Washington, DC – Today, Congressman Frank Lucas (OK-03) introduced the Protect Farmers from the SEC Act. The bill would prohibit the U.S. Securities and Exchange Commission (SEC) from requiring an issuer of securities to disclose greenhouse gas emissions (GHG) from upstream and downstream activities in the issuer’s value chain arising from farms and ranches.
“America’s farmers and ranchers work day in and day out only to struggle with supply chain disruptions, skyrocketing input costs, and burdensome regulations imposed by the irresponsible, nonsensical actions of the Biden Administration. While federal securities laws already require publicly traded companies to disclose material risks to investors, the SEC’s ill-advised climate disclosure rule undermines the materiality standard for environmental policy purposes. The proposed climate rule is so unwieldy and convoluted that publicly traded companies will be forced to require small, independent, family farms to report on-farm data regarding individual operations and day-to-day activities. In this capacity, the SEC would be granted unprecedented jurisdiction over family farms and ranches, hindering the ability of American farmers and ranchers to compete in global markets and creating onerous compliance requirements for operations with few or no employees,” said Congressman Lucas. “The SEC is an independent financial regulator, whose statutory authority reflects its narrow focus on financial markets- not reconstructing America’s farm economy and meddling in capital allocation. I’m proud to introduce this critical legislation to protect America’s family farms and ranches from an encroaching and overreaching Biden Administration.”
On March 21, 2022, the U.S. Securities and Exchange Commission proposed a rule, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (climate disclosure rule), that would require registrants, publicly traded companies registered with the SEC, to include certain climate-related disclosures in their statements and periodic reports, including measured impacts for their entire supply chain.
Specifically, the proposed rule requires a registrant to disclose information about its direct greenhouse gas emissions (Scope 1) and indirect emissions from purchased electricity or other forms of energy (Scope 2). In addition, a registrant would be required to disclose greenhouse gas emissions from upstream and downstream activities in its value chain (Scope 3) under many – if not most – circumstances.
“The Securities and Exchange Commission’s proposed climate disclosure rule could create substantial costs and legal liabilities for farm families. Unlike large corporations, farmers don’t have teams of compliance officers or attorneys dedicated to handling SEC compliance issues,” said American Farm Bureau Federation President Zippy Duvall. “We appreciate Rep. Lucas for his efforts to ensure the SEC remains focused on Wall Street while farmers remain focused on putting food on the table for America’s families.”
“The SEC’s climate disclosure rule would lead to unintended consequences for small businesses like farms and ranches and adds yet another regulatory burden on cattle producers. NCBA is grateful to Rep. Lucas for protecting cattle producers from more federal overreach,” said National Cattlemen’s Beef Association Executive Director of Natural Resources Kaitlynn Glover. “The SEC should stick to regulating Wall Street, not main street.”
“NAWG thanks Congressman Lucas for introducing this important legislation addressing the inclusion of farming in SEC regulation,” said National Association of Wheat Growers President and Washington state wheat grower Nicole Berg. “This regulation could add layers of reporting requirements on wheat farmers that are focused on producing a quality wheat crop for domestic and international customers. With all the uncertainty in agriculture today, we don’t need additional regulation, we need to focus on keeping farming operations productive.”
National Cotton Council Chairman Ted Schneider said the U.S. cotton industry welcomes Representative Lucas’ bill which will prevent more unnecessary regulation of this nation’s producers and ranchers. The Louisiana cotton producer said, “The cotton sector already has committed to reducing greenhouse gas emissions and our producers are escalating that and other key conservation practices under the umbrella of the industry’s U.S. Cotton Trust Protocol sustainability initiative. The SEC’s proposal would just complicate the efforts of cotton producers’ who already are dealing with a plethora of regulations, weather challenges and market volatility.”
