosure requirements).
Third, the Rule undeniably has “deep ‘economic and political significance.’” King, 576 U.S. at 486. It regulates a “significant portion of the American economy,” West Virginia, 597 U.S. at 722, and requires corporate “time and8resources” to such a degree that “elevates climate above nearly all other issues
facing public companies,” Uyeda Dissent. Moreover, the Rule “will increase thetypical external costs of being a public company by around 21%,” Peirce Dissent, thus “entail[ing] billions of dollars in compliance costs each year,” West
Virginia, 597 U.S. at 716; accord, e.g., King, 576 U.S. at 485 (“billions of dollars”
in annual costs support the need for a clear statement).
Congress did not provide any authority for the Rule, let alone aclear delegation of power.
In disputing the application of the “major-questions” doctrine, the SEC
has invoked its “authority to require disclosures that provide investors with information that is important to their investment and voting decisions,” and citedresidual clauses that generally permit disclosures serving the public interest or
protecting investors. 89 Fed. Reg. at 21687. But these provisions do not evenprovide a plausible textual foundation for the Rule, let alone furnish the necessary “‘clear congressional authorization’ for the power [the SEC] claims.” West
Virginia, 597 U.S. at 723.
As the SEC has acknowledged for nearly 50 years, “to insure meaningful
and useful disclosure documents of benefit to most investors without unreasonable costs to registrants and their shareholders,” the Commission may require
environmental disclosures “only if such information … is important to the reasonable investor”—i.e., “material information.” Environmental and Social
9Disclosure, 40 Fed. Reg. 51656, 51660 (Nov. 6, 1975) (1975 Release) (emphasis
added); see Business and Financial Disclosure Required by Regulation S-K, 81 Fed.
Reg. 23916, 23971 (Apr. 22, 2016) (“The current statutory framework for adopting disclosure requirements remains generally consistent with the frameworkthat the Commission considered in 1975”). And because “[a]ll reasonable investors value financial returns,” if “disclosure of information [is] not clearly related
to financial returns” then “only a mandate from Congress” may justify it. Peirce
Dissent (emphasis added). 3
The Commission recently reaffirmed these fundamental limitations whenaddressing disclosure requirements under Regulation S-K, the “central repository for [the SEC’s] non-financial statement disclosure requirements.” 81 Fed.
Reg. at 23916-17. According to the SEC, there are only two scenarios in which
it may require “disclosure relating to environmental and other matters of social
concern”: (1) where “appropriate to further a specific congressional mandate”;
and (2) where, “under the particular facts and circumstances, such matters are
Indeed, in one of “several studies” commissioned by the SEC to “advance[]efforts to integrate the Securities Act and Exchange Act disclosure regimes,” 81Fed. Reg. at 23918, an SEC advisory committee previously explained that “investors are motivated by economic concerns and are generally interested in information which reflects on the current and future economic performance of their investment.” Report of the Advisory Committee on Corporate Disclosure to the
Securities and Exchange Commission 395, Cmte. Print 95-29, House Cmte. on
Interstate and Foreign Commerce, 95th Cong., 1st. Sess. (Nov. 3, 1977),
https://tinyurl.com/4x98j2hx (Sommer Report) (emphasis added).
3

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material.” Id. at 23970 (emphasis added). These limits make good sense given
that, absent some special mandate, “the securities laws care only about the ‘significance of an omitted or misrepresented fact to a reasonable investor.’” Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175, 187(2015) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 445 (1976)); cf.
Basic Inc. v. Levinson, 485 U.S. 224, 232 (1988) (materiality implicated for the“reasonable investor” where information signals a “certain and clear” “impact”
on a company’s “fortune”).
Considering the Rule “adopts an entirely new subpart of Regulation S-K,”
Uyeda Dissent, the SEC’s bipartite understanding of its own authority in theRegulation S-K context should apply. And because neither condition obtains, it
is clear that the Rule exceeds the SEC’s conceded limitations on its power.
The Rule does not rest on a specific congressional mandate.
The SEC primarily pegs the Rule to broad, general language in two residual clauses that authorize it to compel companies to disclose information theCommission deems “necessary or appropriate in the public interest or for theprotection of investors.” 15 U.S.C. § 77g(a)(1) (“[i]nformation required in registration statements”); § 78l(b)(1) (“[r]egistration requirements for securities”).
The SEC’s reliance on these clauses is misplaced for three reasons.

