The funny business of government regulations.

I consider myself a semi-intelligent person. However, I've been reading and re-reading the press release from the Securities and Exchange Commission about plans to advise companies on making disclosures related to their carbon footprints. I expended a lot of my own personal greenhouse gases trying to figure the point.

"SEC Issues Interpretive Guidance on Disclosure Related to Business or Legal Developments Regarding Climate Change" reads the slick, easy-to-read title. The Commission voted along party lines to approve "interpretive guidance on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change." Corporate America is going to have to start putting a dollar figure on how its helping or harming the weather.

Except the SEC isn't saying global warming is real.

"We are not opining on whether the world's climate is changing, at what pace it might be changing, or due to what causes," says SEC Chairman Mary Schapiro. "Nothing that the Commission does today should be construed as weighing in on those topics."

"Okay, so . . . what?" writes blogger Bill Singer. "I mean, what the hell was that all about?" 　

The SEC explains that its "interpretive guidance" will highlight examples "where climate change may trigger disclosure requirements".

These examples include:

"When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic."

How do you figure that out?

What constitutes material?

If pending legislation doesn't have a snowball's chance in a sauna-like Antarctic of passing, do you have to still disclose its potential impact?

Another example: "Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends."

Well, that oughtta cover it, thanks.

One more: the SEC suggests companies evaluate the possibility of disclosing "the actual and potential material impacts of environmental matters on their business." What constitutes an environmental matter? What's material? How potential does something have to be to merit disclosure?

I'll tell you one result of all this--more trees being killed as lawyers crank out mountains of paper.

The Wall Street Journal story on this today tried to provide a real world example. The SEC action could affect insurance companies. "The agency said insurers may want to consider disclosing whether severe weather or changes in sea levels might increase the risk of claims in coastal regions." But the SEC isn't saying whether the sea levels are rising, or whether any of this is real! However, the ensuing lawsuits will be real.

Blogger Bill Singer writes that Schapiro "underscores that the SEC won't opine as to the causes of the alleged climate change, which may or may not actually be occurring but at a speed that, well, you know, the SEC won't comment on. As if the silliness of the press release wasn't enough, we are then admonished that the SEC's non-opining should not be construed as weighing in on the topics on which it has no opinion...Geez, thanks to all those SEC geniuses for clearing this climate change issue up."

He even provides his own disclosure at the end of the blog. "BrokeAndBroker.com is not opining on whether the SEC's Interpretive Release is credible, at what pace the SEC's guidance should be implemented by companies, or whether there were valid climate change concerns prompting the publication of the release...Similarly, Bill Singer, Esq. will not opine on whether there is a Tooth Fairy, an Easter Bunny or Santa Claus, or whether such non-opined characters transport themselves from and to various locales, or whether there is a rational basis for believing or not believing in such characters. However, nothing herein should be construed as admitting or denying the existence of such characters..."

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