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99 

Moving at a Glacial Pace:  What Can 
State Attorneys General Do About SEC 

Inattention to Nondisclosure of 
Financially Material Risks Arising from 

Climate Change? 

By Nina Hart* 

I.  Introduction .............................................................................. 100 
II.  Securities Regulation and Climate Change ............................. 101 

A.  Federal Disclosure Requirements Imposed by the SEC ...... 101 
B.  Events Leading to the SEC’s 2010 Interpretive Release 

on Climate Change Disclosure ............................................. 104 
1.  2007 Efforts ........................................................................ 104 

a.  Petitioning the SEC ........................................................ 104 
b.  Investigations of Energy Companies ............................. 105 

2.  2008 Efforts ........................................................................ 107 
a.  Supplemental Petition to the SEC ................................. 107 
b.  Initial Settlements with Energy Companies .................. 108 

3.  2009 Efforts ........................................................................ 109 
a.  Second Supplemental Petition to the SEC ................... 109 
b.  Additional Settlement with AES Corp. .......................... 109 
c.  Resulting SEC Action ..................................................... 110 

III. Why and How to Obtain Clarification of Federal Disclosure 
Requirements ............................................................................. 110 

A.  Why is Additional Guidance on Disclosure Necessary? ....... 111 
1.  Both Rates and Quality of Disclosure are Inconsistent 

Even Between Companies Within the Same Industry ...... 111 
a.  Disclosure Prior to the 2010 Interpretive Release ........ 111 
b.  Disclosure After the 2010 Interpretive Release ............. 113 

2.  Various Stakeholders, Including Investors and 
Executives, Have Recognized That Improved 

 
*  J.D. Candidate, Columbia Law School, Class of 2015.  The author would like to thank 

Professors Michael Gerrard, Caitlin Halligan, and Gillian Metzger for their encouragement 
and insights. 



100 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

Disclosure is Desirable to Protect and Assist 
Shareholders in Making Informed Investment 
Decisions............................................................................. 114 

3.  Providing More Precise Guidance is Not an Impossible 
Request, and the SEC Has Given More Concrete 
Instruction with Respect to Other Securities 
Regulations ......................................................................... 115 

4.  The SEC Has Promised Further Engagement with the 
Issue of Climate Change-Related Disclosure, but Has 
Largely Failed to Follow Through on This Promise ........ 117 

B.  How Can State Attorneys General Address the Need for 
Further SEC Guidance? ........................................................ 118 

1.  Can a State Attorney General Provoke SEC Action? ........ 119 
a.  Prior SEC Inaction ......................................................... 119 
b.  Strategies for Combatting Federal Agency Inaction ..... 122 

2.  Why is New York Best Positioned to Force SEC Action? .. 127 
a.  The Martin Act Contains Features That Render it 

More Powerful Than the Securities Laws of Other 
States ............................................................................... 127 

b.  New York Possesses the Political Will to Address 
Environmental and Climate Change Issues .................. 130 

c.  Attorney General Schneiderman’s Office Has 
Aggressively Used the Martin Act to Address 
Financial Crimes Generally ............................................ 133 

d.  The Attorney General Will More Likely Be Able to 
Pressure the SEC Than Private Plaintiffs ....................... 134 

3.  Despite the Lack of Similar Blue Sky Laws, Other 
States Can Use Non-Litigation Methods to Contribute 
to New York’s Efforts .......................................................... 136 

4.  Criticism of State Attorneys General as National 
Policymakers ....................................................................... 137 

IV. Conclusion ................................................................................. 142 
 

I. INTRODUCTION 

In recent years, two certainties have created a mass of uncertainty 
for public companies.  First, companies must disclose material 
financial information in their annual statements, known as 10-K 
reports, to the Securities & Exchange Commission (“SEC”).  
Second, climate change poses financial risks to the way many 
companies operate.  Together, these principles have generated 



2015] Moving at a Glacial Pace 101 

 

significant uncertainty within the regulatory and law enforcement 
arenas.  Specifically, companies and law enforcement officials are 
uncertain about what risks stemming from climate change must be 
disclosed in 10-K reports, and how that information should be 
presented. 

The actor primarily responsible for clarifying disclosure 
requirements is the SEC.  This Note will argue that the SEC’s most 
recent attempt to address this uncertainty—a 2010 interpretive 
release—is inadequate, and that the SEC should issue additional 
guidance.  As the SEC has not been active on this issue in the past 
four years despite promising further action on climate change 
disclosure, this Note will then argue that state attorneys general, 
particularly the New York Attorney General, should attempt to 
address this inaction through use of state securities laws and other 
advocacy tools. 

Before addressing the proposed solution, Part II of this Note will 
detail the federal securities disclosure regime currently in place, 
and discuss the SEC’s approval of its 2010 interpretive release.  Part 
II will also outline the events leading to the interpretive release, 
specifically the actions taken by then-Attorney General Andrew 
Cuomo (D–New York).  Part III will then argue that further 
guidance from the SEC is necessary, and that current New York 
Attorney General Eric Schneiderman is best positioned to force 
SEC action and otherwise provide companies and law enforcement 
with a framework for disclosure requirements.  Part III will also 
discuss ways in which other state attorneys general could contribute 
to New York’s efforts. 

II. SECURITIES REGULATION AND CLIMATE CHANGE 

A. Federal Disclosure Requirements Imposed by the SEC 

Securities regulation at the federal level began with the passage 
of the Securities Exchange Act of 1933.1  The Act created the SEC 
and imposed a number of procedural requirements on companies 
intending to sell securities, including the obligation to file 10-K 
reports.2  In 1934, Congress passed a second Securities Exchange 
Act, which refined the periodic reporting requirements, and 
authorized the SEC to issue rules and regulations related to 

 
1.  15 U.S.C. § 77a–77aa (2014). 
2.  See generally id. 



102 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

disclosure requirements.3  The four regulations most relevant to 
disclosure of risks arising from climate change were promulgated 
using this authority.4 

The first of these relevant regulations, Item 101, requires a 
description of all material information related to an entity’s 
business operations.5  For instance, companies must disclose 
information about the financial impacts of complying with existing 
environmental laws.6  Second, Item 103 requires that companies 
disclose pending legal proceedings that could have a material 
impact on business operations, including proceedings involving 
environmental claims.7  In order to provide companies with 
guidance in this area, Instruction 5 clarifies that “ordinary routine 
litigation incidental to the business” does not have to be reported, 
and sets forth the criteria for what is not considered “ordinary 
routine litigation.”8  Item 303, known as Management Discussion 
and Analysis (“MD&A”), requires companies to discuss trends and 
uncertainties facing their business.9  Under Item 303, management 
has great flexibility to decide what constitutes a material trend or 
uncertainty; for instance, there is no time frame set for the 
analysis.10  Finally, Item 503 requires that companies provide 
information about investments that might be considered 
particularly risky or speculative.11 

To determine what is generally considered “material” both the 
courts and the SEC have offered clarification.  Supreme Court 
doctrine, subsequently adopted by the SEC, has held that 
 

3.  15 U.S.C. §§ 78a–78pp (2014). 
4.  15 U.S.C. § 78m(a)(2) (2014). 
5.  17 C.F.R. § 229.101 (2014). 
6.  17 C.F.R. § 229.101(c)(1)(xii); 17 C.F.R. § 229.101(h)(4)(xi) (2014). 
7.  17 C.F.R. § 229.103 (2014). 
8.  Id. 
9.  17 C.F.R. § 229.303 (2014). 
10.  Management’s Discussion & Analysis of Financial Condition & Results of Operations; 

Certain Investment Company Disclosures, SEC Release, Nos. 33-6835, 34-26831, IC-16961 
(May 18, 1989) available at http://www.sec.gov/rules/interp/33-6835.htm [http://perma. 
cc/NKU7-3RQD] (reiterating that “[t]he MD&A requirements are intentionally flexible and 
general”); see also Michael Gollub, Reducing Uncertainty in Environmental Disclosure:  Why the 
Securities and Exchange Commission Should Return to the Basics, 4 ENVTL. LAW. 311, 366 (1998) 
(discussing Item 303, which requires disclosure of “known trends,” but noting that “the line 
between known, uncertain events and those that are unknown is cloudy”).  Item 303 presents 
the least likely basis for enforcement challenges, even those based on nondisclosure, as the 
SEC’s position is that the provision of most information defined as “forward-looking” is 
voluntary.  Suzanne J. Romajas, The Duty to Disclose Forward-Looking Information:  A Look at the 
Future of MD&A, 61 FORDHAM L. REV. S245, S253 (1993). 

11.  17 C.F.R. § 229.503 (2014). 



2015] Moving at a Glacial Pace 103 

 

information is material “if there is a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the ‘total mix’ of 
information made available.”12  The SEC has also attempted to 
provide greater certainty about materiality by stating that 
something affecting less than five percent of a company’s income 
may be, but is not necessarily, immaterial.13 

In recent years, a major challenge for companies has been 
determining what risks from climate change constitute “material 
information” that must be disclosed in their 10-K statements.14  The 
acknowledgment that certain environmental risks must be reported 
is itself not novel; the SEC first issued a number of regulations and 
interpretive releases on environmental risks in the 1970s and 
1980s.15  However, the SEC did not attempt to refine or update 
these documents to deal specifically with climate change until 
2010.16  The 2010 interpretive release first emphasizes that it should 
not be interpreted to impose any new reporting requirements, but 
provides clarification of obligations under “existing disclosure 
requirements.”17  It also highlights the fact that a number of 
companies have voluntarily disclosed more in-depth information 
related to climate change to non-governmental organizations, and 
warns that some of that information may be responsive to SEC 
requirements (although which information is responsive is not 
identified).18  With respect to how climate change may affect a 
company’s financial position, the SEC noted that climate change 
might have significant impacts on “personnel, physical assets, 
supply chain and distribution chain.”19  The most useful portion of 

 
12.  SEC Staff Accounting Bulletin No. 99, 64 Fed. Reg. 45,150, 45,151 n.4 (Aug. 12, 

1999) (to be codified at 17 C.F.R. pt. 211) (quoting TSC Indus., Inc. v. Northway, Inc., 426 
U.S. 438, 449 (1976)). 

13.  Id. at 45,151. 
14.  See, e.g., Rick E. Hansen, Climate Change Disclosure by SEC Registrants:  Revisiting the 

SEC’s 2010 Interpretive Release, 6 BROOK. J. CORP. FIN. & COM. L. 487, 490 (2012) (“A particular 
challenge for registrants is determining what they should be saying in their SEC filings about 
the effects of climate change on their businesses.”). 

15.  See Commission Guidance Regarding Disclosure Related to Climate Change, Release 
Nos. 33-9106; 34-61469; FR-82 (Feb. 8, 2010) [hereinafter “Commission Guidance”], available 
at http://www.sec.gov/rules/interp/2010/33-9106.pdf  [http://perma.cc/C28Q-2FM8] 
(discussing the 1970s–1980s promulgation of current rules related to disclosure of 
environmental risks). 

16.  See generally id. 
17.  Id. at 3. 
18.  See id. at 8–10. 
19.  Id. at 6. 



104 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

the interpretive release is a list of what may have a material effect 
on a company:  1) impact of legislation and regulation, 2) 
international accords, 3) indirect consequences of regulation and 
business trends, and 4) physical impacts of climate change.20 

B. Events Leading to the SEC’s 2010 Interpretive Release on 
Climate Change Disclosure 

The impetus for the 2010 interpretive release came not from the 
SEC, but from the efforts of outside groups, most notably the 
Attorney General of New York.  Between 2007 and 2010, then-
Attorney General Andrew Cuomo undertook a series of 
investigations and submitted petitions to the SEC to obtain the 
interpretive release. 

1. 2007 Efforts 

a. Petitioning the SEC 

In 2007, Attorney General Cuomo joined a group of institutional 
investors and environmental groups to petition the SEC for 
interpretive guidance about what information must be disclosed 
with respect to risks arising from climate change.21  The petition 
stressed that the parties sought only clarification of requirements 
“under existing law” and not the imposition of new disclosure 
requirements.22  Due to what the parties considered to be a 
widespread problem of nondisclosure of information related to 
climate change, the petition primarily sought a clear statement 
from the SEC that such disclosure may be material and therefore 
subject to federal disclosure requirements.23  Further, the petition 
asked the SEC to demand that registrants make calculations, where 
feasible, in order to assess the materiality of such information.24  
The demand for such calculations and information was considered 
reasonable despite the complex science behind climate change 
because the SEC had required similar information from companies 
in fields including biotechnology and pharmaceuticals.25 
 

20.  Id. at 22–27. 
21.  Petition for Interpretive Guidance on Climate Risk Disclosure, File No. 4-547 (Sept. 

18, 2007), available at http://www.sec.gov/rules/petitions/2007/petn4-547.pdf [http:// 
perma.cc/28A3-JN2P].  

22.  Id. at 2. 
23.  Id. at 9. 
24.  Id. 
25.  Id. at 12. 



2015] Moving at a Glacial Pace 105 

 

Much of the petition was devoted to detailing the increased 
awareness, by both investors and corporations, of financial risks 
posed by climate change.26  For instance, the petition described a 
number of studies on rates and quality of disclosure to highlight 
the inconsistency of disclosure across the corporate sector.27  The 
petition also acknowledged that there were private entities offering 
to perform analyses of companies’ climate change risks, but 
rejected the idea that the existence of these entities was sufficient 
to provide interested investors with such information.28  The 
petition further asserted that selective disclosure of this kind of 
material information may violate Regulation FD, the selective 
disclosure prohibition, and therefore must be made available to the 
public at large.29  Moreover, reliance on private entities created a 
risk of biased analyses in that analysts might provide more favorable 
evaluations for fear of otherwise being denied business or 
information from their clients.30 

In addition to the petition, the signatories submitted a separate 
letter to the SEC requesting immediate action on the enforcement 
side.31  Specifically, the letter requested that the SEC “devote close 
attention to the adequacy of disclosures concerning climate risk, 
particularly by registrants in industry sectors that emit high levels of 
greenhouse gases and those that are subject to regulation of 
greenhouse gas emissions.”32 

b. Investigations of Energy Companies 

At the same time the petition was filed, Cuomo turned to the 
state Martin Act, New York’s securities law, to investigate five energy 
companies that conducted business in New York.33  Under the 
Martin Act, the Attorney General is empowered to investigate any 
suspected deception or fraud in relation to securities, and 
combined with the Executive Act, the Attorney General may 
 

26.  See generally id. 
27.  Id. at 45–48. 
28.  Id. at 34–39. 
29.  Id. at 38. 
30.  Id. at 38–39 (citing SEC, Selective Disclosure and Insider Trading, 65 Fed. Reg. 51,716, 

51,731 (Aug. 24, 2000) (to be codified at 17 C.F.R. pt. 243), available at http://www.sec.gov/ 
rules/final/33-7881.htm [http://perma.cc/8LLK-PDQR].  