11First, general language from these residual clauses is not a “specific” mandate from Congress, 81 Fed. Reg. at 23970, as opposed to, say, a provision expressly requiring the disclosure of the use of “conflict minerals,” 15 U.S.C.
§ 78m(p). Thus, even under the SEC’s own understanding of its authority, theseclauses cannot provide a foundation for requiring companies to “disclos[e] [information] relating to environmental … matters.” 81 Fed. Reg. at 23970.
Second, and more fundamentally, the clauses’ catch-all language “is notwithout limit.” TSC Indus., 426 U.S. at 448; see NYSE v. SEC, 962 F.3d 541, 546(D.C. Cir. 2020) (“[A]n agency’s general rulemaking authority does not meanthat the specific rule the agency promulgates is a valid exercise of that authority.”) (cleaned up). To the contrary, “‘public interest’ is never an unbounded
term,” and “broad ‘public interest’ mandates must be limited to ‘the purposes
Congress had in mind when it enacted [the] legislation.’” Bus. Roundtable v. SEC,
905 F.2d 406, 413 (D.C. Cir. 1990). Here, “[t]he primary purpose of the Acts of1933 and 1934 was to eliminate serious abuses in a largely unregulated securities
market.” United Hous. Found., Inc. v. Forman, 421 U.S. 837, 849 (1975). That
counsels toward constraining the scope of disclosures authorized under the pertinent residual clauses to the sort of information that would curb market abuses
and protect investors—i.e., financial information. Accord, e.g., Sommer Report395; cf. Basic Inc., 485 U.S. at 232.

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Ordinary principles of statutory interpretation lead to the same conclusion. Typically, “general words are construed to embrace only objects similar innature to those objects enumerated by the preceding specific words.” Wash. State
Dep’t of Soc. & Health Servs. v. Guardianship Est. of Keffeler, 537 U.S. 371, 384 (2003)(cleaned up). The “specific words” that “preced[e]” the residual clauses’ “general words” in this case provide no specific mandate for the Rule. Id. In one, thelanguage preceding the residual clause refers to information “specified in Schedule A of section 77aa,” 15 U.S.C. § 77g(a)(1), which the SEC itself has admitted
is “largely financial in nature,” 81 Fed. Reg. at 23921. And in the other, thepertinent catch-all language relates to 12 enumerated disclosure requirements,
each of which similarly has a financial focus. See 15 U.S.C. § 78l(b)(1)(A)-(L)(requiring disclosure of, among other things, “balance sheets,” “profit and loss
statements,” and “any further financial statements … deem[ed] necessary or appropriate for the protection of investors”) (emphases added). None of these requirements is “similar in nature” to determinations about environmental sustainability. Keffeler, 537 U.S. at 384.
Simply put, “a word is known by the company it keeps.” Gustafson v. Alloyd Co., 513 U.S. 561, 575 (1995). And here, the words accompanying the residual clauses are “financial in nature,” 81 Fed. Reg. at 23921, and geared toward “eliminat[ing] serious abuses” in the market, Forman, 421 U.S. at 849.
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Construing catch-all language to authorize the compelled disclosure of information that is not “financial in nature” or aimed at investor protection would
therefore “giv[e] … unintended breadth” to the securities laws. Jarecki v. G. D.
Searle & Co., 367 U.S. 303, 307 (1961); see, e.g., Chamber Br. 46-49; Iowa Br. 1924; TAEP Br. 29-42.
The validity of this limitation on the SEC’s disclosure authority is supported by the fact that, as far as Business Roundtable is aware, the SEC has neverbrought an enforcement action based on a company’s failure to report the extensive nonmaterial information required in the rule. See also Chamber Br. 23(“[T]he Commission apparently has never brought a single case against any company for failing to disclose material climate-related risks[.]”). Indeed, despite
bearing the burden of demonstrating that the current regime is ineffective, theSEC never suggests that any prior enforcement actions uncovered, in relation toa failure to disclose climate risk, the sorts of “serious abuses” that the securities
laws were designed to prevent. Forman, 421 U.S. at 849. This history underscores the lack of any statutory basis for the Rule. See West Virginia, 597 U.S. at
725 (“[J]ust as established practice may shed light on the extent of power conveyed by general statutory language, so the want of assertion of power by those
who presumably would be alert to exercise it, is equally significant in determining whether such power was actually conferred.”) (cleaned up).