Specifically, the Protect Farmers from the SEC Act:
- Prohibits the SEC from requiring an issuer of securities to disclose greenhouse gas emissions from upstream and downstream activities in the issuer’s value chain arising from a farm
- Defines the production, manufacturing, or harvesting of an agricultural product through the Agricultural Marketing Act of 1946, outlines upstream and downstream activities, and defines greenhouse gases
- Removes the SEC’s exemptive authority in relation to this Act
Congressman Lucas, the longest-serving Republican on the House Committee on Financial Services and former Chairman of the House Committee on Agriculture, was joined by 101 original cosponsors, including Representatives John Rose (TN-06), Austin Scott (GA-08), Ron Estes (KS-04), Mike Rogers (AL-03), Dan Meuser (PA-09), Tom Cole (0K-04), Bill Johnson (OH-6), Rick Crawford (AR-01), Jake La Turner (KS-02), Diana Harshbarger (TN-01), Jack Bergman (MI-01), Bob Gibbs (OH-07), Barry Moore (AL-02), Jim Baird (IN-04), Markwayne Mullin (OK-02), Randy Weber (TX-14), John Curtis (UT-03), Virginia Foxx (NC-05), Stephanie Bice (OK-05), Ken Buck (CO-04), Dan Newhouse (WA-04), Mary Miller (IL-15), Buddy Carter (GA-01), Mariannette Miller-Meeks (IA-02), Kat Cammack (FL-03), Tracey Mann (KS-01), Tom McClintock (CA-04), Sam Graves (MO-06), Julia Letlow (LA-05), Dusty Johnson (SD-AL), Rob Wittman (VA-01), David Rouzer (NC-07), Chris Stewart (UT-02), Ted Budd (NC-13), Rick Allen (GA-12), Scott Franklin (FL-15), Michael Guest (MS-03), Bruce Westerman (AR-04), Ashley Hinson (IA-01), Liz Cheney (WY-AL), Greg Murphy (NC-03), Steve Womack (AR-03), Tim Walberg (MI-07), Doug LaMalfa (CA-01), Richard Hudson (NC-08), Greg Pence (IN-06), August Pfluger (TX-11), Joe Wilson (SC-02), Jerry L. Carl (AL-01), Randy Feenstra (IA-04), Young Kim (CA-39), Nancy Mace (SC-01), Louie Gohmert (TX-01), Pete Stauber (MN-08), Yvette Herrell (NM-02), Bill Posey (FL-08), Mike Bost (IL-12), Andy Biggs (AZ-05), Pete Sessions (TX-17), Chuck Fleischmann (TN-03), Mike Flood (NE-01), Claudia Tenney (NY-22), Mike Carey (OH-15), David McKinley (WV-01), Ralph Norman (SC-05), Jake Ellzey (TX-06), Clay Higgins (LA-03), Bob Good (VA-05), Drew Ferguson (GA-03), Larry Bucshon (IN-08), Chris Jacobs (NY-27), Michael McCaul (TX-10), Doug Lamborn (CO-05), Lance Gooden (TX-05), Russ Fulcher (ID-01), Neal Dunn (FL-02), Michael Waltz (FL-06), Andy Barr (KY-06) Kelly Armstrong (ND-AL), Brad Wenstrup (OH-02), Tom Tiffany (WI-07), Mike Johnson (LA-04), Mayra Flores (TX-34), Adrian Smith (NE-03), Kevin Brady (TX-08), Ben Cline (VA-06), Troy E. Nehls (TX-22), Vicky Hartzler (MO-4), Matt Rosendale (MT-AL), Cathy McMorris Rodgers (WA-05), Roger Williams (TX-25), Brian Babin (TX-36), Tom Emmer (MN-06), Matt Rosendale (MT-AL), Trent Kelly (MS-01), Michelle Fischbach (MN-07), Tony Gonzales (TX-23), Ronny Jackson (TX-13), Michael Cloud (TX-27), Darin LaHood (IL-18), Brad Finstad (MN-01), and David Kustoff (TN-8).
The Protect Farmers from the SEC Act is supported by the American Farm Bureau Federation, National Cattlemen’s Beef Association, National Association of Wheat Growers, National Cotton Council, National Corn Growers Association, National Pork Producers Council, USA Rice, American Sugar Alliance, American Soybean Association, National Potato Council, United States Cattlemen’s Association, National Council of Farmer Cooperatives, Agricultural Retailers Association, Oklahoma Farm Bureau, and the Oklahoma Cattlemen’s Association.
The introduction of the legislation follows numerous actions by Congressman Frank Lucas and House Republicans calling on the Biden Administration and the U.S. Securities and Exchange Commission to leave setting environmental policy to Congress- not financial regulators.
On June 13, 2022, Lucas joined House Republican Leader Kevin McCarthy and House Agriculture Committee Republican Leader Glenn “GT” Thompson sending a solutions-focused letter to President Joe Biden calling on the Administration to reverse overly burdensome regulations and policy barriers to U.S. agriculture production that have caused needless uncertainty for farmers, ranchers, and working families.
On March 21, 2022, Lucas criticized the climate disclosure rule, stating in part, “Even though the SEC already has the authority under existing rules to require companies to disclose climate-related risks that are material to investors, today’s proposed rule stretches the definition of materiality to its limits and greatly expands the authority of the SEC to an area far outside its expertise. Financial statements and disclosures are intended to accurately represent a company’s financial situation- and today’s costly and problematic rule would jeopardize the usefulness and reliability of future financial disclosures.”
In November of 2021, Lucas published an op-ed in Morning Consult outlining the importance of government-industry research and development partnerships- not financial regulation- to mitigate greenhouse gas emissions and climate-related risks.
In October of 2021, Lucas questioned SEC Chairman Gary Gensler about the Commission’s Environmental, Social, and Governance (ESG) rule-making process, how it might impact small-to-medium sized companies, and the depth of expertise at the SEC currently drafting the climate-risk disclosure.
On June 4, 2021, Lucas joined House Financial Services Committee Republicans in sending a letter to Chairman Gensler outlining the issues with the SEC’s plans to mandate disclosures for public companies regarding climate change and greenhouse gas emissions.
For bill text of Protect Farmers from the SEC Act, click here.
For a summary, click here.