31.  Id. at 10. 
32.  Id. 
33.  N.Y. GEN. BUS. LAW §§ 352–59 (McKinney 2013); Press Release, Eric T. 

Schneiderman, N.Y. Att’y Gen., Energy Company Subpoenas (Sept. 17, 2007), http:// 
www.ag.ny.gov/press-release/energy-companies-subpoenas [http://perma.cc/N778-GB7D]. 



106 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

investigate fraud in the context of any business activity.34  In this 
instance, Cuomo argued that the companies failed to disclose 
material information related to climate change risks in their SEC 
filings, and that “[s]elective disclosure of favorable information or 
omission of unfavorable information concerning climate change is 
misleading.”35  To investigate these allegations, Cuomo issued 
subpoenas “seeking information regarding [the companies’] 
analyses of [their] climate risks and disclosures of such risks to 
investors.”36 

The use of the Martin Act to investigate nondisclosures related to 
climate change was unprecedented.  Numerous media and legal 
periodicals stressed that the application of the Martin Act to 
environmental issues was unusual, but also noted that aggressive 
use of the Martin Act was not.37  Specifically, the aggressive use of 
the Martin Act to investigate corporations was largely pioneered by 
Cuomo’s predecessor, Eliot Spitzer, and then continued by 
Cuomo.38  Prior to Spitzer’s term in office, the Martin Act had been 

 
34.  ANDREW LORIN, THE INVESTMENT PROTECTION BUREAU:  AN OVERVIEW OF FINANCIAL 

MARKETS REGULATION AND ENFORCEMENT IN NEW YORK 2 (Initiative for Policy Dialogue ed., 
2006), available at http://policydialogue.org/events/meetings/financial_markets_ 
reform_task_force_meeting_manchester_2006/materials/ [http://perma.cc/JA7W-UZBF].  

35.  See, e.g., Letter from N.Y. Office of Att’y Gen. to Paul Hanrahan, President and CEO, 
AES Corp. Accompanying Subpoena (Sept. 14, 2007) [hereinafter AES Corp. Letter], 
http://www.ag.ny.gov/sites/default/files/press-releases/archived/aes%20corporation.pdf 
[http://perma.cc/NLF6-P9QX].  See also Energy Companies Subpoenas, N.Y. STATE OFFICE OF 

THE ATT’Y GEN. (Sept. 17, 2007), http://www.ag.ny.gov/press-release/energy-companies-
subpoenas [http://perma.cc/GCY7-G8WU]. 

36.  AES Corp. Letter, supra note 35. 
37.  See, e.g., Felicity Barringer & Danny Hakim, New York Subpoenas 5 Energy Companies, 

N.Y. TIMES (Sept. 16, 2007), http://www.nytimes.com/2007/09/16/nyregion/16 
greenhouse.html?_r=0 [http://perma.cc/6MG6-7KSV] (“It is rare, if not unique, for a 
securities law to be used for an environmental purpose.”); Steve Raabe, Xcel Pueblo Site Among 
Targets in N.Y. AG Probe, DENVER POST, Sept. 17, 2007, available at 2007 WLNR 18204565 
(noting that some might view the investigation “as an unusual attempt to use securities law to 
advance an environmental agenda”). 

38.  See, e.g., Sarah Kelly-Kilgore, Ninety and Kicking?  How New York’s Martin Act is Only 
Getting Stronger with Age, AM. CRIM. L. REV. (Feb. 7, 2011), http://www.americancriminal 
lawreview.com/aclr-online/ninety-and-kicking-how-new-yorks-martin-act-only-getting-
stronger-age/ [http://perma.cc/A5VC-8JK4] (noting that Spitzer began using the Martin 
Act to combat fraud in the banking, hedge fund, and mutual fund industries); Ashby Jones, 
Cuomo to E&Y:  Let Me Introduce You to My Good Friend, Martin, WALL ST. J. (Dec. 21, 2010), 
http://blogs.wsj.com/law/2010/12/21/cuomo-to-ey-let-me-introduce-you-to-my-good-friend-
martin/ [http://perma.cc/Y43P-HDW9] (indicating that Cuomo used the Martin Act as 
aggressively as Spitzer to prosecute large financial entities such as Bank of America in 
relation to the subprime mortgage crisis); Nicholas Thompson, The Sword of Spitzer, LEGAL 

AFF. (2004), at 50, 53–54, available at http://www.legalaffairs.org/issues/May-June-2004/ 
feature_thompson_mayjun04.msp [http://perma.cc/LJE2-8ZEF] (stating that “Spitzer 



2015] Moving at a Glacial Pace 107 

 

left unused except in regards to “uranium boiler rooms and 
promoters of shady Canadian mining stock.”39  Once Spitzer took 
office, he broke the “unspoken gentleman’s agreement” that the 
Martin Act would not be wielded against “the moneymen of Wall 
Street.”40  Instead, Spitzer obtained large settlements against Merrill 
Lynch and other large financial institutions after investigating them 
for fraud.41 

After Cuomo assumed the role of Attorney General, his office 
continued Spitzer’s legacy in the context of financial fraud.  For 
instance, his office investigated Bank of America and numerous 
other entities in relation to the subprime mortgage crisis.42  He also 
brought a case against Bank of America for failing to disclose losses 
at Merrill Lynch, which Bank of America had acquired in 2008.43  
Thus, while using the Martin Act to force companies to disclose 
climate change information was novel in terms of subject matter, 
the underlying strategy was not. 

2. 2008 Efforts 

a. Supplemental Petition to the SEC 

After nearly one year of inaction on the September 2007 request 
for guidance, the signatories submitted a supplemental petition to 
show their continued interest in obtaining an interpretive release 
on climate change disclosure.44  The document reported on federal 
and state hearings, regulations, and initiatives undertaken since the 
initial petition was filed, and again pointed to numerous reports 

 
grasped its potential in a way that his predecessors hadn’t,” leading him to undertake 
“merciless investigations” targeting Wall Street). 

39.  Thompson, supra note 38. 
40.  Id. at 50. 
41.  Id. at 53. 
42.  See Kate Kelly, Amir Efrati & Ruth Simon, State Subprime Probe Takes a New Tack, WALL 

ST. J. (Jan. 31, 2008), http://online.wsj.com/news/articles/SB120173938230430417 [http:// 
perma.cc/BK3W-YMPH].  

43.  Michael Corkery, Andrew Cuomo and the Real Power of the Martin Act, WALL ST. J. (Feb. 
4, 2010), http://blogs.wsj.com/deals/2010/02/04/ndrew-cuomo-and-the-real-power-of-the-
martin-act/ [http://perma.cc/HC2R-LVZD].  

44.  Supplemental Petition for Interpretive Guidance on Climate Risk Disclosure, File No. 
4-547(June 12, 2008) [hereinafter Supplemental 2008 Petition], available at http:// 
www.sec.gov/rules/petitions/2008/petn4-547-supp.pdf [http://perma.cc/TMC2-AWWL]. 



108 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

about investor interest in climate change disclosure.45  Even after 
receiving this filing, the SEC did not take action.46 

b. Initial Settlements with Energy Companies 

In August 2008, Cuomo’s office reached a settlement with Xcel 
Energy, one of the five energy companies subpoenaed in 2007 for 
allegedly failing to disclose climate change risks.47  This settlement 
represented the “first-ever binding and enforceable agreement 
requiring a major national energy company to disclose” financial 
risks related to climate change in subsequent 10-K reports.48  Xcel 
Energy, an electricity and natural gas provider, allegedly failed to 
disclose information related to a coal-fired electric generating unit 
that it was building.49  Specifically, Xcel did not disclose how the 
new unit would impact its “financial, regulatory, and litigation 
risks” with regards to increased emissions.50 

Under the terms of the settlement, Xcel Energy was required to 
disclose material risks stemming from three categories:  “present 
and probable future climate change regulation and legislation; 
climate-change related litigation; and physical impacts of climate 
change.”51  Additionally, Xcel Energy committed to providing 
specific data related to four topics.  First, Xcel Energy must provide 
its “current carbon emissions.”52  Second, the company must report 
any “projected increases in carbon emissions from planned coal-
fired power plants.”53  Third, the 10-K report must include all 
“company strategies for reducing, offsetting, limiting, or otherwise 
 

45.  Id. 
46.  See Supplemental Petition for Interpretive Guidance on Climate Risk Disclosure, File 

No. 4-547, 2–4 (Nov. 23, 2009) [hereinafter Supplemental 2009 Petition], available at http:// 
www.sec.gov/rules/petitions/2009/petn4-547-supp.pdf [http://perma.cc/R52V-A4FL] 
(discussing the purpose of filing a second supplement petition and the lack of SEC action on 
the 2007 petition). 

47.  Press Release, Andrew Cuomo, N.Y. Att’y Gen., Cuomo Announces Entergy to Back-Off on 
Plan That Would Have Cost NYS []432 Million Dollars (Aug. 27, 2008), http://www.ag.ny.gov/ 
press-release/cuomo-announces-entergy-back-plan-would-have-cost-nys-432-million-dollars 
[http://perma.cc/UWN8-KKNK]. 

48.  Id. 
49.  See Letter from N.Y. Office of Att’y Gen. to Richard C. Kelly, Chairman, President, 

and CEO, Xcel Energy Accompanying Subpoena (Sept. 14, 2007), http://www.ag.ny.gov/ 
sites/default/files/press-releases/archived/xcel%20energy.pdf [http://perma.cc/H2J5-
NE7G].  

50.  Id. 
51.  Press Release, Cuomo Announces Entergy to Back-Off on Plan That Would Have Cost NYS 

[]432 Million Dollars, supra note 47.  
52.  Id. 
53.  Id. 



2015] Moving at a Glacial Pace 109 

 

managing its global warming pollution emissions and expected 
global warming emissions reductions from these actions.”54  Last, 
Xcel Energy must report all “corporate governance actions related 
to climate change, including whether environmental performance 
is incorporated into officer compensation.”55 

Two months after reaching a settlement with Xcel Energy, 
Cuomo announced a second agreement with Dynegy, Inc., a 
producer and seller of electric energy.56  The Attorney General’s 
Office used its settlement with Xcel Energy as a template for what 
Dynegy must disclose in its future SEC filings.57  At the time, 
Cuomo indicated that his investigations of the remaining three 
energy companies were ongoing.58 

3. 2009 Efforts 

a. Second Supplemental Petition to the SEC 

In November 2009, the parties to the September 2007 petition 
persisted in their efforts to obtain SEC guidance by filing a second 
supplemental petition.59  This supplement not only provided 
updates about the regulatory climate, but also reiterated many of 
the conclusions in the initial petition, particularly the fact that 
there was a consensus in the business community that climate 
change posed financial risks to companies.60  Also highlighted were 
Cuomo’s investigations of the five energy companies and details of 
the settlements reached with Xcel Energy and Dynegy, Inc.61 

b. Additional Settlement with AES Corp. 

Around the time that the second supplemental petition was filed, 
Cuomo’s office announced that it had reached a third settlement 
from its investigations into nondisclosure of risks related to climate 
change.  AES Corp. agreed to the same settlement terms imposed 

 
54.  Id. 
55.  Id. 
56.  Press Release, Andrew Cuomo, N.Y. Att’y Gen., Attorney General Cuomo, Joined by Vice 

President Gore, Announces Agreement with Major Energy Company, Dynegy, Inc. (Oct. 23, 2008), 
http://www.ag.ny.gov/press-release/attorney-general-cuomo-joined-vice-president-gore-
announces-agreement-major-energy [http://perma.cc/3M88-MFPW].  

57.  Id. 
58.  Id. 
59.  Supplemental 2009 Petition, supra note 46.  
60.  See id. 
61.  Id. at 24–25. 



110 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

on Xcel Energy and Dynegy, Inc.62  Cuomo hailed these three 
settlements as evidence that “[s]electively revealing favorable facts 
or intentionally concealing unfavorable information about climate 
change is misleading” to investors.63  By undertaking these 
investigations and continuing to pursue companies for 
nondisclosure the Attorney General was “rais[ing] the bar in the 
industry and ensur[ing] transparency and disclosure in the 
marketplace.”64  Of the two companies still under investigation, 
Cuomo indicated that the Office was continuing its efforts to reach 
agreements.65  To date, however, no public agreements have been 
disclosed. 

c. Resulting SEC Action 

On February 8, 2010, the SEC finally issued its response to the 
2007 petition submitted by Cuomo and other organizations.66  The 
2010 interpretive release, as described in Part II.A, represented the 
first interpretive release specifically about climate change since 
investors and other organizations had begun petitioning for 
clarification in 2007.67  The petition filed by Cuomo and the other 
parties was the first such petition to be filed.68  Perhaps encouraged 
by Cuomo’s filing, additional petitions were submitted in 2007 by 
other entities including the Free Enterprise Fund.69 

III. WHY AND HOW TO OBTAIN CLARIFICATION OF FEDERAL 
DISCLOSURE REQUIREMENTS 

Now that the SEC has issued an interpretation of disclosure 
requirements specific to climate change, what, if anything, remains 
to be done?  This Part will first set out why additional guidance is 

 
62.  Press Release, Andrew Cuomo, N.Y. Att’y Gen., Attorney General Cuomo Announces 

Agreement with AES to Disclose Climate Change Risks to Investors (Nov. 19, 2009), http://www. 
ag.ny.gov/press-release/attorney-general-cuomo-announces-agreement-aes-disclose-climate-
change-risks-investors [http://perma.cc/6XU8-AEJ7].  

63.  Press Release, Andrew Cuomo, N.Y. Att’y Gen., Cuomo Announces Entergy to Back-Off 
On Plan that Would Have Cost NYS []432 Million Dollars, supra note 47.   

64.  Press Release, Andrew Cuomo, N.Y. Att’y Gen., Attorney General Cuomo, Joined By Vice 
President Gore, Announces Agreement With Major Energy Company, Dynegy, Inc., supra note 56. 

65.  Press Release, Andrew Cuomo, N.Y. Att’y Gen., Attorney General Cuomo Announces 
Agreement with AES to Disclose Climate Change Risks to Investors, supra note 62. 

66.  Commission Guidance, supra note 15. 
67.  See id. at 7 n.20. 
68.  Id. 
69.  Id. 



2015] Moving at a Glacial Pace 111 

 

necessary.  Based on this need for regulatory action, and the fact 
that, as a general matter, an agency cannot be forced to act where it 
possesses the discretion to exercise its regulatory authority,70 it is 
clear that any attempt to force the agency to issue further guidance 
must go beyond direct in-court action (i.e., suing the SEC for 
failure to issue an interpretive release).  This Part will argue that 
the best solution is to have New York resume the efforts begun 
under Attorney General Cuomo (discussed in Part II.B).  Last, this 
Part will also suggest ways in which other state attorneys general 
can assist New York and otherwise play an active role in obtaining 
SEC guidance. 