14

Third, the SEC’s assertion of authority is particularly implausible giventhat Congress knows how to authorize the Commission to compel non-financial
disclosures when it wants to do so. See 15 U.S.C. § 78m(p) (requiring companies
to disclose use of “conflict minerals”). Here, however, Congress repeatedly “rejected” bills that would impose such requirements when it comes to climate risk.
Brown & Williamson, 529 U.S. at 144, 159 (emphasis added); see supra at 8. Thatis “a sign that an agency is attempting to work around the legislative process toresolve for itself” a question of great importance. West Virginia, 597 U.S. at 743(Gorsuch, J., concurring) (cleaned up); see Chamber Br. 57-58; Iowa Br. 35.4
The Rule compels disclosures that are not material.
a.

As noted, there is “universal[] agree[ment]” that materiality requires

an “objective” inquiry “involving the significance of an omitted orWhile the SEC also claims to find authority for the Rule in “sections … 10,
19(a), and 28 of the Securities Act, as amended, and sections 3(b), … 13, 15,23(a), and 36 of the Exchange Act, as amended,” these provisions generally pertain to the disclosure of financial information and investor safety. 89 Fed. Reg. at
21912; see, e.g., 15 U.S.C. § 77s(a) (SEC may make “rules and regulations governing registration statements and prospectuses” and “to prescribe … the items
or details to be shown in the balance sheet and earning statement, and the methods” for preparing accounts), § 78m(a)-(b) (similar). In fact, some of the provisions have little (or nothing) to do with disclosures at all. See, e.g., 15 U.S.C.
§ 78c-2 (deeming certain instruments “securities” which are otherwise exemptedby the Commodity Futures Trading Commission); § 78l (requiring registration
for “any security … on a national securities exchange”). Read in context, thesestatutory provisions cannot plausibly authorize the Rule’s required environmental disclosures—which is presumably why the SEC does not place much weighton them.
415

misrepresented fact to a reasonable investor.” TSC Indus., 426 U.S. at 445; see
Omnicare, 575 U.S. at 186-87 (explaining the “materiality” inquiry turns on an“objective” assessment “of a reasonable investor”). And because the hallmark
of reasonable investors is “the expectation that they w[ill] earn a profit[,]” themateriality standard turns on investors’ financial considerations. SEC v. W.J.
Howey Co., 328 U.S. 293, 298 (1946); accord, e.g., Basic Inc., 485 U.S. at 232.
The “particularized interests” surrounding the Rule’s non-financial, climate-based disclosure regime therefore mark a stark departure from matters of“objective[]” significance to the “reasonable investor.” Peirce Dissent; see, e.g.,
Omnicare, 575 U.S. at 187. While some of the Rule nominally anchors itself tothe adjective “material,” 89 Fed. Reg. at 21683-86, much of its “materiality”
analysis reduces to the broad premise that any climate-related information ismaterial because some investors would like to know it, see id. at 21684 (claiming
the Rule “reflect[s] investors’ increased demand[s]”). Congress, however, “didnot create [the SEC] to satisfy the wants of every investor, but to serve the interests of the objectively reasonable investor seeking a return on her capital.” Peirce
Dissent; see, e.g., Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44 (2011) (discussing “contextual inquiry” necessary for determining whether undisclosed information would have “significantly altered the ‘total mix’ of information made16

available” for “a reasonable investor”) (citations omitted, emphases in original);
see also Chamber Br. 46-54; TAEP Br. 32-42.
Both the SEC’s reasoning and the Rule’s actual requirements therefore
stretch the concept of materiality beyond traditional limits in spite of the lack ofany congressional authority to do so. That further calls into question the Rule’s
legitimacy.5b.

While petitioners have highlighted numerous examples in the Rulethat go beyond materiality limits (e.g., Chamber Br. 33-37; Iowa Br. 10-13, 2628), the degree to which the Rule’s board-disclosure and strategic-disclosure requirements strain materiality merit further attention.
First, the Rule requires disclosure of all “climate-related risks,” “target[s,]or goal[s]” “reasonably likely to have a material impact” on a business—

