Commentary: Big Tent Ideas

KEVIN MOONEY: Biden Admin’s New Climate Rules Could Mean Big Payday For His Buddies, Burden For American Businesses

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In a setback for former government officials and attorneys poised to cash in on proposed climate disclosure rules, the Securities and Exchange Commission continued to kick the ball down the road last year.

Many of the objections raised in public comments revolve around so-called Scope 3 emissions that are not directly produced by companies and instead result from what occurs “upstream” and “downstream” of a company’s activities. That’s a problem because if the SEC rule is finalized the commission would effectively extend its jurisdiction to include private companies that transact business with public firms registered with the SEC.

There’s a strong case to be made that under this scenario the commission would be overstepping its authority, which would help to explain why the SEC has continuously slow-walked its proposal.

But there’s additional intrigue involving a somewhat unheralded “carbon accounting” firm equipped with specialized software known as Persefoni that could also gum up the works. The for-profit outfit founded in 2020 has managed to recruit several high-ranking SEC officials who all had a hand in crafting the climate rules first introduced in March 2022.

These include Allison Herren Lee, a former acting chair of the SEC, Kristina Wyatt, who served as the SEC’s senior counsel for climate and environmental, social, and corporate government (ESG), and Emily Pierce who served as the SEC’s assistant director in the Office of International Affairs.

The SEC estimates that it will cost anywhere from $460,000 to $640,000 for companies to comply with the new rules during the first year they are in operation. Given the complexity involved in tracking Scope 3 emissions, it’s not too difficult to imagine how Persefoni stands to benefit financially from software and accounting services specifically tailored for this purpose.

In fact, that appears to have been the plan right from the get-go. Influence Watch describes how the accounting firm and environmental activists joined forces to have substantial input on the disclosure rules. Moreover, Persefoni is prominently mentioned throughout the SEC proposal. But it’s not just carbon accountants who stand to benefit at the expense of companies that fall within the purview of the SEC.

Dan Kish, a senior fellow at the Institute for Energy Research, a Washington-based nonprofit, sees a potential “big payday for law firms” attached to the SEC’s supply chain reporting mandates.

“This is all about expanding the size and scope of government,” he said in an interview. “Lawyers can get involved with a class action lawsuit and they’ll say this particular company didn’t properly report their emissions. You can expect the lawyers to take a huge chunk from these suits. This gets into very gray areas about how a company can be expected to account for every single item along the supply chain.”

Kish continued:

“You’ll have lawyers intervening supposedly to protect the public interest, but they’ll be raking in all kinds of cash. The process doesn’t stop here since the law firms will then dump campaign contributions into the coffers of the people pushing these policies.”

The SEC’s actions can be viewed as just one small part of President Biden’s “whole-of-government effort” to push climate initiatives at the expense of taxpayers and energy producers.

Companies in the energy-intensive states, such as Pennsylvania, will likely feel a greater financial burden, explained Gordon Tomb, a senior fellow with Commonwealth Foundation, a free market think tank headquartered in Harrisburg, explained.

“Pennsylvania is the second largest net supplier of energy to other states and the largest exporter of electricity to other states,” Tomb said. “As such, private companies supporting enterprises that emit carbon dioxide in the production of energy number at least in the hundreds and their employees in the many thousands. Imposing costs artificially constructed to advance a quasi-religious climate ideology and create ways for the politically connected to make money without producing a benefit is viciously economically destructive.”

Ultimately, it’s up to Congress to reign in overreaching executive agencies. Last June, House Oversight Committee Chair James Comer, (R-K.Y.) and Senate Banking Committee ranking member Tim Scott (R-S.C.) sent a joint letter to the SEC seeking information and documentation providing insight into the commission’s relationship with Persefoni and environmental activist groups. That’s an encouraging sign, but hardly sufficient for the potential victims of burdensome new regulations.

Kevin Mooney is the Senior Investigative Reporter at the Commonwealth Foundation, Pennsylvania’s free-market think tank, and writes for several national publications. Twitter: @KevinMooneyDC

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.