A. Why is Additional Guidance on Disclosure Necessary? 

1. Both Rates and Quality of Disclosure are Inconsistent Even 
Between Companies Within the Same Industry 

Disclosure rates and the quality of disclosure were inconsistent 
prior to the issuance of the SEC’s 2010 interpretive release, and 
remain so today.  This section will address studies conducted from 
both before and after the issuance of the 2010 interpretive release 
to assess whether and how the SEC’s action influenced companies’ 
reporting practices. 

a. Disclosure Prior to the 2010 Interpretive Release 

Prior to the issuance of the SEC’s 2010 interpretive release, 
disclosure between companies varied dramatically, even between 
companies in the same industry.71  For instance, some energy 
companies, including AES Corp., disclosed quantitative estimates of 
environmental risks, including the methodology used to arrive at 
their figures (although AES’s disclosure practices are the result of 
the New York investigation discussed above).72  Other energy 

 
70.  Heckler v. Chaney, 470 U.S. 821, 832 (1985) (stating that “an agency’s decision not 

to take enforcement action should be presumed immune from judicial review under § 
701(a)(2) [of the APA]”); cf. Massachusetts v. EPA, 549 U.S. 497 (2007). 

71.  See, e.g., Hansen, supra note 14, at 508–09 (discussing a GAO study of 20 electric 
utilities and noting that the quality of disclosure varied between companies); see generally 
Kevin L. Doran & Elias L. Quinn, Climate Change Risk Disclosure:  A Sector by Sector Analysis of 
SEC 10-K Filings from 1995–2008, 34 N.C.J. INT’L L. & COM. REG. 721, 763 (2009). 

72.  AES Corp., Annual Report (Form 10-K) (Feb. 26, 2010), available at http://www.sec. 
gov/Archives/edgar/data/874761/000119312510041006/d10k.htm [http://perma.cc/ 
8QKG-HRW6]; JIM COBURN, SEAN H. DONAHUE & SURIYA JAYANTI, DISCLOSING CLIMATE RISKS 

& OPPORTUNITIES IN SEC FILINGS 20 (2011) [hereinafter “Ceres 2011 Report”], available at 



112 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

companies, including Blacksands Petroleum, Inc., even after being 
asked by the SEC to clarify an annual 10-K report, provided only 
the following regarding climate change:  “Products produced by 
the oil and natural gas exploration and production industry are a 
source of certain GHGs, namely carbon dioxide and methane, and 
future restrictions on the combustion of fossil fuels or the venting 
of natural gas could have a significant impact on our future 
operations.”73  Non-energy companies often did not address 
environmental risks at all, but when such risks were identified, they 
were often presented in generic statements such as, “business 
operations are subject to numerous environmental and other air 
pollution control laws.”74 

A survey of 10-K reports from 1995 to 2008 concluded that there 
was “an alarming pattern of non-disclosure by corporations 
regarding climate change risks.”75  Specifically, a “large majority of 
S&P 500 companies neglect[ed] to even mention climate risk,” and 
the disclosure provided was often superficial, which “demonstrates 
the fundamental failure [by the SEC] to implement securities law 
and protect investors.”76  For instance, in 2008, less than twenty-five 
percent of the companies listed on the S&P Index made any 
reference to climate change.77  In one of the sectors comprising the 
largest percent of the S&P Index (6.2%), utilities, disclosure was 
highest with all but one company making some mention of climate 
change.78  However, the utilities’ disclosure quality varied, and 
despite increasing in length from previous years, most 10-K reports 
were “cursory in their discussion and insubstantial in their analysis 
of risk.”79  Based on these sector-by-sector analyses and the fact that, 
overall, 76.3% of the S&P 500 companies failed to mention climate 
change, the study determined that both industrial and non-

 
http://www.ceres.org/resources/reports/disclosing-climate-risks-2011 [http://perma.cc/ 
GC6R-9SYU]. 

73.  Correspondence from Donald Giannattasio, Chief Fin. Officer, Blacksands 
Petroleum, Inc., to the SEC (Jan. 15, 2013), available at http://www.sec.gov/ 
Archives/edgar/data/1308137/000147793213000197/filename1.htm [http://perma.cc/ 
S72K-LQDX].  

74.  Dean Foods Co., Annual Report (Form 10-K) (Feb. 25, 2010), available at http:// 
www.sec.gov/Archives/edgar/data/931336/000119312510039767/d10k.htm [http:// 
perma.cc/L5BK-SXK9].  

75.  Doran & Quinn, supra note 71, at 763. 
76.  Id. at 764. 
77.  Id. at 733. 
78.  Id. at 735–36. 
79.  Id. at 742. 



2015] Moving at a Glacial Pace 113 

 

industrial companies would benefit from additional guidance to 
appropriately deal with direct and indirect risks.80 

b. Disclosure After the 2010 Interpretive Release 

After the 2010 interpretive release was issued, disclosure rates 
increased, although the quality remains suspect in many cases.81  
For instance, Ceres studied disclosure rates among the S&P 500 
companies between 2009 and 2013, and concluded that, after the 
2010 interpretive release, disclosure rates increased from forty-five 
percent of all S&P 500 companies to fifty-ninte percent, but the 
overall quality and specificity of the disclosures dropped.82  Rather 
than “fulfill the SEC’s expectation,” set out in its 2010 interpretive 
release, that companies would discuss material risks related to four 
categories83 in a “meaningful” way, the companies are treating 
climate change risks with brevity and superficiality.84 

ISS Corporate Services also reviewed disclosure of the 100 largest 
companies in the United States, and determined that of the fifty-
one companies including any reference to financial risks related to 
climate change, only twenty-four mentioned physical risks to their 
assets and twenty-two noted future business opportunities that 
could arise from climate change.85  Additionally, the National 
Association of Corporate Directors (“NACD”) has noted that 
although the 2010 interpretive release seems to have instigated 
somewhat higher disclosure rates, a sizeable portion of companies 
did not report anything and disclosure rates remain less 
“widespread or as extensive as some would like.”86 

 
80.  Id. at 764. 
81.  See, e.g., Ceres 2011 Report, supra note 72, at 5 (citing ISS Corporate Services Study); 

Press Release, ISS Corporate Services, New ISS Corporate Services Report Highlights Need for 
Improved Company Disclosure Per New SEC Climate Risk Disclosure Guidelines (Oct. 12, 2010), 
http://www.isscorporateservices.com/node/140 [http://perma.cc/Z69F-8JJT]; JIM COBURN 

& JACKIE COOK, COOL RESPONSE:  THE SEC & CORPORATE CLIMATE CHANGE REPORTING, 12–
13 (2014) [hereinafter “Ceres 2014 Report”], available at http://www.ceres.org/ 
resources/reports/cool-response-the-sec-corporate-climate-change-reporting [http://perma. 
cc/M6U2-WUXH]. 

82.  Ceres 2014 Report, supra note 81, at 12–13. 
83.  The four categories are 1) impact of legislation and regulation, 2) international 

accords, 3) indirect consequences of regulation and business trends, and 4) physical impacts 
of climate change.  Commission Guidance, supra note 15, at 22–27.  

84.  Ceres 2014 Report, supra note 81, at 14. 
85.  Id. at 5 (citing ISS Corporate Services Study).  
86.  Stuart Hammer & Lauren M. Boccardi, Climate Change Disclosure, NATIONAL 

ASSOCIATION OF CORPORATE DIRECTORS (July 26, 2011), http://www.directorship.com/ 
climate-change-disclosure-in-sec-filings/ [https://perma.cc/PN2V-TWZD]. 



114 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

2. Various Stakeholders, Including Investors and Executives, 
Have Recognized That Improved Disclosure is Desirable to 
Protect and Assist Shareholders in Making Informed 
Investment Decisions 

The SEC has acknowledged that “[t]here have been increasing 
calls for climate-related disclosures by shareholders” as “reflected in 
the several petitions for interpretive advice submitted by large 
institutional investors and other investor groups.”87  For instance, 
the petition that ultimately led to the 2010 interpretive release was 
submitted by forty-one parties, including “some of the nation’s 
largest public pension funds, state treasurers, controllers and 
comptrollers, asset managers, foundations, and other institutional 
investors with approximately $1.4 trillion in assets under 
management.”88  In sum, the SEC’s response to the petition is itself 
an acknowledgement that, in particular, “carbon-intensive 
industries have an obligation to inform investors of the material 
risks that climate change may pose to their companies.”89 

Moreover, as the petition stressed, investors are not interested 
based purely on “moral or policy interest,” but also for financial 
reasons.90  Specifically, investors may be seeking out companies 
“best positioned to avoid the financial risks associated with climate 
change and to capitalize on the new opportunities that greenhouse 
gas regulation will provide.”91  Corporate executives also 
acknowledge that climate change poses a risk to share value.  In a 
2006 survey of 4,000 international executives, climate change was 
identified as the third most commonly cited risk to companies.92  
 

87.  Commission Guidance, supra note 15, at 7. 
88.  Investors Call on SEC to Enforce Climate Change Disclosures, ENVIRONMENTAL LEADER 

(June 16, 2009), http://www.environmentalleader.com/2009/06/16/investors-call-on-sec-to-
enforce-climate-change-disclosures/ [http://perma.cc/QG4U-5ZP3].  

89.  Press Release, Andrew Cuomo, N.Y. Atty. Gen., Statement from the New York State 
Attorney General Andrew M. Cuomo on the SEC’s Action Regarding the Disclosure of Financial Risks 
Related to Climate Change (Jan. 27, 2010), http://www.ag.ny.gov/press-release/statement-new-
york-state-attorney-general-andrew-m-cuomo-secs-action-regarding [http://perma.cc/5CJB-
8TCU]. 

90.  Petition for Interpretive Guidance on Climate Risk Disclosure, supra note 21, at 7–8. 
91.  Id. at 7. 
92.  McKinsey & Company, The McKinsey Global Survey of Business Executives:  Business and 

Society, 2 MCKINSEY Q. 33 (2006).  Environmental issues more broadly remain important to a 
large number of executives, both as a source of potential obstacles and opportunities.  See, 
e.g., McKinsey & Company, The Next Environmental Issue for Business:  McKinsey Global Survey 
Results (Aug. 2010), http://www.mckinsey.com/insights/sustainability/the_next_ 
environmental_issue_for_business_mckinsey_global_survey_results [http://perma.cc/YF48-
HNP9].  



2015] Moving at a Glacial Pace 115 

 

More recently, a bipartisan group of political and financial leaders 
commissioned an independent report that sought to quantify the 
damage to property, infrastructure, and supply chains stemming 
from climate change in an attempt to persuade even more 
businesses that the consequences of climate change can and will 
affect their operation.93 

3. Providing More Precise Guidance is Not an Impossible 
Request, and the SEC Has Given More Concrete Instruction 
with Respect to Other Securities Regulations 

While it is true that some variance in disclosure is inevitable due 
to the fact-specific nature of the analysis, the SEC could provide 
more “best practice” guidance about when companies should 
attempt to provide quantitative information and should provide the 
methodology used in such analyses.  Specific examples or 
illustrations have been provided in other contexts to assist 
companies with compliance.  For instance, Rule 14a-9, which 
addresses false and misleading statements made in proxy 
statements, includes official notes that give examples of such 
statements.94  The Rule itself states only that “[n]o solicitation . . . 
shall be made . . . containing any statement which . . . is false or 
misleading with respect to any material fact, or which omits to state 
any material fact necessary in order to make the statements therein 
not false or misleading.”95  This text is arguably imprecise with 
regards to which types of statements might be considered 
misleading.  However, the SEC followed the Rule with a clarifying 
note.  “[S]ome examples of what . . . may be misleading” include 
“[p]redictions as to specific future market values” and “[m]aterial 
which directly or indirectly impugns character, integrity or 
personal reputation . . . without factual foundation.”96  Similarly, as 
noted in Part II, the SEC has stated that, in order to help 

 
93.  RISKY BUSINESS PROJECT, THE ECONOMIC RISKS OF CLIMATE CHANGE IN THE UNITED 

STATES (June 2014), available at http://riskybusiness.org/report/overview/executive-
summary [http://perma.cc/6M4G-3YNR]; see also John Ydstie, Latest Climate Change Report 
Paints Dire Picture for Business, N.P.R. (June 24, 2014, 5:07 AM), http://www.npr.org/2014/ 
06/24/325073881/latest-climate-change-report-paints-dire-picture-for-business [http:// 
perma.cc/C49B-YBP7].  

94.  17 C.F.R. § 240.14a-9 (2014). 
95.  Id. 
96.  17 C.F.R. § 240.14a-9 advisory note. 



116 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

companies assess what is material information, the five percent 
threshold, while not determinative, may be a useful guideline.97 

Along these lines, examples or baselines of what should be 
disclosed could be issued with respect to disclosure of climate 
change.  For instance, the SEC could issue an interpretation that 
included hypothetical illustrations and suggest when a company 
ought to calculate, if reasonably possible, costs related to 
compliance with pending regulations that are either likely to be 
passed or scheduled to take effect in the coming fiscal year.98  Or, 
the SEC could provide an example of how a company might decide 
whether a trend is certain enough that it will materially affect its 
financial position.99  Further, setting out instances where 
quantitative information should be provided, if possible, would be 
helpful, and the SEC has often requested such information from 
registrants in other contexts.100 

This information would improve the quality of 10-K reports by 
making the information more accessible and meaningful to 
investors and authorities that are struggling to interpret the 
information that is disclosed and determine whether to take action 
against companies for misleading information or nondisclosure.  
Additionally, any potential increase in compliance costs to the 
companies may be less than what the companies gain from added 
certainty about what they should be disclosing.101  Even without 
setting a particular method of assessing materiality, such guidelines 
would set a baseline from which state and federal authorities could 
begin enforcement proceedings and on which companies could 
 

97.  SEC Staff Accounting Bulletin No. 99, supra note 12. 
98.  As a note, although it is true that companies cannot always obtain quantitative data, 

there is no reason to accept that objection as a reason to impose no or very limited 
quantification standards.  As noted by the SEC in its 2010 interpretive release, a number of 
companies have voluntarily disclosed quantified climate change information to non-
governmental groups (NGOs).  See Commission Guidance, supra note 15, at 8–9.  The fact 
that such information is often not supplied to the SEC may also indicate that further 
clarification of reporting requirements is needed. 

99.  The SEC has provided such illustrations with respect to disclosure in other contexts, 
such as Item 303.  See Management’s Discussion & Analysis of Financial Condition & Results 
of Operations; Certain Investment Company Disclosures, supra note 10. 

100.  See, e.g., Correspondence from Post Holdings, Inc., to the SEC (Nov. 22, 2011), 
available at http://www.sec.gov/Archives/edgar/data/1530950/000095012311100084/ 
filename1.htm [http://perma.cc/X2BL-LEQ7] (SEC stating, “If possible, please provide 
quantitative disclosure to clarify how much your leverage is anticipated to increase.”).  

101.  Dru Stevenson, Special Solicitude for State Standing:  Massachusetts v. EPA, 112 PENN ST. 
L. REV. 1, 64 (2007) (“The decreased uncertainty resulting from more regulation can provide 
a benefit that offsets—even outweighs—the greater compliance costs that those regulations 
impose on the regulated industry.”). 