As the Chamber notes (Br. 59-67), the SEC’s deviation from the traditional
materiality standard also raises serious First Amendment compelled-speech concerns. The First Amendment “prohibits the government from telling people
what they must say,” Rumsfeld v. FAIR, 547 U.S. 47, 61 (2006), including whenit comes to SEC disclosure requirements, see, e.g., Nat’l Ass’n of Mfrs. v. SEC, 800
F.3d 518, 555 (D.C. Cir. 2015). By compelling speech, the Rule is a facially content-based regulation that is therefore subject to strict scrutiny and “presumptively unconstitutional.” NIFLA v. Becerra, 585 U.S. 755, 766 (2018). But the
SEC’s asserted justification for the Rule largely turns on providing consumers
with more information (as opposed to, e.g., fraud protection), and thus would
likely fail even the most lenient form of First Amendment scrutiny governing
disclosures. See, e.g., Am. Meat Inst. v. USDA, 760 F.3d 18, 31 (D.C. Cir. 2014)(en banc) (Kavanaugh, J., concurring) (“[I]t is plainly not enough” just to say acompelled disclosure “giv[es] consumers information.”).
517

including on its “strategy.” 89 Fed. Reg. 21915-16; see supra at 6-7. From that
attenuated understanding of “material” the Rule requires extensive detail about
the tools that track or lead to the identification of these risks, irrespective
whether that detail is itself material information. See, e.g., 89 Fed. Reg. at 21916(requiring disclosure of “parameters, assumptions, and analytical choices used”
in any “scenario analysis” that identifies climate risk reasonably likely to be material; lacking exception for proprietary information).
Second, the Rule mandates that companies describe “a board of directors’
oversight of climate-related risks,” and expressly declines to “adopt[] a materiality qualifier for this portion of the final rule.” Id. at 21712-13. As such, every
board must disclose—material or not—the “processes by which” the board isinformed, and “whether and how the board of directors oversees progress” of
any “target or goal or transition plan.” Id. at 21915. While the SEC attempts tojustify this portion of the Rule on the theory that “any risks elevated to the board
level will be material to the company and limited in number,” id. at 21713, it
does not actually embrace this argument. If the SEC truly believed any risk “elevated to the board level,” id., was necessarily “material” to the “reasonable investor,” TSC Indus., 426 U.S. at 445, it would mandate disclosure of every risk aboard considers. But the SEC does not do that. Indeed, by declining to “adopt[]18

a materiality qualifier,” 89 Fed. Reg. at 21713, the SEC all but concedes thisprovision requires disclosure of immaterial information.
Unless the Judiciary puts a stop to it, the SEC’s corporate-governanceoverreach is almost certain to continue. The disclosure rule in this case comes
amidst a flurry of new SEC disclosure requirements into internal-management
matters for public and private entities alike, some of which have been held invalid. See, e.g., Nat’l Ass’n of Priv. Fund Managers v. SEC, No. 23-60471, 2024 WL
2836655, at *11-12 (5th Cir. June 5, 2024) (vacating SEC rule requiring disclosures from private fund advisors as “exceed[ing] its statutory authority,” andconcluding “the Commission has not articulated a ‘rational connection’ between
fraud and any part of the Final Rule”); Chamber of Com. of U.S. v. SEC, 85 F.4th
760, 766, 780 (5th Cir. 2023) (concluding that “[t]he SEC acted arbitrarily andcapriciously … when it failed to respond to petitioners’ comments and failed to
conduct a proper cost-benefit analysis” of a rule requiring disclosure of company’s rationale for stock buybacks).
Absent continued judicial scrutiny, the SEC likely will feel emboldened tocontinue drifting further from material, financial concerns and toward unmistakably political matters, jeopardizing investors and boards alike. After all, if the
SEC can compel board-related disclosures shorn of any “materiality qualifier”
without express statutory authority, it is hard to see what would stop the19Commission from mandating disclosures related to any sensitive issue “elevatedto the board level.” 89 Fed. Reg. at 21713; see also, e.g., TAEP Br. 49-50 (explaining SEC’s approach “would deny any limiting principle”).
II.

The Rule Is Not Reasonably Explained.
Even if the Rule had a statutory foundation, the SEC’s decisionmaking

