The Fortunate Demise of SEC Staff Legal Bulletin No. 14L

In 2021, the SEC published its now rescinded Staff Legal Bulletin No. 14L (“the 2021 Bulletin”), revising its interpretations of the “ordinary business” and “economic relevance” exclusions under Rule 14a-8. This Article contends that the post-Bulletin landscape has proven undesirable. It empirically shows that environmental and social (“E & S”) shareholder proposals—including anti-E&S proposals—surged in response. Between 2022 and 2024 alone, E & S proposals accounted for 40% of all such filings in Russell 3000 companies over the entire 2014-2024 period, generating an estimated $23.3 million in additional processing costs for companies during that three-year window. Despite their volume, these proposals were largely unpopular among shareholders. The Article argues that rescinding the 2021 Bulletin was a necessary corrective—but not a sufficient safeguard. Although non-binding, SEC Bulletins exert significant influence on market behavior. Decisions about whether to facilitate or constrain the submission of E & S proposals, however, should not rest with the SEC staff’s discretion, particularly when such interpretative shifts are achieved through non-binding acts and carry large systemic consequences. Simply rescinding the 2021 Bulletin leaves open the possibility of future reversals, and is, therefore, insufficient to prevent future overuse of Rule 14a-8. To provide more durable protection, this Article proposes giving shareholders greater control over E & S resolutions—either by voting on whether such proposals should be solicited, or by allowing companies to adopt anti-E&S bylaw provisions. These mechanisms would preserve shareholder choice while reducing the costs and uncertainty generated by staff-driven interpretative changes.