2015] Moving at a Glacial Pace 117 

 

model their approach to disclosure.  On a related issue, 
institutional investors have frequently indicated through 
shareholder proposals that they are concerned with and would like 
to change the substantive environmental practices of companies.102  
Increased disclosure may be one method for determining whether 
or not those changes are warranted or effective as such information 
may not otherwise be available to interested investors. 

It may seem obvious that certain information should be disclosed 
(e.g., impact of environmental legislation on physical assets).  As 
the quality of disclosure indicates, however, companies appear to 
disagree about where environmental impacts (particularly 
potential, rather than certain, impacts—e.g., pending regulations 
and trends in energy usage or production) become material.103  
Thus, although the SEC may think it simple to determine what 
should be included in 10-K reports, offering more concrete 
guidance to companies would transfer the Commission’s 
assumptions to the public sphere and reduce the potential for 
uncertainty. 

4. The SEC Has Promised Further Engagement With the Issue 
of Climate Change-Related Disclosure, but Has Largely Failed 
to Follow Through on This Promise 

After issuing its 2010 interpretive release, the SEC promised to 
take further steps to address climate change disclosure.  Despite 
this promise, which is consistent with its practice of “refin[ing] its 
interpretive guidance over a period of years to better define what it 
expects of registrants,”104 very little action has occurred.  NACD has 
characterized the SEC’s enforcement and monitoring responses as 
“muted” and “not particularly proactive.”105  For instance, in the 
2010 interpretive release, the SEC announced that it would hold a 

 
102.  See, e.g., Ernst & Young, Proxy Season Results Show Dramatic Shift in Company-Shareholder 

Engagement (July 26, 2012), http://www.ey.com/US/en/Newsroom/News-releases/Proxy-
season-results-show-dramatic-shift-in-company-shareholder-engagement [http://perma.cc/ 
FZ7S-9GJA] (indicating that between 2007 and 2012 environmental proposals comprised the 
largest, either alone or equal to another category, type of shareholder proposal submitted to 
corporations); Emily Pickrell, Climate Change Becoming Top Shareholder Concern, FUEL FIX (June 
25, 2013, 12:09 PM), http://fuelfix.com/blog/2013/06/25/climate-change-becoming-top-
priority-for-shareholders/ [http://perma.cc/D6AA-VDTY] (stating that in the first half of 
2013 alone, 40% of the shareholder proposals related to climate change). 

103.  See infra Part III.B.1. 
104.  Ceres 2011 Report, supra note 72, at 10. 
105.  Hammer & Boccardi, supra note 86. 



118 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

public roundtable discussion related to climate change,106 but never 
followed through with its promise.107  Further, the SEC resolved to 
monitor climate change disclosure through its Investor Advisory 
Committee,108 but the Committee was subsequently dissolved.109  
Although a new advisory committee was established in 2012, “it has 
not yet provided any recommendations related to climate change 
disclosure.”110 

Last, in the enforcement arena, as of the end of 2013, the SEC 
has issued a total of fifty-two letters to companies and asset 
managers (out of a total of over 45,000 such letters) requesting 
information related to climate change.111  Of these letters, thirty-
eight were issued in 2010, and the rate of issuance has consistently 
declined since then, with no letters related to climate change 
issued in 2013.112  Not only is the quantity of letters small, but also 
the requests to the companies primarily asked what, if any, 
consideration they gave to the 2010 interpretive release in making 
their securities filings.113  Based on these requests, twelve companies 
made revisions or promised to change practices in the future; and 
of those that made revisions, half either committed to discussing 
climate change in the future or indicated that climate change did 
not pose a material risk.114  Overall, the small quantity of letters and 
generic requests from the SEC indicates “minimal attention” to 
disclosure of climate change risks, and suggests that there is no 
“ongoing SEC commitment to implement” the interpretive 
release.115 

B. How Can State Attorneys General Address the Need for Further 
SEC Guidance? 

In light of the fact that further clarification of climate change 
disclosure requirements is needed, this section will propose that 
the New York Attorney General’s Office reassert its leadership on 
this issue through the two-part solution undertaken by Attorney 

 
106.  Commission Guidance, supra note 15, at 28. 
107.  Hammer & Boccardi, supra note 86. 
108.  Commission Guidance, supra note 15, at 27–28. 
109.  Hammer & Boccardi, supra note 86. 
110.  Ceres 2014 Report, supra note 81, at 10. 
111.  Id. at 20. 
112.  Id. at 21. 
113.  Id. at 23. 
114.  Id. at 25. 
115.  Id. 



2015] Moving at a Glacial Pace 119 

 

General Cuomo.  Under Attorney General Schneiderman, this 
issue has not been actively pursued, except for one instance in 
2011, discussed below.  This section proposes that the Attorney 
General reconsider making it a priority, and will argue that this is 
consistent with Schneiderman’s agenda and conception of the 
Attorney General’s mission.  In particular, the Attorney General’s 
Office should continue working with coalitions not only to petition 
the SEC for further guidance, but also to outline continued 
inconsistencies in the quality of disclosure, as discussed in Part II.  
The Attorney General should also continue raising the political 
salience of the issue as a means of pressuring the SEC.  This can be 
accomplished by using the Martin Act to investigate companies for 
failure to disclose risks related to climate change, and issuing press 
releases or holding press conferences related to these efforts. 

For a variety of reasons, the New York Attorney General is best 
positioned to lead the states on this issue.  These reasons include 
particular facets of the Martin Act; the presence of political will in 
New York to address both climate change and SEC inaction; and an 
inability of private plaintiffs to obtain similar results under both 
federal and state law. 

1. Can a State Attorney General Provoke SEC Action? 

Before specifying the details of this Note’s proposal, the power of 
a state attorney general to provoke federal agency action must be 
addressed.  Although it is difficult to prove absolutely that Cuomo’s 
efforts factored into the SEC’s decision to issue the 2010 
interpretive release, there is evidence to suggest that his Office’s 
investigations combined with the 2007 petition influenced the SEC.  
This subsection will first address potential reasons for SEC inaction 
on disclosure of climate change risks, and then will argue that 
Cuomo’s efforts influenced the SEC’s decision to issue the 2010 
interpretive release. 

a. Prior SEC Inaction 

As noted, prior to the 2010 interpretive release, the SEC had not 
issued any climate change-specific regulations or releases in recent 
years.  The political nature of climate change may explain why the 
SEC has been hesitant to offer advice to companies in this area.  
Specifically, climate change and environmental law more generally 



120 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

is a highly partisan issue.116  Thus, the SEC may have wished to avoid 
“taking sides” in the debate, particularly since the Commission 
itself is split along party lines with three Democratic Commissioners 
and two Republicans.117  Bearing out this theory is the fact that the 
2010 Guidance itself was approved by a 3–2 party-line vote.118  
Further, the Commission attempted to distance itself from the 
appearance that it was weighing in on the debate by stating that it 
“is not making any kind of statement regarding the facts as they 
relate to the topic of ‘climate change’ or ‘global warming.’”119  If 
the SEC needed additional proof that issuing guidance related to 
climate change would be politically controversial, Congress 
willingly provided it.  Soon after the 2010 interpretive release was 
issued, over twenty representatives wrote to the SEC expressing 
their opposition to it.120  Another contingent of the Senate and 
House introduced legislation to repeal it, but their efforts were 
unsuccessful.121 

The second reason that the SEC may have failed to enforce or 
otherwise issue interpretive guidance in this area is “agency 
capture.”  Some scholars have posited that regulatory vacuums 
within the SEC are due to the fact that it has fallen victim to 
“capture by the very special interests it was ostensibly regulating.”122  
In this case, the companies that might suffer the most from more 
strictly enforced disclosure requirements are those who have often 

 
116.  Climate Change:  Key Data Points from Pew Research, PEW RESEARCH CTR. (Jan. 27, 

2014), http://www.pewresearch.org/key-data-points/climate-change-key-data-points-from-
pew-research/ [http://perma.cc/JG3A-KHN3] (stating that “[t]here are sharp partisan 
divides about whether there is solid evidence of global warming,” and that 50% of 
Republicans and 88% of Democrats believe there is such evidence).  

117.  See Current SEC Commissioners, SEC (last updated Sept. 17, 2013), http://www.sec. 
gov/about/commissioner.shtml [http://perma.cc/5HAG-2XGZ]; John M. Broder, S.E.C. 
Adds Climate Risk to Disclosure List, N.Y. TIMES, Jan. 27, 2010, http://www.nytimes.com/ 
2010/01/28/business/28sec.html [http://perma.cc/H47K-PM72]. 

118.  Broder, supra note 117.  
119.  Mary Schapiro, Chairman, SEC, Statement Before the Open Committee Meeting on 

Disclosure Related to Business or Legislative Events on the Issue of Climate Change (Jan. 27, 
2010), available at http://www.sec.gov/news/speech/2010/spch012710mls-climate.htm 
[http://perma.cc/J7T7-8ZCY].  

120.  GARY SHORTER, CONG. RESEARCH SERV., SEC CLIMATE CHANGE DISCLOSURE 

GUIDANCE:  AN OVERVIEW AND CONGRESSIONAL CONCERNS 5 (2013).  
121.  Id. 
122.  Jonathan R. Macey, The SEC at 70:  Positive Political Theory and Federal Usurpation of the 

Regulation of Corporate Governance:  The Coming Preemption of the Martin Act, 80 NOTRE DAME L. 
REV. 951, 958 (2005). 



2015] Moving at a Glacial Pace 121 

 

been favored historically by the SEC.123  Agency capture can occur 
indirectly as well.124  As a former SEC Chairman noted, because 
regulated entities are well financed and well positioned to lobby 
Congress, the Commission has, at times, been “constantly 
threatened with budget cuts by . . . congressional overseers if it 
pursued aggressive regulations,” and therefore refrained from 
acting.125 

Another reason that the SEC may not have addressed climate 
change earlier is a lack of resources.126  In other contexts, the SEC 
has defended its actions or lack thereof by stating that its budget 
forces prioritization, and that it cannot even aggressively pursue all 
the investigations that it does choose to undertake (resulting in 
settlements criticized by outsiders and federal judges alike).127  In 
the face of competing priorities, it is possible that disclosure of risks 
arising from climate change fell toward the bottom of the SEC’s 
agenda.  However, whether lack of resources, agency capture, or an 
unwillingness to engage in a partisan debate (or a combination of 
these factors) better explains the SEC’s prior inaction on 
disclosure, these theories strongly suggest that without outside 

 
123.  See Jonathan R. Macey, Administrative Agency Obsolescence and Interest Group Formation:  

A Case Study of the SEC at Sixty, 15 CARDOZO L. REV. 909, 948 (1994) (arguing that the 
defining characteristic of the SEC in recent years is that its “major litigation efforts and 
regulatory initiatives have been designed to protect the Commission’s regulatory turf, rather 
than to further important areas of public policy” that will protect investors rather than the 
entities it regulates); John C. Coffee, Jr., A Course of Inaction:  Where Was the SEC When the 
Mutual Fund Scandal Happened?, LEGAL AFFAIRS (2001), http://www.legalaffairs.org/ 
issues/March-April-2004/review_coffee_marapr04.msp [http://perma.cc/VB58-5RYQ] 
(discussing the SEC’s capture by the mutual fund industry, leaving a regulatory vacuum later 
filled by Eliot Spitzer); David Skeel, Unleashing a Wall Street Watchdog, PACIFIC STANDARD (Apr. 
23, 2012, 6:19 PM), http://www.psmag.com/navigation/business-economics/unleashing-a-
wall-street-watchdog-40545/ [http://perma.cc/9DM3-9ZTZ] (criticizing the SEC for failing 
to strongly enforce financial laws by not even requiring admissions of wrongdoing when it 
managed to obtain settlements). 

124.  See Rachel E. Barkow, Insulating Agencies:  Avoiding Capture through Institutional Design, 
89 TEX. L. REV. 15, 22–23 (2010) (suggesting that industry groups may lobby Congress as a 
way to control agencies); J.R. DeShazo & Jody Freeman, The Congressional Competition to 
Control Delegated Power, 81 TEX. L. REV. 1443, 1446 (2003) (“Agencies may be very much in the 
control of a different legislative principal, namely members of oversight committees.”). 

125.  Barkow, supra note 124, at 23 (quoting Arthur Levitt, Chairman of the SEC from 
1993 to 2001).  

126.  Renee M. Jones, Dynamic Federalism:  Competition, Cooperation, and Securities 
Enforcement, 11 CONN. INS. L.J. 107, 126 (2004) (“Because the SEC lacks adequate resources 
to effectively police the national securities market, supplemental enforcement is essential to 
achieve an appropriate level of deterrence.”). 

127.  See Skeel, supra note 123. 



122 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

pressure—in this case, Cuomo’s actions—the SEC would not have 
issued its 2010 interpretive release at all. 

b. Strategies for Combatting Federal Agency Inaction 

There are two major challenges facing states and other actors 
attempting to force state action.  First, there is the principle of 
federal preemption.  In the context of securities disclosure and 
registration, states are largely preempted in that they may not 
impose additional or separate requirements on federally registered 
companies.128  Second, agency inaction is largely immune to judicial 
review,129 and “lawsuits targeting agency performance more 
generally have found little judicial receptivity.”130  Combined, these 
principles can “create a vast unregulated domain when federal 
agencies do not enforce their regulations.”131  Thus, states must be 
creative in their approach to persuading the SEC to issue 
interpretive releases or otherwise take enforcement action. 

One approach to filling the regulatory void, which provided the 
basis for Cuomo’s strategy, was pioneered by his predecessor, Eliot 
Spitzer.  While Spitzer’s approach was not aimed at forcing SEC 
action in the same way as Cuomo’s, but rather to act in place of the 
SEC, it remains relevant to the problem addressed here.  
Specifically, it serves as an example of the competitive dynamic that 
can exist when state and federal governments have concurrent 
authority to enforce federal law.  When the state and federal 
governments disagree about enforcement levels, each actor may 
independently make its own judgment and use its own resources to 
pursue actions as it sees fit.132  Thus, where states perceive a 
 

128.  15 U.S.C. § 77r(a)(2)(B) (2014) (stating that “no law, rule, regulation, or order, or 
other administrative action of any State . . . shall directly or indirectly prohibit, limit, or 
impose any conditions upon the use of . . . any . . . disclosure document relating to a covered 
security or the issuer thereof that is required to be and is filed with the Commission”); see also 
SEC, Report on the Uniformity of State Regulatory Requirements for Offerings of Securities That Are Not 
“Covered Securities” (Oct. 11, 1997), http://www.sec.gov/news/studies/uniformy.htm [http:// 
perma.cc/B2K3-7MXF] (noting that the National Securities Market Improvement Act of 
1996 preempted states from using blue sky laws to impose additional registration 
requirements on companies registered with the SEC). 

129.  Heckler v. Chaney, 470 U.S. 821, 832 (1985). 
130.  Gillian E. Metzger, Federalism and Federal Agency Reform, 111 COLUM. L. REV. 1, 6 

(2011). 
131.  Amy Widman, Advancing Federalism Concerns in Administrative Law Through a 

Revitalization of State Enforcement Powers:  A Case Study of the Consumer Product Safety and 
Improvement Act of 2008, 29 YALE L. & POL’Y REV. 165, 166 (2010). 