process would still violate the Administrative Procedure Act (APA). A rule may
be vacated under the APA when the agency has “failed to consider an important
aspect of the problem” or neglected to “look at the costs as well as the benefits”
of a regulation. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43, 54 (1983). And when it comes to the SEC specifically,
Congress required the Commission to also “assess the economic effects of a newrule” and “consider the effect of a new rule upon ‘efficiency, competition, andcapital formation’”—assessments that should “quantify” a rule’s costs and benefits whenever possible. Bus. Roundtable v. SEC, 647 F.3d 1144, 1148-49 (D.C.
Cir. 2011) (citing 15 U.S.C. §§ 78c(f), 78w(a)(2), 80a-2(c)); see, e.g., Am. Equity
Inv. Life Ins. Co. v. SEC, 613 F.3d 166, 178 (D.C. Cir. 2010) (SEC failed to “consider the economic implications” of its rule fully, where “it failed to consider”
the baseline status quo). Here, the SEC’s explanation for the Rule fails to fully
assess its costs (including its chilling effect on boards addressing climate risks at20all); explain how the Rule’s supposed benefits counterbalance its conceded costs;
or meaningfully analyze the factors it was statutorily mandated to consider.
The SEC failed to adequately address numerous key costs.
As petitioners explain, the SEC failed to consider many important costsof its Rule and dramatically underestimated others. See, e.g., Chamber Br. 37-43.
Notably, the SEC failed to reasonably assess two costs bearing on the ability ofcorporate boards and management to exercise effective corporate governance.
First, the Rule’s board and management level disclosure requirements will
punish companies’ proactive efforts to address climate-related risk, and run therisk of chilling robust board discussions. Once a board exercises any “oversightof climate-related risks”—which must be disclosed “irrespective of the materiality of those risks”—or assesses “progress” toward a “transition plan,” the board
must immediately engage in “disclosure of [that] board-level governance.” 89
Fed. Reg. at 21855, 21915. Thus, even at the most tentative stage of structuring
climate risk oversight, corporate boards across the country will have to consider
the disclosure impact of their decisions.
Perversely, the burdens of the Rule increase in direct relation to a company’s proactive engagement with climate risk. If, for example, management
commissions a risk scenario for any climate-related issue “reasonably likely tohave a material impact on its business, results of operations, or financial

21

condition,” the Rule requires the company to describe “the parameters, assumptions, and analytical choices used, as well as the expected material impacts, including financial impacts, on the registrant under each such scenario.” Id. at
21916. Similarly, should a business take the initiative to set a climate-related“target or goal” that is “reasonably likely to materially affect the registrant’sbusiness,” it must provide extensive public disclosure on the details, including
its scope of activities, its plan to meet the target, and an update “each fiscal year”
on its progress toward the target. Id. And, of course, all these compelled disclosures carry with them the threat of “legal liability”—including an “inevitableflood of class actions”—should public or private litigants perceive any of thecompany’s additional disclosures as inaccurate or insufficient. Peirce Dissent.
Such a regime penalizes thoughtful engagement with climate risk by mandating
the diversion of key risk-management resources to address these intrusive disclosure mandates in a manner that minimizes potential liability. 6

The SEC’s claim that “some of the required disclosures …. will be subject to[Private Securities Litigation Reform Act] safe harbors, which may reduce litigation costs” is no response to this concern. 89 Fed. Reg. at 21855. Many of thestatements that require “assertions of present fact”—e.g., how the company currently addresses risk—will not be covered. Boykin v. K12, Inc., 54 F.4th 175, 184(4th Cir. 2022). And these safe harbors are no absolute bar to litigation based on
forward-looking statements if, for example, a plaintiff alleges a statement was
knowingly false and lacked “‘meaningful cautionary language.’” IBEW Loc. 98
Pension Fund v. Best Buy Co., 818 F.3d 775, 778 n.2 (8th Cir. 2016).
6

22

Second, the SEC concededly failed to adequately account for an important
category of costs: the “standalone cost” of “materiality determinations” under
the Rule’s various quasi-materiality standards. 89 Fed. Reg. at 21875 (declining
to “estimate” such costs and suggesting, without elaboration, that they may bebuilt into other cost estimates); see Peirce Dissent (“The Commission does nottake full account of the costs to make such a non-materiality determination.”).
That cost is amplified under the Rule’s broad approach to materiality—encompassing not just climate risks materially endangering a company’s financial
health, but risks “reasonably likely to have a material impact” on various aspectsof a company (including its “strategy”). 89 Fed. Reg. at 21915-16. And because“any non-disclosure, including assessments of materiality, will be judged inhindsight,” companies will be pressured toward overinclusive disclosure—andin turn, more expense—to “avoid potential liability.” Uyeda Dissent.7
It is therefore far from clear “what disclosures the rule actually mandate[s]”—a problem in and of itself. Chamber, 85 F.4th at 779. Indeed, a study
undertaken by an SEC advisory committee anticipated that the SEC’s lack ofComplicating matters, “nested” materiality pervades the rule, where Information A is treated as material if it is material to Information B, which is material to the business. See, e.g., 89 Fed. Reg. at 21916 (requiring disclosure of certain “material component[s] of a registrant’s plan to achieve climate-related targets or goals” when those targets or goals may be likely to materially impact abusiness); see also, e.g., Chamber Br. 35.

