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House Hearing on SEC Climate Rule

April 16, 2024

The House Financial Services Committee (HFSC) held a hearing on April 10 titled “Beyond Scope: How the SEC’s Climate Rule Threatens American Markets.”

Why it matters: This climate regulation hearing is the latest salvo from conservative lawmakers against the Securities and Exchange Commission’s (SEC’s) climate disclosure rule.

• Committee Republicans described the rule as SEC overreach, arguing that it deviates from the materiality standard and could potentially harm businesses by mandating costly and burdensome disclosures.
• Democrats stated that climate risk is undeniably material and is necessary to protect investors.

Lawmakers also discussed the exclusion of Scope 3 (related to an organization’s value chain) emissions disclosure requirements from the final rule.

As covered in previous CREFC Policy and Capital Markets Briefings, at least nine lawsuits have been filed against the SEC’s climate disclosure rule and consolidated in the Eighth Circuit Court of Appeals pending litigation.

On April 4, the SEC issued a stay on the rule to avoid regulatory uncertainty if registrants “were to become subject to the Final Rules’ requirements during the pendency of the challenges to their validity.”

Unfortunately, attempting to reduce regulatory uncertainty is likely impossible at this point, regardless of what transpires with the SEC rule.

• In the two years since the SEC issued the proposal, California passed more stringent climate disclosure laws, with related regulations likely proposed in the coming year.
• Additionally, U.S. organizations that do business in Europe also have tougher standards with which to comply. For example, under the EU’s Corporate Sustainability Reporting Directive, U.S.-headquartered companies doing business with EU companies may have to include Scope 3 emissions reporting.
• Finally, the International Sustainability Standards Board’s (ISSB’s) extensive climate disclosure requirements are being adopted by more and more countries.

CREFC will continue to monitor regulatory and legislative developments related to climate regulation.

Please contact Sairah Burki (sburki@crefc.org) with any questions. 

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Speaker Johnson Prevails Amid Surveillance Law Infighting

April 16, 2024

On Friday, April 12, the House passed a two-year reauthorization of the Foreign Intelligence Surveillance Act (FISA). The bill now heads to the Senate where it is expected to pass.

Why it matters: The reauthorization was another test for Speaker Mike Johnson (R-LA). Conservatives and progressives opposed various pieces of the surveillance program, forcing Johnson to juggle his narrow House majority with national security priorities and Trump’s distaste for the program.

Overview of FISA: Section 702 of FISA generally governs the surveillance of foreign nationals located outside the U.S. The government does not have to obtain a warrant for this surveillance, but the surveillance cannot target U.S. persons or those located in the U.S. FISA was renewed in 2012 and 2017 with bipartisan support.

• Critics have focused on instances where 702 surveillance of foreigners abroad also sweeps in communications with any Americans.
• An amendment to add a warrant requirement to some aspects of FISA failed in a tie 212-212 vote.
• The shortened timeframe from the traditional five-year authorization was part of a negotiation after former President Trump opposed the reauthorization.

Rule Vote Failures: Earlier this week, the House failed to pass a “rule” to govern debate and consideration of the FISA bill after 19 GOP members voted against the rule. Rules allow the majority party to limit debate and amendments (e.g., tough votes) on its priorities.

• This was Speaker Johnson’s fourth failed rule vote in the last six months. This dysfunction could be a sign of things to come, as Johnson is dealing with a possible vote to oust him as early as next week. More on that later.
• Previously, speakers John Boehner, Nancy Pelosi and Paul Ryan never lost a rule vote during their tenures. McCarthy lost three before his ouster.

The result: Amid tense and close amendment votes, the bill finally passed on a bipartisan vote of 273-147. Later the same day, Speaker Johnson traveled to Mar-a-Lago for a joint appearance with Trump, less than 48 hours after Trump had publicly opposed FISA reauthorization.

• While Johnson has faced criticism from all corners of Capitol Hill during his tenure, he has navigated a complicated political predicament on spending and national security issues.

Yes, but: The threat of a motion to vacate continues to loom over Johnson, and the FISA passage may stir up more critics.

• Rep. Marjorie Taylor Greene (R-GA) sent an open letter to her colleagues this week, detailing her reasons for wanting to oust Johnson, including a promise to vote on Ukraine funding and his passage of government spending deals.
• Trump voiced his support for Johnson and acknowledged the difficult tasks he's faced with, though he noted his own friendship with Greene.

Contact James Montfort at (jmontfort@crefc.org) or David McCarthy (dmccarthy@crefc.org) with any questions. 

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Overview of Foreign Investment Legislation

April 16, 2024

As we have previously covered, Georgia’s governor is considering legislation that would limit certain foreign investments in commercial real estate and agriculture.

What's next: Governor Brian Kemp (R-GA) has 40 days from March 30 to sign or veto the SB 420. If he does not act, the bill becomes law.

Why it matters: The limitation on foreign investment and ownership in real estate follows the trend of over a dozen other states that have enacted similar provisions, most notably Florida SB 264.

CREFC has prepared a high-level overview of federal and state proposals related to foreign investment in real estate.

• Click here for the overview.

Contact David McCarthy (dmccarthy@crefc.org) with any questions. 

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