132.  Margaret H. Lemos, State Enforcement of Federal Law, 86 N.Y.U. L. REV. 698, 719 
(2011) (“[F]ederal enforcers cannot prevent the states from acting in ways that conflict with 



2015] Moving at a Glacial Pace 123 

 

regulatory void, as Spitzer did, they may seek to increase their own 
enforcement efforts, and thereby act as a substitute for the federal 
agency.133 

In the early and mid-2000s, faced with what Spitzer considered to 
be the SEC’s failure to act in the face of financial wrongdoing, his 
office turned to the Martin Act to combat financial crimes.134  
Specifically, at the time Spitzer took office, there had been a 
number of market scandals involving conflicts of interest and other 
fraudulent practices such as the filing of false analyst reports.135  
Despite these scandals, the SEC had been slow in pursuing actions 
against the perpetrators.136  Critics alleged the agency was in a 
“deep slumber . . . [along with] other important financial 
regulators.”137  Using the state Martin Act, Spitzer began what has 
been characterized as a “‘hostile takeover’ of the SEC.”138  Through 
his office’s investigations of the financial entities involved in these 
scandals, Spitzer made the issues “politically salient, much to the 
embarrassment and discomfort of the SEC.”139 

Although it could be argued that Spitzer was simply attempting 
to fill the void left by the SEC, he acknowledged that one goal of 
these investigations was to “be a catalyst for reform.”140  To an 
extent, he was successful.  For instance, after his office began 
investigating Putnam, a hedge fund, for illegal trading transactions, 
and publicly exposed the wrongdoing, both Massachusetts and the 
SEC began separate investigations.141  Prior to Spitzer’s 
investigation, the SEC had been tipped off to the abusive practices 

 
the federal enforcement strategy.  Similarly, while state enforcers can and do coordinate with 
their federal counterparts and with each other, cooperation is voluntary.). 

133.  Id. 
134.  See Macey, The SEC at 70, supra note 122, at 952 (stating that Spitzer claimed “to be 

doing the job the Commission was supposed to be doing, only better, and with fewer 
people”). 

135.  See Jake Zamansky, Calling the Ghost of Eliot Spitzer, FORBES, Oct. 12, 2012, http:// 
www.forbes.com/sites/jakezamansky/2012/10/12/calling-the-ghost-of-eliot-spitzer/ [http:// 
perma.cc/Q6M3-6L7M].  

136.  Id. 
137.  Thompson, supra note 38. 
138.  Macey, The SEC at 70, supra note 122, at 952. 
139.  Id. at 957. 
140.  Charles Gasparino, Wall Street Has Unlikely New Cop in New York State’s Eliot Spitzer, 

WALL ST. J. (Apr. 25, 2002, 12:24 AM), http://online.wsj.com/news/articles/ 
SB101968249615728680 [http://perma.cc/P49V-D6QT].  

141.  Jeffrey Krasner & Andrew Caffrey, SEC Missed a Chance in its Probe of Putnam, BOS. 
GLOBE, Nov. 16, 2003, http://www.boston.com/business/globe/articles/2003/11/16/sec_ 
missed_a_chance_in_its_probe_of_putnam/ [http://perma.cc/Z3JK-XMDP].  



124 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

but not undertaken any inquiry.142  Thus, Spitzer’s efforts likely 
contributed to the SEC’s own investigation.143 

In contrast to Spitzer’s approach, Cuomo’s strategy actively 
sought a direct response from the SEC in its role as a “lawmaker” 
rather than just as an enforcer.144  Due to this goal, Cuomo could 
not rely solely on Spitzer’s example of aggressively using the Martin 
Act; rather, he had to make a direct request to the SEC for 
guidance,145 thus resulting in the adoption of the two-step approach 
discussed in detail in Part II.B.  The first step, filing a petition, was 
necessary to engage the attention of the SEC in its capacity as a 
policymaker.  Once engaged, retaining attention, even in the face 
of continued inaction, was critical to emphasize the importance of 
the issue; thus, the filing of the two supplemental petitions.146  
Without clear direction as to what Cuomo wanted from the SEC, 
the SEC likely could have easily continued its silence on climate 
change disclosure. 

While placing pressure on the SEC by calling for guidance was a 
necessary step, the second step of undertaking investigations under 
state law was at least as important in ultimately obtaining the 2010 
interpretive release.  Specifically, there is some evidence to suggest 
that Cuomo’s highly publicized investigations provided the 
necessary catalyst for agency action.  For instance, when the SEC 
finally responded to the petitions, it expressly acknowledged 
Cuomo’s investigations, stating that “[t]he New York Attorney 
General’s Office has entered into settlement agreements with three 
energy companies,” and then detailed the disclosure requirements 
placed on those companies.147  This statement, and the response of 
the energy companies to Cuomo’s investigations, suggests that the 
SEC decided to act to protect its own role as the ultimate source of 
federal disclosure guidelines.  For instance, the energy companies 

 
142.  Id. 
143.  See also Robert B. Ahdieh, Dialectical Regulation, 38 CONN. L. REV. 863, 872–79, 885 

(2006) (discussing effect of Spitzer’s enforcement actions against the financial sector on the 
SEC). 

144.  See Petition for Interpretive Guidance on Climate Risk Disclosure, supra note 21. 
145.  If Cuomo had only begun investigations, the SEC may simply have increased its own 

enforcement actions, which may have been a welcome change, but perhaps would not 
provide the clarity that an interpretive release could.  At least in theory, interpretive 
guidance would provide clearer advice to companies and state actors than individual 
enforcement actions that might not set out a pattern of expectations regarding disclosure. 

146.  Supplemental 2008 Petition, supra note 44; Supplemental 2009 Petition, supra note 
 46. 

147.  Commission Guidance, supra note 15, at 7–8. 



2015] Moving at a Glacial Pace 125 

 

likely did not disclose out of fear of SEC enforcement (as the 
agency had not signaled any intent to investigate), but rather 
because of Cuomo’s direct involvement.148  Further, a study of 10-K 
reports in 2008 concluded that the entire utility sector led all 
industries in terms of at least mentioning climate change risks, but 
emphasized that this sector “had reason to be particularly careful” 
due to Cuomo’s subpoenas to five energy companies.149 

Viewed through the lens of cooperative federalism, which 
suggests that concurrent enforcement presents states with the 
opportunity to impose “novel interpretations of federal law” on 
regulated entities,150 the SEC’s response seems to be an example of 
an agency attempting to prevent just such an opportunity.  As 
Cuomo himself made clear, the investigations were not undertaken 
just to publicize the issue of climate change disclosure, but also to 
begin establishing a baseline for other companies in the absence of 
SEC guidance.  Specifically, after filing the lawsuits, he emphasized 
that increasing disclosure is “a priority for us.”151  Even after 
reaching three landmark settlements, Cuomo signaled his intent to 
continue pursuing companies for similar violations, stating, “my 
office’s initiative to make sure companies are up front with 
investors continues.”152  Moreover, his office strategically chose to 
pursue companies in the same line of business and imposed the 
same settlement terms on all of them.153 

The regulatory scheme governing securities laws and the historic 
behavior of the SEC also makes it more likely that the SEC would 
feel threatened in its role as a lawmaking body by Cuomo’s 
investigations.  Specifically, under the existing regulatory regime, 
although the states may not impose separate disclosure 
requirements on companies, they may bring actions independent 

 
148.  See Barringer & Hakim, supra note 37 (indicating that “[i]t is rare, if not unique, for 

a securities law to be used for an environmental purpose”).  
149.  Doran & Quinn, supra note 71, at 737. 
150.  Lemos, supra note 132, at 737.  See also Macey, The SEC at 70, supra note 122, at 959 

(arguing that due to SEC inaction, Spitzer’s aggressive reaction was both “natural and 
inevitable”). 

151.  Barringer & Hakim, supra note 37.  
152.  Press Release, Attorney General Cuomo Announces Agreement with AES to Disclose Climate 

Change Risks to Investors, supra note 62.  As a note, Cuomo did not undertake any further 
investigations in this area, possibly because he left office just over one year after reaching the 
last agreement with AES Corp. in Nov. 2009. 

153.  See id.; Press Release, Cuomo Announces Entergy to Back-Off on Plan That Would Have 
Cost NYS []432 Million Dollars, supra note 47; Press Release, Attorney General Cuomo, Joined By 
Vice President Gore, Announces Agreement With Major Energy Company, Dynegy, Inc., supra note 56. 



126 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

of and parallel to the SEC’s own investigations for nondisclosure.154  
Furthermore, “the SEC has no right to intervene in state 
proceedings.”155  Thus, where the result of a state action, as here, 
will be to provide concrete content to existing disclosure 
requirements, the SEC will either have to accept the consequences 
or intervene in its lawmaking capacity. 

Although it may be argued that the regulatory void is not the 
same as when Spitzer was the Attorney General,156 and assuming 
that the SEC responded in 2010 because it felt the state was 
encroaching on its authority, then it is likely that the SEC will 
continue to be wary of state action in this area.  The key fact—that 
the states are preempted from imposing additional filing or 
disclosure requirements on entities registered with the SEC—
remains firmly in place.157  This feature differentiates the SEC’s 
relationship with the states from that of some other consumer-
oriented agencies; for instance, the Office of the Comptroller of 
the Currency (OCC) may not prohibit states from imposing 
additional consumer protection rules on national banks unless the 
state rules are inconsistent with the federal laws.158  Thus, unlike the 
OCC, which may be less likely to respond to state action due to its 
inability to interfere unless such actions are inconsistent with 
federal statutes, the SEC has a greater incentive to intervene and 
protect its authority to control the content of 10-K reports. 

 
154.  Amanda M. Rose, State Enforcement of National Policy:  A Contextual Approach (with 

Evidence from the Securities Realm), 97 MINN. L. REV. 1343, 1383–84 (2013). 
155.  Id. 
156.  Gillian E. Metzger, Federalism Under Obama, 53 WM. & MARY L. REV. 567, 570–71 

(2011) (stating that “federal agencies have pulled back from more aggressive preemption 
practices and . . . [are] at times actively soliciting state partnerships”). 

157.  SEC, Report on the Uniformity of State Regulatory Requirements for Offerings of Securities 
That Are Not “Covered Securities,” supra note 128. 

158.  Metzger, Federalism Under Obama, supra note 156, at 583–84 (stating that Dodd-Frank 
“takes a restrictive approach toward preemption, providing that only inconsistent state law is 
preempted; providing that state laws offering greater protection to consumers are not 
inconsistent for that reason; and requiring that a state consumer financial law must be 
preempted only if the state law discriminates against national banks or prevents or 
significantly interferes with the exercise by a national bank of its powers as determined by a 
court or by the OCC on a case-by-case basis” (internal quotation marks omitted)). 



2015] Moving at a Glacial Pace 127 

 

2. Why is New York Best Positioned to Force SEC Action? 

a. The Martin Act Contains Features That Render it More 
Powerful Than the Securities Laws of Other States 

New York’s Martin Act, just one of the numerous blue sky laws in 
effect, is often characterized as the most powerful in the nation.159  
There are a number of reasons for this, not the least of which is the 
generous interpretation of “fraud” that the New York courts have 
fashioned from the text of the statute.160  Specifically, the statute 
gives the Attorney General the power to investigate and prosecute 
“all deceitful practices contrary to the plain rules of common 
honesty,” or “acts tending to deceive or mislead the public.”161  
Thus, unlike in federal fraud cases, the state need not prove intent 
or scienter.162  Moreover, the Act applies to all suspected 
wrongdoing that an entity “shall have employed, or employs, or is 
about to employ.”163  All of these factors point to what the courts 
have confirmed:  the Attorney General possesses “wide discretion” 
to determine whether to begin an inquiry under the Martin Act.164  
Reinforcing this broad power is the fact that the courts do not have 

 
159.  See, e.g., State v. 7040 Colonial Rd. Assocs. Co., 671 N.Y.S.2d 938, 941–42 (N.Y. Sup. 

Ct. 1998) (stating that the Martin Act provides the Attorney General with “the broadest and 
most easily triggered investigative and prosecutorial powers of any securities regulator, state 
or federal”) (citing David J. Kaufmann, Introduction and Commentary Overview, Art. 23-A, to 
MCKINNEY’S CONSOLIDATED LAWS OF NEW YORK, BOOK 19, GENERAL BUSINESS LAW (1996).  
The Act is also considered one of the strongest statutes in New York with respect to the 
powers it gives the Attorney General.  See, e.g., Robert J. Anello, The Martine Act:  New York 
State securities fraud statute in 4C N.Y. PRAC., COM. LITIG. IN N.Y. ST. CTS. § 90:17 (Robert L. 
Haig ed., 3d ed.) (“The Martin Act is perceived as the most powerful tool utilized by the 
Attorney General’s Office to investigate and prosecute frauds in relation to securities in New 
York State.”). 

160.  See, e.g., State v. Sonifer Realty Corp., 622 N.Y.S.2d 516, 517 (N.Y. App. Div. 1995) 
(stating that “the fraudulent practices targeted by the statute need not constitute fraud in the 
classic common law sense, and reliance need not be shown in order for the Attorney General 
to obtain relief”); People v. Cadplaz Sponsors, 69 Misc. 2d 417, 419 (N.Y. Sup. Ct. 1972) 
(stating that all acts are covered regardless of “whether or not the product of scienter or 
intent to defraud”). 

161.  Cadplaz Sponsors, 69 Misc. 2d at 419. 
162.  See id.; see also Frank C. Razzano, The Martin Act:  An Overview, 1 J. BUS. & TECH. L. 

125, 129 (2006) (stating that neither intent nor scienter need be proved as the Act was 
meant to reach more than intentional fraud).  Cf. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 
551 U.S. 308, 310 (2007) (setting scienter standard as whether “a reasonable person would 
deem the inference of scienter cogent and at least as compelling as any opposing inference 
one could draw from the facts”); Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005) 
(describing all elements that must be proved, including scienter). 

163.  N.Y. GEN. BUS. LAW § 352(1) (McKinney 2013). 
164.  Charles H. Greenthal & Co. v. Lefkowitz, 342 N.Y.S.2d 415 (N.Y. App. Div. 1973). 