7

23

environmental expertise would leave it with “no standard on which to base its
decisions as to what specific additional disclosure should be required” if it
adopted a relevance threshold more capacious than just “reflect[ing] significantly on the economic and financial performance of” a company. Sommer Report 395-96. It is therefore no answer for the SEC to treat vagueness as a virtue,
saying that the Rule preserves “flexibility” in corporate descriptions of strategy
that “may enable [companies] to avoid disclosure of competitively sensitive information.” 89 Fed. Reg. at 21851. That response fails to consider how partial
or oblique statements could themselves give rise to liability—and further underscores that the SEC did not engage with the full costs of its disclosure regime.
The SEC failed to quantify the Rule’s purported benefits and to
consider downstream costs imposed on investors.
Failure to rigorously address a rule’s costs and benefits is a classic APA
violation. See, e.g., Bus. Roundtable, 647 F.3d at 1150-51. But even where the SEC
attempted to calculate the costs of its rule, it failed to meaningfully assess
whether the “anticipated benefits” of its Rule to investors were sufficient to “outweigh the [Rule’s] costs.” Peirce Dissent (emphasis added). Indeed, despite theRule’s invocation of various possible benefits like “reducing information asymmetry” it repeatedly concedes it is “unable to quantify these benefits.” 89 Fed.
Reg. at 21866 (weather events); see, e.g., id. at 21829-30 (“In many cases, however, we are unable to reliably quantify the potential benefits and costs of the24final rules because we lack information necessary to provide a reasonable estimate.”).
While firm quantification of a rule’s benefits may sometimes be challenging, the SEC’s dismissive shrug here reveals a lack of reasoned decisionmaking
given that (1) the SEC’s own estimates concede severe costs; and (2) both dissenting Commissioners along with a bevy of commentators explain that the SEC
dramatically underestimates the Rule’s price tag. 8 To determine whether thosecosts were worth it, the SEC needed to come up with some estimate of the supposed benefits of the Rule. It failed to do so.
Moreover, by “elevat[ing] climate above nearly all other issues,” the
SEC’s regime inevitably diverts resources from proactively addressing other key
risks. Uyeda Dissent; see Michigan v. EPA, 576 U.S. 743, 753 (2015) (“too muchwasteful expenditure devoted to one problem may well mean considerably fewer
resources available to deal effectively with other (perhaps more serious) problems”) (citation omitted). Particularly when a corporation’s immediate threats
come from areas other than climate risk—e.g., cybersecurity risks or global instability—a climate-risk requirement that requires significant operational

See generally Peirce Dissent; Comment from Retail Industry Leaders Association (RILA Comment) at 5 (“[T]he true initial set up and ongoing compliancecosts for a typical retailer will be more than 35 times the amount that the SEC has
estimated.”) (emphasis added).

825

resources undermines the business’s ability to address more immediate perils.
And that in turn will jeopardize investors’ interests.
Nevertheless, the SEC only passingly acknowledged these costs, never attempting to reconcile them with the Rule’s supposed benefits. See 89 Fed. Reg.
at 21856 (“To the extent that the final rules lead companies to alter their governance structures in ways that are less efficient (e.g., by diverting board or management attention from other pressing corporate matters or devoting internal resources and expertise to climate-related risks at the expense of other concerns),
investors could incur costs in the form of diminished shareholder value.”). That
is not enough. See, e.g., Michigan, 576 U.S. at 753.
The SEC’s analysis of statutorily mandated factors is inadequate.
Finally, the SEC failed to adequately analyze “statutorily mandated factors.” Pub. Citizen v. Fed. Motor Carrier Safety Admin., 374 F.3d 1209, 1222 (D.C.
Cir. 2004). Per Congress’s mandate, the SEC is required: (1) to consider whether
a proposed rule “will promote efficiency, competition, and capital formation,”
15 U.S.C. § 77b(b); see id. § 78c(f) (similar); and (2) in considering an “impact …
on competition,” to “not adopt any such rule or regulation which would imposea burden on competition not necessary or appropriate” to further its statutory
purposes, id. § 78w(a)(2). The Commission also must consider whether specificdisclosures in registration statements are “necessary or appropriate in the public