128 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

“the authority to judicially review” the Attorney General’s “exercise 
of discretion” regarding whether or not to investigate an entity.165 

Also of relevance to nondisclosure actions are the broad 
investigatory powers given to the Attorney General.166  Prior to trial, 
the state may subpoena any documents deemed “relevant or 
material to the inquiry.”167  Additionally, the state may subpoena 
witnesses to give oral or written statements even before deciding to 
take a case to a grand jury for indictment, and these witnesses are 
not given a right to counsel or a right against self-incrimination.168  
If the Attorney General permits counsel (which is the typical 
practice), then counsel may be denied the ability to object to 
questions and to take notes during the interview.169  Witnesses who 
fail to respond to a subpoena “without reasonable cause” may be 
prosecuted for a misdemeanor.170  Significantly, unlike in federal 
cases, the Attorney General’s subpoena power continues even after 
he or she decides to commence a legal proceeding.171  All of these 
steps may be taken in complete secrecy, and any state official or 
witness involved who discloses information about the investigation 
may be prosecuted for a misdemeanor.172  Alternatively, the 
investigation may be conducted publicly, and the resulting “shock 
value and potential business damage of having a criminal 
investigation conducted in public” has been said to give the 
Attorney General “awesome power” and leverage against 
defendants.173 

This investigatory power is a large part of why other state 
attorneys general are unable to replicate the investigations 
regarding nondisclosure that Cuomo undertook.174  Specifically, the 
other state attorneys general that have often been active in the area 
 

165.  People v. Bunge Corp., 250 N.E.2d 204 (N.Y. 1969).  
166.  Rose, supra note 154, at 1382–83 (stating that the “Martin Act also confers on the 

NYAG powerful tools of pre-suit discovery”); see also id. at 1383 n.134. 
167.  N.Y. GEN. BUS. LAW § 352(2) (McKinney 2013); People v. Thain, 874 N.Y.S.2d 896, 

899 (N.Y. Sup. Ct. 2009). 
168.  Matter of Abrams, 611 N.Y.S.2d 422, 426 (N.Y. Sup. Ct. 1994); Robert G. Morvillo & 

Robert J. Anello, White-Collar Crime:  Securities, Investigations and Prosecutions Under the Martin 
Act, N.Y. L.J. (Mar. 31, 2003), http://www.newyorklawjournal.com/id=900005383709/ 
WhiteCollar-Crime?slreturn=20150006103125 [http://perma.cc/Q8XE-92B8]. 

169.  Kanterman v. Att’y Gen., 76 Misc. 2d 743, 745–46 (N.Y. Sup. Ct. 1973). 
170.  N.Y. GEN. BUS. LAW § 352(4) (McKinney 2013). 
171.  N.Y. GEN. BUS. LAW § 352(2) (McKinney 2013); Razzano, supra note 162, at 128 

n.18. 
172.  N.Y. GEN. BUS. LAW § 352(5) (McKinney 2013); Razzano, supra note 162, at 130. 
173.  Morvillo & Anello, supra note 168. 
174.  Id.  



2015] Moving at a Glacial Pace 129 

 

of climate change have less or no jurisdiction in this area.  For 
instance, the state securities laws in Connecticut and Massachusetts 
give the attorney general no jurisdiction over nondisclosure.175  In 
Rhode Island and Vermont, the attorneys general possess only 
criminal jurisdiction,176 which is not a likely avenue for pursuing 
nondisclosure cases. 

One state whose attorney general may be able to partner with 
New York in investigating companies for nondisclosure is 
California.177  Although the state securities law vests investigative 
and enforcement power with a corporations commissioner, the law 
authorizes the commissioner to work with the attorney general.178  
Further, a separate statute expressly gives the attorney general 
concurrent investigative and enforcement powers.179  The 
investigative powers of both the commissioner and attorney general 
are similar to those in New York.180  For instance, the California 
Code permits the attorney general and commissioner to undertake 
private and public investigations.181  Both officers also have the 
power to subpoena witnesses for testimony and documents that are 
“relevant or material to the inquiry.”182  Individuals who fail to 
comply with the subpoenas may be held in contempt.183  The broad 
reach of New York’s law to already committed, ongoing, and future 
acts also exists in California.184  The one factor that may hinder the 
efforts of the California attorney general in aligning him or herself 

 
175.  CONN. GEN. STAT. § 36b-25 (2014); MASS. GEN. LAWS ch. 110A, § 406 (2013).  
176.  R.I. GEN. LAWS § 7-11-604 (2013); VT. STAT. ANN. tit. 9, § 5508 (2013). 
177.  See CAL. CORP. CODE § 25531 (West 2013) (describing Commissioner’s investigative 

powers); id. at § 25606 (West 2013) (stating that the Attorney General “upon the 
commissioner’s request shall act as the attorney for the commissioner in actions and 
proceedings brought by or against the commissioner under or pursuant to any provision of 
any law under the commissioner’s jurisdiction”). 

178.  CAL. CORP. CODE § 25606 (West 2013). 
179.  CAL. GOV’T. CODE § 12659 (West 2013). 
180.  Compare CAL. CORP. CODE § 25531 (West 2013), with N.Y. GEN. BUS. LAW § 352 

(McKinney 2013). 
181.  CAL. CORP. CODE § 25531(a) (West 2013); CAL. GOV’T CODE § 12659(a) (West 

2013).  
182.  CAL. CORP. CODE § 25531(c) (West 2013); CAL. GOV’T CODE § 12659(c) (West 

2013). 
183.  CAL. CORP. CODE § 25531(d) (West 2013); CAL. GOV’T CODE § 12659(d) (West 

2013). 
184.  CAL. CORP. CODE § 25531(a) (West 2013) (stating that the commissioner may open 

an investigation “in his discretion . . . to determine whether any person has violated or is 
about to violate any provision of this law or any rule or order hereunder”); CAL. GOV’T CODE 
§ 12659(a) (West 2013) (using identical language as in § 25531(a) to allow the attorney 
general to open investigations). 



130 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

with New York’s efforts is that the investigations by the attorney 
general and commissioner may not be duplicative.185  Thus, if the 
two officers do not agree on what and how to pursue corporate 
entities, it may prove difficult to provide the consistent support 
New York needs. 

b. New York Possesses the Political Will to Address 
Environmental and Climate Change Issues 

As evidenced by the efforts of New York’s most recent attorneys 
general, the Attorney General’s Office is more than willing to take 
on initiatives related to the environment and climate change.  
General Cuomo headed a number of initiatives related to climate 
change in areas other than securities disclosure.  For example, 
Cuomo took an active role in several multistate actions against 
federal agencies in which the states sought additional emissions 
regulations from the EPA.186  Since taking office in 2011, General 
Schneiderman has similarly been active in efforts to address 
environmental issues.  The following sections will detail his office’s 
record on the environment and argue that, although his office has 
largely not pursued Cuomo’s initiative on securities disclosure, 
resuming that issue is consistent with his agenda. 

 
185.  C. HUGH FRIEDMAN ET AL., CAL. PRAC. GUIDE:  CORPS. Ch. 5-C (Rutter Group et al. 

eds., 2012). 
186.  See, e.g., Press Release, Andrew Cuomo, N.Y. Att’y. Gen., Attorney General Andrew 

Cuomo Issues Statement on Historic Global Warming Decision; U.S. Supreme Court Rejects EPA’s 
Refusal to Regulate Carbon Dioxide Emissions (Apr. 2, 2007), http://www.ag.ny.gov/press-
release/attorney-general-andrew-cuomo-issues-statement-historic-global-warming-decision-us 
[http://perma.cc/GX7Q-RY8U] (discussing Massachusetts v. EPA, in which the Supreme 
Court ruled that the EPA improperly refused to consider a multistate petition for rulemaking 
related to carbon dioxide emissions; as a note, Cuomo took office while the lawsuit was 
pending, but continued to be a party to it); Press Release, Andrew Cuomo, N.Y. Att’y. Gen., 
Cuomo Leads Coalition of 15 States Against EPA in Battle for States’ Right to Fight Global Warming 
(Jan. 2, 2008), http://www.ag.ny.gov/press-release/cuomo-leads-coalition-15-states-against-
epa-battle-states-right-fight-global-warming [http://perma.cc/7N7Z-M2QB] (describing a 
lawsuit against the EPA to preserve states’ rights to regulate emissions from automobiles); 
Press Release, Andrew Cuomo, N.Y. Att’y. Gen., Attorney General Cuomo Leads 13-State Coalition 
to Defend the First-Ever Limits on Global Warming Pollution from Facilities Like Power Plants and Oil 
Refineries (July 22, 2010), http://www.ag.ny.gov/press-release/attorney-general-cuomo-leads-
13-state-coalition-defend-first-ever-limits-global [http://perma.cc/RH34-58H9] (discussing 
multistate effort to intervene in litigation to defend a federal rule regulating emissions from 
power plants). 



2015] Moving at a Glacial Pace 131 

 

i. Attorney General Schneiderman and Disclosure of 
Environment-Related Risks in Federal Securities Filings 

Soon after taking office, Schneiderman indicated his willingness 
to involve his office in environmental issues by invoking the Martin 
Act to subpoena five shale gas companies and three energy 
companies.187  His office alleged that the companies disclosed 
misleading and inaccurate information to investors related to the 
use of oil and natural gas wells.188  The subpoenas sought 
information about the methods used to calculate how much the 
wells would produce in future years.189  Although it appears that no 
legal consequences resulted from these subpoenas (no public 
information related to further steps or even the subpoenas have 
been released by the Attorney General),190 this attempt to use the 
Martin Act to address nondisclosure of environmental risks could 
still be seen as a somewhat successful effort to force federal action, 
and as a sign that his office is well equipped to continue pursuing 
this issue. 

About one month after Schneiderman subpoenaed the five shale 
gas companies, members of Congress took notice.  These members 
submitted letters to the SEC requesting that it open a parallel 
investigation.191  Within a month, the SEC had issued subpoenas to 
an undisclosed number of natural gas companies seeking the 
requested information.192  To date, no further enforcement action 
in these cases has been announced or otherwise been made 
publicly available, although one company announced that the SEC 
had concluded its investigation.193  Thus, although it appears that 
the SEC did not ultimately take enforcement steps or request 
 

187.  See Ian Urbina, Lawmakers Seek Inquiry of Natural Gas Industry, N.Y. TIMES, June 28, 
2011, http://www.nytimes.com/2011/06/29/us/politics/29naturalgas.html [http://perma. 
cc/R3PA-FLJD]; Ian Urbina, New York Subpoenas Energy Firms, N.Y. TIMES, Aug. 18, 2011, 
http://www.nytimes.com/2011/08/19/us/19gas.html?dlbk [http://perma.cc/5Q8C-
2AGM]. 

188.  Urbina, New York Subpoenas Energy Firms, supra note 187. 
189.  Id. 
190.  No information was released on the New York Attorney General’s website at the 

time that the subpoenas were issued, and no further information has since appeared.  NEW 

YORK STATE ATTORNEY GENERAL, http://www.ag.ny.gov [http://perma.cc/J9R7-J5ZJ] (last 
visited Jan. 6, 2015). 

191.  Urbina, Lawmakers Seek Inquiry of Natural Gas Industry, supra note 187.  
192.  Ian Urbina, Regulators Seek Records on Claims for Gas Wells, N.Y. TIMES, July 29, 2011, 

http://www.nytimes.com/2011/07/30/us/30gas.html [http://perma.cc/88DB-2B6P].  
193.  See, e.g., Paul Ausick, SEC Ends Probe into Shale Gas Reserves, MARKETWATCH (Sept. 24, 

2012, 7:50 AM), http://www.marketwatch.com/story/sec-ends-probe-into-shale-gas-reserves-
gdp-chk-xom-bhp-rrc-cog-2012-09-24 [http://perma.cc/63GG-K6UN].  



132 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

amended disclosure forms, the events suggest that the agency can 
be pressured through state and federal actors to pay attention to 
nondisclosure issues.194 

 

ii. Attorney General Schneiderman’s Office Has Been Active 
on Climate Change Policy, and Working on Disclosure of 
Risks Related to Climate Change Is Consistent with His 
Agenda 

Despite Schneiderman’s lack of subsequent action regarding 
disclosure of environmental risks, his office has remained highly 
involved with other climate change initiatives, indicating that 
resuming efforts to improve climate change-related disclosure 
would be consistent with his agenda.  These initiatives, discussed 
below, include litigation or the threat of litigation against federal 
agencies and submission of official comments to agencies. 

Schneiderman’s office has threatened litigation in several 
instances.  For example, in December 2012, Schneiderman and six 
other states notified the EPA that they intended to sue the agency 
for failing to issue regulations, as required under the Clean Air Act, 
to control methane emissions from the oil and gas industries.195  
Further, after the EPA missed the deadline to finalize a rule 
limiting greenhouse gas emissions from new power plants, 
Schneiderman and 11 other states and cities notified the EPA of 
their intent to sue if the EPA did not expedite its finalization 
process.196  Another major effort involved defending the state’s 
participation in a multi-state climate change effort known as the 
“Regional Greenhouse Gas Initiative” (RGGI).197  As Schneiderman 
 

194.  See also supra Part II.B on the SEC’s response to Cuomo’s petition for interpretive 
guidance. 

195.  Press Release, Eric T. Schneiderman, N.Y. Att’y. Gen., A.G. Schneiderman Leads Multi-
State Coalition in Action to Curb Climate Change Pollution from Oil and Gas Industry (Dec. 11, 
2012), http://www.ag.ny.gov/press-release/ag-schneiderman-leads-multi-state-coalition-
action-curb-climate-change-pollution-oil [http://perma.cc/FSS4-V8KR].  

196.  Neela Banerjee, States, Cities, Environmental Groups Demand EPA Emission Rules, L.A. 
TIMES, Apr. 17, 2013, http://articles.latimes.com/2013/apr/17/news/la-pn-epa-emission-
rules-demand-20130417 [http://perma.cc/BZX9-WY2P].  

197.  Press Release, Eric T. Schneiderman, N.Y. Att’y. Gen., A.G. Schneiderman Victorious in 
Defense of State Effort to Combat Climate Change (June 13, 2012), http://www.ag.ny.gov/press-
release/ag-schneiderman-victorious-defense-state-effort-combat-climate-change.  See also Press 
Release, Eric T. Schneiderman, N.Y. Att’y. Gen., A.G. Schneiderman Wins Court Victory 
Defending Critical State Effort to Combat Climate Change  (Dec. 5, 2013), http://www.ag.ny.gov/ 
press-release/ag-schneiderman-wins-court-victory-defending-critical-state-effort-combat-



2015] Moving at a Glacial Pace 133 

 

stated after a New York court dismissed Thrun v. Cuomo,198 the 
lawsuit to block state participation in RGGI, “[t]his is a significant 
victory . . . [and] I will continue to use the full force of my office to 
vigorously defend sensible efforts that reduce climate change 
pollution.”199 

In addition to litigation, Schneiderman has utilized the public 
comment system that federal agencies must use when considering 
policy initiatives.  In April 2013, his office submitted comments 
criticizing the U.S. State Department for failing to accurately assess 
the environmental effects of the Keystone Pipeline, and arguing 
that the Environmental Impact Statement (EIS) did not adequately 
consider emissions from the pipeline.200  Along with eleven other 
states, Schneiderman also submitted comments to the EPA 
regarding proposed rules on emissions from power plants.201  His 
office has continued advocating for the EPA’s proposals to limits 
power plant emissions, including through public statements 
supporting the proposed regulations.202 

c. Attorney General Schneiderman’s Office Has Aggressively 
Used the Martin Act to Address Financial Crimes Generally 

Like the two attorneys general who came before him, 
Schneiderman has actively made use of the Martin Act to combat 
financial crimes.203  This fact, combined with his role in climate 

 
climate [http://perma.cc/RM8C-D8BG] (describing the Appellate Division’s affirmation of 
the 2012 State Supreme Court ruling on RGGI). 

198.  Thrun v. Cuomo, No. 4358-11 (N.Y. Sup. Ct. June 12, 2012) (dismissing the action), 
aff’d, 976 N.Y.S.2d 320 (N.Y. App. Div. 2013). 

199.  Press Release, A.G. Schneiderman Victorious in Defense of State Effort to Combat Climate 
Change, supra note 198. 

200.  Press Release, Eric T. Schneiderman, N.Y. Att’y. Gen., A.G. Schneiderman Faults U.S. 
State Department for Failing to Fully Analyze Climate Change Impact of Keystone XL and Related 
Pipelines on New York State (Apr. 24, 2013), http://www.ag.ny.gov/press-release/ag-
schneiderman-faults-us-state-department-failing-fully-analyze-climate-change-impact [http:// 
perma.cc/7TL5-P5UG].  

201.  Press Release, Eric T. Schneiderman, N.Y. Att’y. Gen., A.G. Schneiderman & Coalition 
States:  Clean Air Act Mandates Federal Action to Cut Climate-Change Pollution from Power Plants 
(Dec. 16, 2013), http://www.ag.ny.gov/press-release/ag-schneiderman-coalition-states-clean-
air-act-mandates-federal-action-cut-climate [http://perma.cc/BUZ4-43WA].  

202.  Press Release, Eric T. Schneiderman, N.Y. Att’y. Gen., Statement:  A.G. Schneiderman 
Commends EPA’s Landmark Proposal to Cut Climate Change Pollution from Existing Power Plants 
(June 2, 2014), http://www.ag.ny.gov/press-release/statement-ag-schneiderman-commends-
epas-landmark-proposal-cut-climate-change-pollution [http://perma.cc/Q8QA-MU3Q].  

203.  Urbina, New York Subpoenas Energy Firms, supra note 187 (“Since he took office in 
January, Mr. Schneiderman has used the Martin Act to investigate major Wall Street banks 



134 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

change initiatives, suggests that resuming Cuomo’s disclosure 
efforts is consistent with his view that the Attorney General’s Office 
should play a role in issues affecting both New York residents and 
the nation.204  For example, in 2011, his office sued the Bank of 
New York Mellon, a national financial entity, for allegedly 
“overcharg[ing] customers for processing foreign currency 
transactions” and cheating the state out of fees associated with the 
transactions.205  In 2012, the Office filed a lawsuit against JPMorgan 
for allegedly defrauding consumers who purchased mortgage-
backed securities.206  In early 2014, Schneiderman also reached an 
agreement with BlackRock, the world’s largest money manager, 
wherein the company agreed to end an analyst survey program that 
allegedly facilitated insider trading.207 

d. The Attorney General Will More Likely Be Able to Pressure 
the SEC Than Private Plaintiffs 

Although it may be thought that private plaintiffs could play a 
role in forcing the SEC to act, there are a number of institutional 
barriers to this strategy.  First, there is no right of action for private 
parties under the state Martin Act; thus, the state Attorney General 
is the sole enforcer.208  Second, while private parties do have an 

 
involved in the mortgage-backed securities crisis and other accusations of financial 
impropriety.”). 

204.  See Eric T. Schneiderman, N.Y. Att’y. Gen., Remarks to the 2013 Bloomberg Markets 
50 Summit (Sept. 24, 2013), available at http://www.ag.ny.gov/press-release/remarks-
attorney-general-eric-t-schneiderman-2013-bloomberg-markets-50-summit [http://perma.cc/ 
6SXG-B6EJ].  While discussing ways to combat financial crimes by nationwide firms on Wall 
Street, Schneiderman discussed the power of the Martin Act to investigate companies, 
stating, “we can bring a lot of weight of the law to bear” on the entities suspected of 
wrongdoing.  Id. 

205.  Eric Dash & Peter Lattman, U.S. and New York Sue Bank of New York Mellon over Foreign 
Exchange Fees, N.Y. TIMES, Oct. 4, 2011, http://www.nytimes.com/2011/10/05/ 
business/new-york-state-says-bank-of-new-york-mellon-cheated-pension-funds.html?dlbk 
[http://perma.cc/3HK2-8LK3].  

206.  Michael J. De La Merced, In JPMorgan Case, the Martin Act Rides Again, N.Y. TIMES 

DEALBOOK (Oct. 2, 2012, 12:06 PM), http://dealbook.nytimes.com/2012/10/02/in-
jpmorgan-case-the-martin-act-rides-again/ [http://perma.cc/2E49-J8GF]; Gretchen 
Morgenson, JPMorgan Unit is Sued over Mortgage Securities Pools, N.Y. TIMES, Oct. 1, 2012, 
http://www.nytimes.com/2012/10/02/business/suit-accuses-jpmorgan-unit-of-broad-
misconduct-on-mortgage-securities.html?dlbk [http://perma.cc/2M2P-5P66].  

207.  Alex Leondis, Chris Dolmetsch & Joel Rosenblatt, BlackRock Agrees with N.Y. to End 
Analyst Survey Program, BLOOMBERG (Jan. 9, 2014, 7:09 PM), http://www.bloomberg.com/ 
news/2014-01-09/blackrock-agrees-with-n-y-to-end-analyst-survey-program.html [http:// 
perma.cc/67GX-ZB42].  

208.  CPC Int’l Inc. v. McKesson Corp., 70 N.Y.2d 268, 275 (N.Y. 1987). 



2015] Moving at a Glacial Pace 135 

 

implied right of action under federal securities laws, subsequent 
legislation on the issue makes it difficult for plaintiffs to bring 
successful cases.209  For instance, plaintiffs must state “with 
particularity” the facts giving rise to the alleged wrong, but are not 
entitled to even limited discovery before a court rules on whether 
the lawsuit states a cause of action.210  Moreover, under existing 
regulations and Supreme Court precedent, plaintiffs must have 
already suffered actual economic loss (unlike the state of New York 
under the Martin Act) to file a claim.211 

In addition to the practical difficulties facing private plaintiffs in 
bringing lawsuits, they also are disadvantaged vis-à-vis state 
attorneys general with respect to the media.  Specifically, actions 
brought by the state often have “added credibility and weight” due 
to the status of the plaintiff as a government official.212  Thus, to 
bring sufficient publicity to securities disclosure cases such that the 
political salience of the issue forces a reaction from the SEC, 
relying on a state attorney general is a more promising strategy.213 

 
209.  David Skeel, Unleashing a Wall Street Watchdog, PACIFIC STANDARD (Apr. 23, 2012, 6:19 

PM), http://www.psmag.com/navigation/business-economics/unleashing-a-wall-street-
watchdog-40545/ [http://perma.cc/7HA9-QRP6].  

210.  See id. (describing the requirements imposed by the Private Securities Litigation 
Reform Act of 1995).  

211.  15 U.S.C. § 78r(a) (2014) (establishing liability for misleading statements only if the 
plaintiff, “in reliance upon such statement, shall have purchased or sold a security at a price 
which was affected by such statement, for damages caused by such reliance); 15 U.S.C. § 78u-
4(b)(4) (2014) (stating that private plaintiffs “shall have the burden of proving that the act 
or omission of the defendant alleged to violate this chapter caused the loss for which the 
plaintiff seeks to recover damages); Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 344 (2005) 
(describing the elements of a 10b-5 action, including “actual economic loss” or “actual 
damages”). 

212.  Lynn Mather, Theorizing about Trial Courts:  Lawyers, Policymaking, and Tobacco 
Litigation, 23 LAW & SOC. INQUIRY 897, 917 (1998) (also indicating that “[t]he press is more 
accustomed to covering news releases and activities of state government officials than the 
statements and court hearings of private lawyers”); see also Widman, Advancing Federalism 
Concerns in Administrative Law Through a Revitalization of Statement Enforcement Powers, supra 
note 131, at 194 (noting the impact that media campaigns can have in attempts to hold 
federal agencies accountable). 

213.  See Lainie Rutkow & Stephen P. Teret, The Potential for State Attorneys General to 
Promote the Public’s Health:  Theory, Evidence, and Practice, 30 ST. LOUIS U. PUB. L. REV. 267, 276–
77 (2011) (discussing the ways in which attorneys general can use their “bully pulpit” to 
engage in advocacy on an issue); Donald C. Gifford, Impersonating the Legislature:  State 
Attorneys General and Parens Patriae Product Litigation, 49 B.C. L. REV. 913, 915 (2008) (“The 
state attorney general often wields disproportionate bargaining power in negotiations arising 
in parens patriae litigation.”). 



136 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

3. Despite the Lack of Similar Blue Sky Laws, Other States Can 
Use Non-Litigation Methods to Contribute to New York’s 
Efforts 

State attorneys general have frequently been involved in efforts to 
force the federal government to take action on climate change.214  
Although in the context of securities disclosure they are often 
unable to initiate their own investigations, there are other ways in 
which they may contribute to efforts to obtain further disclosure 
guidance.  In the past, the two main ways in which attorneys 
general have worked together to challenge federal agencies have 
been 1) multistate litigation215 and 2) multistate coalitions that 
submit comments or petitions to agencies regarding proposed 
policies.  Of these two strategies, the latter is of most relevance with 
respect to securities disclosure. 

In a number of contexts, state attorneys general have submitted 
letters and official comments to federal agencies urging them to 
adopt certain policies.  For instance, in 2013, twenty-one state 
attorneys general petitioned the U.S. State Department to extend 
the Keystone Pipeline.216  Also in 2013, a coalition of thirteen 
attorneys general submitted a letter to the EPA urging the agency 
to finalize a rule related to emissions standards for motor 
vehicles.217  Within the area of securities disclosure, Cuomo’s 2007 
petition to the SEC included forty other groups representing both 
state and non-state entities.218  Consistent with past practice, other 
state attorneys general could lend their names and the weight of 

 
214.  See, e.g., Am. Elec. Power Co., Inc. v. Connecticut, 131 S. Ct. 2527 (2011); 

Massachusetts v. EPA, 549 U.S. 497 (2007). 
215.  See, e.g., Am. Elec. Power Co., Inc., 131 S. Ct. 2527 (involving eight states suing 

American Electric Power Co., arguing that it was creating a public nuisance by contributing 
to global warming); Massachusetts, 549 U.S. 497 (involving 13 states suing the EPA after it 
refused to consider a petition to regulate carbon dioxide emissions from motor vehicles); 
Florida v. U.S. Dep’t of Health & Hum. Servs., 648 F.3d 1245 (11th Cir. 2011) (involving 26 
states suing HHS to prevent enforcement of the Affordable Care Act). 

216.  Bryan Cohen, Multi-State Coalition Petitions Kerry to Expand Keystone Pipeline, LEGAL 

NEWSLINE (Aug. 13, 2013, 11:16 AM), http://legalnewsline.com/news/federal-
government/243541-multi-state-coalition-petitions-kerry-to-expand-keystone-pipeline 
[http://perma.cc/B3MV-BTED].  

217.  Bryan Cohen, Multi-State Coalition Urges EPA to Adopt Air Pollution Controls for Vehicles, 
LEGAL NEWSLINE (July 3, 2013, 2:09 PM), http://legalnewsline.com/news/federal-
government/242659-multi-state-coalition-urges-epa-to-adopt-air-pollution-controls-for-
vehicles [http://perma.cc/3Y2T-J5R4]. 

218.  Petition for Interpretive Guidance on Climate Risk Disclosure, supra note 21 
(including state officials from California, Florida, North Carolina, Oregon, Rhode Island, 
and Vermont). 



2015] Moving at a Glacial Pace 137 

 

their offices to any additional petitions for interpretive guidance 
submitted to the SEC. 

Another avenue of potential importance is filing amicus briefs in 
court challenges to the New York Attorney General’s authority 
under the Martin Act.  Over the years, the New York courts have 
been asked to rule on a number of issues stemming from the 
Martin Act, some of which have challenged the ability of the 
attorney general to pursue action under the statute.219  In the most 
recent challenge, People v. Greenberg, the states of Vermont and 
Connecticut filed an amicus brief in support of New York’s use of 
the Martin Act and the state’s substantive argument, which was that 
the lower courts properly denied summary judgment to defendants 
in a case against an insurance company.220  Although state 
investigations for nondisclosure may not reach the trial stage, 
preserving the Attorney General’s authority to investigate and 
prosecute under the Martin Act remains important and 
controversial.221  Thus, as in the Greenberg case, it may be important 
in the future for other states to file amicus briefs to support New 
York’s authority to prosecute or investigate companies under the 
Martin Act.222 

4. Criticism of State Attorneys General as National Policymakers 

As the number of state attorneys general involved in national 
policy issues has grown,223 so has the criticism of their actions.224  
 

219.  See, e.g., Dunham v. Ottinger, 154 N.E. 298 (N.Y. 1926) (challenging the 
constitutionality of the law); Bishop v. Commodity Exch., Inc., 564 F.Supp. 1557 (S.D.N.Y. 
1983) (dealing with whether the Martin Act is preempted by Commodity Exchange Act); 
People v. Greenberg, 946 N.Y.S.2d 1, 4–7 (N.Y. App. Div. 2012) (dealing with whether 
federal laws preempted Attorney General’s authority under the Martin Act). 

220.  See People v. Greenberg, 21 N.Y.3d 439, 445 (N.Y. 2013). 
221.  See, e.g., Kelly-Kilgore, supra note 38 (noting that the law’s broad investigatory 

powers remain “[e]xtremely controversial,” and that many are uncomfortable with its 
“almost unlimited power”); Walter Olsen, Devil’s Bargain:  Wall St. & the Martin Act, N.Y. POST 
(Aug. 30, 2011, 4:00 AM), http://nypost.com/2011/08/30/devils-bargain-wall-st-the-martin-
act/ [http://perma.cc/5W26-HDWV] (stating that many individuals oppose the Attorney 
General’s aggressive use of the Martin Act, and explaining that the “trouble is with the state 
of the Martin Act itself”). 

222.  The federal preemption issue raised at trial was not appealed, thus the amicus brief 
filed by Vermont and Rhode Island did not address this issue, but if such an issue were 
appealed in future cases, amicus briefs from other states could similarly be submitted in 
support of the state. 

223.  See Lemos, supra note 132, at 726–27 (listing the numerous areas in which state 
attorneys general have involved themselves, including “campaigns against the tobacco 
industry, makes of lead-based paint, prescription drug marketing programs, student lending 
practices, handgun manufacturers, and . . . the mortgage-service industry”); see generally 



138 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

Most of the criticism revolves around the basic reality that state 
attorneys general are elected or appointed by individuals in only 
one state, but their “enforcement efforts may have nationwide 
consequences” and can prompt both federal agencies and potential 
defendants to permanently alter their behavior.225  This last section 
of the Note will argue that, despite these criticisms, there is no 
inherent reason to keep attorneys general from using their offices 
to address national issues such as climate change.  In fact, Congress 
has, in other contexts, acknowledged and accepted the benefits of 
having state actors play a role in shaping national policy.226 

To begin with, critics have asserted that concurrent state 
enforcement creates a climate of overenforcement that is harmful 
to regulated entities.227  However, the phenomenon of 
overenforcement seems unlikely to occur—or at least very rarely if 
history is any guide.228  States are unlikely to overenforce because, 
like any government entity, they “are limited in number and must 
 
Cornell W. Clayton, Law, Politics and the New Federalism:  State Attorneys General as National 
Policymakers, 56 REV. OF POL. 525 (1994). 