26

interest or for the protection of investors.” Id. § 77g(a)(1); see 89 Fed. Reg. at
21683. Namechecking these factors is insufficient; the SEC must “disclose a reasoned basis” for its conclusions on each. Am. Equity, 613 F.3d at 177. Here, theSEC fell short in at least two ways.
First, while the SEC invoked empirical research to support its view that it“expect[s] the final rules to increase efficiency,” 89 Fed. Reg. at 21888-89, its
analysis of the Rule’s effect on “competition” and “capital formation” is inexplicably conclusory, id. at 21890-91. For instance, rather than determining how
the Rule will impact competition, the SEC simply stated it “expect[s] that bystandardizing reporting practices, the final rules would level the playing fieldamong firms, making it easier for investors to assess the climate-related risks ofa registrant against those of its competitors,” and that “[t]he effects of peerbenchmarking can contribute to increased competition.” Id. at 21890 (emphasis
added). Absent greater substantiation, this reasoning only “supports at most theconclusion that any SEC action in this area could promote competition, but does
not establish [the Rule’s] effect on competition.” Am. Equity, 613 F.3d at 178 (emphasis added). Indeed, courts have rejected similar economic analysis from theSEC before. See, e.g., Chamber, 412 F.3d at 143-44 (“[T]he Commission violated
its obligation under 15 U.S.C. § 80a-2(c), and therefore the APA” by failing to27

“do what it [could] to apprise itself … of the economic consequences of a proposed regulation”).
Second, the SEC must assess its rules against “the existing regime,” Am.
Equity, 613 F.3d at 179, and evaluate costs and benefits “at the margin” of that
regime, Bus. Roundtable, 647 F.3d at 1151. The SEC acknowledges that “current
requirements for climate-related disclosures and current market practice” forms
the “baseline against which … the effects on efficiency, competition, and capitalformation … are measured.” 89 Fed. Reg. at 21830. But despite describing that“baseline” at some length, the SEC provides a perfunctory discussion of benefits
to competition and capital formation (such as allowing “investors to assess theclimate-related risks of a registrant against those of its competitors,” id. at
21890), that does not discuss the degree to which the baseline is already serving
those goals. Because the Rule does not “accurately assess any potential increaseor decrease in competition,” it must be set aside. Am. Equity, 613 F.3d at 178.

28

CONCLUSION
For the reasons discussed above, the Court should vacate the Rule.

Dated: June 24, 2024

Respectfully submitted,/s/ Brinton Lucas

Leon F. DeJulius Jr.
Traci L. Lovitt
Howard F. Sidman
JONES DAY
250 Vesey St.
New York, NY 10281

Noel J. FranciscoCounsel of Record
Brinton Lucas
Brett A. Shumate
Christopher PagliarellaThomas A. Wilson
JONES DAY
51 Louisiana Ave. NW
Washington, DC 20001
Telephone: 202-879-3939
njfrancisco@jonesday.com

Liz Dougherty
BUSINESS ROUNDTABLE
1000 Maine Ave., SW
Washington, DC 20024

Counsel for Amicus Curiae Business Roundtable

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CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rule of Appellate Procedure 29(a)(4), I certify thatthe foregoing brief contains 6,472 words, excluding the parts of the brief exempted by Federal Rule of Appellate Procedure 32(f), as counted using theword-count function on Microsoft Word 365 software.
This brief further complies with the typeface and type style requirementsof Federal Rule of Appellate Procedure 32(a)(5)-(6) because this brief has been
prepared in a proportionately spaced typeface, 14-point Calisto MT.

Dated: June 24, 2024

Respectfully submitted,/s/ Brinton Lucas
Brinton Lucas

30

EIGHTH CIRCUIT RULE 28A(h)(2) CERTIFICATIONI hereby certify that this brief has been scanned for viruses and is virusfree.

Dated: June 24, 2024

Respectfully submitted,/s/ Brinton Lucas
Brinton Lucas

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CERTIFICATE OF SERVICE
I hereby certify that on June 24, 2024, I caused the foregoing brief to beelectronically filed with the Clerk of the Court for the U.S. Court of Appeals for
the Eighth Circuit via the CM/ECF system. I further certify that service on allparties’ counsel will be accomplished by the CM/ECF system.

Dated: June 24, 2024

Respectfully submitted,/s/ Brinton Lucas
Brinton Lucas32