224.  See, e.g., Gifford, supra note 214, at 968 (stating that some court decisions indicate 
that “the attorney general’s filing of parens patriae litigation against manufacturers of 
products already regulated through the legislative process distorts our constitutional 
structure”); Hal Stratton, N.M. Att’y Gen., Attorneys General in State of Collusion, WALL ST. J., 
June 10, 1988 (criticizing efforts by the National Association of Attorneys General to set 
national policies in the area of business regulation); William H. Pryor, Jr., Ala. Att’y Gen., 
Novel Government Lawsuits Against Industries:  An Assault on the Rule of Law, FEDERALISM & 

SEPARATION POWERS PRAC. GROUP NEWSL. (Federalist Soc’y, Washington, D.C.), July 1999, 
available at http://www.fed-soc.org/publications/detail/novel-government-lawsuits-against-
industries-an-assault-on-the-rule-of-law [http://perma.cc/9EJN-4QQE] (arguing that the use 
of lawsuits by state attorneys general to address national issues is a misuse of the court 
system). 

225.  Lemos, supra note 132, at 741. 
226.  Metzger, Federalism Under Obama, supra note 156, at 582–85 (discussing Dodd-Frank’s 

limits on preemption of state consumer protection laws, and noting that the CFPB is 
required to respond to state petitions for rulemaking if a majority of states sign the petition). 

227.  See Lemos, supra note 132, at 703 (discussing concerns with overenforcement 
generally); James J. Park, Rules, Principles, and the Competition to Enforce the Securities Laws, 100 

CAL. L. REV. 115, 121 (2012) (stating that the “criticism of decentralized securities 
enforcement is largely driven by the problem of overenforcement, the tendency of some 
enforcers to bring more cases than is socially optimal”); Metzger, Federalism and Federal Agency 
Reform, supra note 130, at 22 (indicating that the Supreme Court majority opinion in Altria 
“offers a strong caution against states playing too much of a regulatory role” where they have 
concurrent enforcement power). 

228.  See Amy Widman & Prentiss Cox, State Attorneys General Use of Concurrent Public 
Enforcement Authority in Federal Consumer Protection Laws, 33 CARDOZO L. REV. 53, 81–82 (2011) 
(stating that empirical data in the area of consumer protection indicates that excessive 
enforcement has not occurred).  See also supra Part II (detailing the regulatory void left by 
the SEC, which led Spitzer and Cuomo to begin aggressively pursuing cases traditionally left 
to SEC jurisdiction). 



2015] Moving at a Glacial Pace 139 

 

ration their own scare resources.”229  Due to the existence of finite 
resources, states “have no inherent incentive to maximize 
enforcement by taking action on every colorable offense.”230  
Additionally, states are more likely than private plaintiffs to 
consider the public interest or social utility of taking action, further 
reducing the likelihood of overzealous prosecution.231  Thus, if what 
the states are seeking is an optimal enforcement level, then 
overenforcement is not necessarily a problem; “‘good’ enforcement 
is not the same thing as maximum enforcement.”232 

Related to the image of attorneys general as overzealous 
prosecutors is the critique that the generals take on certain cases or 
issues to further a partisan agenda.233  There is no question that 
political will must exist for an attorney general to involve his or her 
office in a controversial area.234  That being said, the allegation that 
these attorneys general are motivated solely by partisan politics is 
exaggerated.  First of all, choosing office priorities is more complex 
than whether an issue is popular amongst Democrats or 
Republicans, and in many cases, “the public policy consequences 
are not always clear in advance.”235  Moreover, even if attorneys 
general work together on an issue, each represents a different 
constituency with differing priorities, meaning that the attorneys 
general “are a diverse group with diverse motivations.”236  While 
political motivations remain a legitimate concern, it should also not 
be forgotten that their critics are often pushing a regulatory or 

 
229.  Lemos, supra note 132, at 703. 
230.  Id. 
231.  Id.; Park, supra note 228 at 122. 
232.  Lemos, supra note 132, at 705. 
233.  See, e.g., Lawrence G. Wasden & Brian Kane, Massachusetts v. EPA:  A Strategic and 

Jurisdictional Recipe for State Attorneys General in the Context of Emission Accelerated Global Warming 
Solutions, 44 IDAHO L. REV. 703, 732–33 (2008) (“A significant hurdle for state attorneys 
general when forming partnerships can be the political overtones associated with such 
partnerships.  As indicated previously, attorneys general are elected in forty-three states and 
such elections necessarily carry with them the political ramifications of party affiliation.  
Massachusetts is an example of how party affiliation can shape the affiliations that are forged 
in bringing suit.”). 

234.  See, e.g., Amanda M. Rose & Larry J. LeBlanc, Policing Public Companies:  An Empirical 
Examination of the Enforcement Landscape and the Role Played by State Securities Regulators, 65 FLA. 
L. REV. 395, 399 (2013) (concluding that “states with an elected Democrat serving as the 
securities regulator brought matters at nearly seven times the rate of other states” indicating 
that “pursuit of public companies for securities-related misconduct has a partisan political 
dimension”). 

235.  Lemos, supra note 132, at 722 n.102 (indicating that “every case has two sides, and 
state politics can be unpredictable”). 

236.  Id. at 722. 



140 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

partisan agenda, and that the political agendas of state attorneys 
general could be viewed as a needed counterweight to the political 
views of the agencies.237  Nor should it be forgotten that any action 
undertaken by an attorney general could be viewed as politically 
motivated.238  Most importantly, if the state action is meritorious 
aside from being “good politics,” then whether the attorney general 
stands to gain from it is largely beside the point. 

Critics also assert that the attorney general of a single state 
should not be able to impose its policy preferences on the rest of 
the nation.239  The securities market overseen by the federal and 
state governments has both national and international dimensions, 
so this particular critique of how attorneys general wield their 
authority perhaps carries more weight here than in other 
contexts.240  However, the dominance of state policy does not have 
to be and, as Cuomo’s efforts seemed to indicate, is not the 
ultimate goal with respect to disclosure of risks from climate 
change.  Relying on state investigations to establish a baseline may 
be both useful and one method of holding companies accountable 
in the absence of federal action, but the issuance of a single, 
uniformly applied SEC interpretation would be preferable and (at 

 
237.  Widman, Advancing Federalism Concerns in Administrative Law Through a Revitalization 

of State Enforcement Powers, supra note 131, at 212. 
238.  For example, the Massachusetts Attorney General was accused of failing to bring 

public corruption cases in order to avoid prosecuting her fellow Democrats, but after she 
began bringing such cases, her critics then charged that she only filed the actions to buttress 
her own political career.  Peter Schworm & Frank Phillips, Cahill to Pay $100,000 to Settle Case, 
BOS. GLOBE, Mar. 1, 2013, http://www.bostonglobe.com/metro/2013/03/01/cahill-will-not-
retried-will-instead-pay-fine-lottery-case/KiFpyqJIU0OWJwltRcbkfM/story.html [http:// 
perma.cc/N5JA-MQGF]; Noah Bierman, Effect of Outcome on Coakley’s Future a Matter of Debate, 
BOS. GLOBE, Dec. 12, 2012, http://www.boston.com/news/local/massachusetts/2012/12/ 
13/political-cost-for-coakley-question/0b8N6gu3XH8Km6LRIWd4QK/story.html [http:// 
perma.cc/VE7G-JE7V]. 

239.  See, e.g., Gifford, supra note 214, at 968 (stating that some court decisions indicate 
that “the attorney general’s filing of parens patriae litigation against manufacturers of 
products already regulated through the legislative process distorts our constitutional 
structure”); Stratton, supra note 225 (criticizing efforts by the National Association of 
Attorneys General to set national policies in the area of business regulation); John W. 
Suthers, Colo. Att’y Gen., The State Attorney General’s Role in Global Climate Change, 85 DENV. U. 
L. REV. 757, 762 (2008) (“I do not believe that state AGs have the authority to act in whatever 
they believe is the broader national or international interest and to usurp the jurisdictional 
authority of Congress and federal regulatory agencies in the process.”). 

240.  See Rose, State Enforcement of National Policy, supra note 154, at 1353 (“Policy 
distortion can result . . . when different enforcers have different views on what the 
appropriate policy should be.  When this occurs, the more aggressive enforcer’s viewpoint 
will always win out, creating a one-way ratchet as regulated parties adjust their behavior to 
conform to the demands of the strictest enforcer with jurisdiction over them.”). 



2015] Moving at a Glacial Pace 141 

 

least in theory) would provide clearer instructions, which is why 
Cuomo’s office sought federal guidance. 

Assuming that climate change disclosure is less of a priority to the 
SEC than other issues, and that a failure to issue additional 
guidance is the result of the agency’s decisions on how to manage 
its finite resources, then state pressure to issue such guidance may 
be criticized for attempting to divert the agency’s resources to less 
important areas.  There are two possible responses to such 
criticism.  First, the SEC is always the target of industry groups and 
other lobbying that would likely result in a shift of its resources 
away from their current distribution.241  Thus, basing opposition to 
state action on the idea that the state wants the agency to 
reprioritize is not conclusive evidence of its harm.  Second, 
assuming that a reprioritization is unwarranted, the SEC and the 
state are independent actors, and the SEC, therefore, is not 
obligated to respond at all to state demands.242  However, that lack 
of obligation is hardly sufficient to justify prohibiting the state from 
acting on its own or requesting SEC action. 

The motivation of the SEC in not responding also highlights why 
the intervention of the state attorney general may be reasonable.  
Assuming that the SEC is not hostile to the idea of clearer 
disclosure guidelines but feels it lacks the resources to focus on the 
issue, then the state should step in and pursue its own 
investigations under the Martin Act in order to set a baseline for 
disclosure practices.  In this context, the choice is between no 
enforcement and state enforcement, and assuming that there are 
harms to investors and companies from continued uncertainty in 
the law, then the benefit of state intervention may outweigh the 
costs.243 Alternatively, assume that the SEC has not issued further 
 

241.  See Barkow, supra note 124, at 22 (discussion of industry groups lobbying both the 
SEC and Congress to influence the agency’s policies and priorities). 

242.  Cf. 12 U.S.C. § 5551(c)(1) (2014) (“The Bureau [of Consumer Financial 
Protection] shall issue a notice of proposed rulemaking whenever a majority of the States has 
enacted a resolution in support of the establishment or modification of a consumer 
protection regulation by the Bureau.”).  There is no similar provision requiring the SEC to 
respond to state demands for rulemaking. 

243.  See Joseph E. Stiglitz, Federalism in Securities Regulation:  An Economist’s Perspective, 40 
U.S.F. L. REV. 805, 819–20 (2006) (arguing that duplication of financial regulation efforts is 
beneficial where the risk of underenforcement presents high costs to consumers, and 
concluding that state laws such as the Martin Act are useful way to reduce the possibility of 
costly errors when agencies either make mistakes or do not act).  The Supreme Court has 
also addressed the benefits of concurrent enforcement.  See Metzger, Federalism and Federal 
Agency Reform, supra note 130, at 25–32 (proposing that Supreme Court doctrine limiting the 
extent of state preemption could be viewed, at least in part, as stemming from “the Court’s 



142 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 40:1 

 

guidance because it does not view current disclosure practices as 
problematic.244  Pressure from the state attorney general may still be 
warranted as a means of promoting agency transparency and 
accountability.  Specifically, rather than allow the SEC to obfuscate 
the issue by stating in its 2010 interpretive release that it would 
continue to monitor and seek public comment on the issue245 and 
then fail to follow through on its promises, continued state action 
could force the agency to acknowledge its actual policy position, 
and thereby increase the level of candor within the disclosure 
debate.246 

IV. CONCLUSION 

Disclosure of financial risks arising from climate change poses an 
ongoing challenge for companies and for law enforcement.  To 
date, there is no consensus on when such risks should be disclosed 
and how much detail ought to be included in federal securities 
filings.  While the SEC’s 2010 interpretive release has been viewed 
as one step toward resolving the debate, it is also incomplete.  The 
SEC itself recognized that the issuance of the release might not be 
the Commission’s final statement on disclosure.  In fact, the 
Commission promised to monitor the situation, solicit public 
comment, and consider whether further guidance or rulemaking 
was necessary.247  To date, this promise has been unfulfilled—at 
 
concern that federal agencies may be systematically failing to meet their statutory 
responsibilities”). 

244.  For example, at the time the 2010 Commission Guidance was released, one of the 
two SEC Commissioners who voted against the interpretive release indicated that she did not 
believe attention to the subject was either substantively necessary or within the SEC’s 
expertise.  Kathleen L. Casey, Commissioner, SEC, Statement at Open Meeting:  Interpretive 
Release Regarding Disclosure of Climate Change Matters (Jan. 27, 2010), available at 
http://www.sec.gov/news/speech/2010/spch012710klc-climate.htm [http://perma.cc/ 
9ELH-TL4X] (“I do not believe that this release will result in greater availability of material, 
decision-useful information geared toward the needs of the broad majority of investors. . . . I 
can only conclude that the purpose of this release is to place the imprimatur of the 
Commission on the agenda of the social and environmental policy lobby, an agenda that falls 
outside of our expertise and beyond our fundamental mission of investor protection.”). 

245.  Commission Guidance, supra note 15, at 27–28. 
246.  Where there is express disagreement between the states and the SEC about whether 

a problem exists, the state may still get a federal response, but from Congress.  In particular, 
if an agency publicly asserts that it does not want state involvement, Congress might decide 
to end the dispute by either specifying disclosure guidelines itself or preempting the state.  
Either way, the state actor, while possibly not ending up with the federal response it desires, 
can force the debate to a larger arena and bring the democratic process to bear on the issue 
(and thereby also address the criticism that one state is setting policy). 

247.  Commission Guidance, supra note 15, at 27–28. 



2015] Moving at a Glacial Pace 143 

 

least in any public manner—and disagreement about how and 
when to report climate change risks persists. 

Whether the SEC’s failure to act on climate change disclosure 
since 2010 is the result of inadvertent inattention or a belief that no 
further action is needed, the agency’s continued silence suggests 
the need for an outside actor to exert pressure on the SEC for 
clarification of its policy beliefs.  Armed with the Martin Act and 
the political will to serve as a leader on environmental issues, the 
New York Attorney General is best positioned to be that actor.  Not 
only can the Attorney General use Cuomo’s two-part strategy to 
request interpretive guidance, but the Office can, in the face of 
continued SEC inaction, directly pressure corporations to disclose 
information.  While it is uncertain what the actual results of such 
efforts will be, without leadership from New York, continued SEC 
inaction seems certain.