ICYMI: Lucas, Farm Groups Express Deep Concern to SEC Climate Rule

Mar 01, 2023
Agriculture
Press

Washington, DC – Yesterday, former House Agriculture Committee Chairman Congressman Frank Lucas (OK-03) joined his colleagues on the House Agriculture Committee for a hearing on “Uncertainty, Inflation, Regulations: Challenges for American Agriculture.”

Lucas discussed with American Farm Bureau Federation President Zippy Duvall, Fertilizer Institute President & CEO Corey Rosenbusch, and National Chicken Council President Mike Brown the impact the U.S. Securities and Exchange Commission’s (SEC) climate disclosure rule would have on farmers and ranchers who serve as the starting point for many value chains of publicly traded companies.

Click here to watch Lucas’ Q&A.

On SEC climate disclosure rule

Lucas: In March of 2022, the U.S. Securities and Exchange Commission proposed a rule that expands the scope of what climate related information publicly traded companies must disclose to the SEC and to their investors.

One part of the deeply flawed rule requires companies to disclose various types of emission information.

Firstly, its own direct greenhouse gas emissions, otherwise known as scope 1.

Secondly, companies are to disclose the indirect emissions from all purchased electricity or other forms of energy, scope 2.

And finally, serving as a catch all, it would compel the public company to disclose the greenhouse gas emissions from all upstream and downstream activities in its entire value chain, so called scope 3 emissions.

I am greatly concerned about the impact this rule will have on the farmers and ranchers who serve as the starting point for many of these value chains. President Duvall, can you please speak to the potential impact and cost this rule would place on farmers and ranchers who find themselves ensnared in this broad reporting scheme?

Duvall: It could be tremendous. I’ve spoken to Chairman Gensler once and going to speak to him again this week about this issue. Scope Three would put a heavy bookkeeping burden on our farmers. And yes, if you’re a large farmer, which is 2% of the farming group, you may have the office space and the specialist to be able to make that documentation. But you take a middle-sized small farmer like myself, that becomes a huge burden and you have to hire someone to do it, have consultants help you through it. It is tremendous.But I’ll tell you this as a farmer that sells my cattle on free market and choose where I want to sell it to being a contract grower for a large, vertically integrated company, knowing that when things come down on that company, they have to deliver it, and when they have to deliver it, they turn to me to do it. And there’s no one help record it, there’s no one help to pay for it. And the farmer carries that burden, whether it be cattle or whether it be grain or whether it be poultry. And so, it is a tremendous burden and it’s something that we need to stop before it gets started.

Lucas: Mr. Rosenbusch, I will start with you, but I welcome any insights the rest of the panel may have. Can you speak to the impact this rule would have on the publicly traded companies who are members of your organization?

Rosenbusch: Thank you, Chairman Lucas. The impact on publicly traded companies is one thing because a lot of them are already reporting a lot of their ESG metrics. As a matter of fact, we just released our sustainability report and we’ve captured an increase of over 300%- our emissions from fertilizer manufacturing. So great strides have been made there. And I will tell you that most of those manufacturers are committed and are doing a lot of that reporting. So, I think regulatory certainty, as I mentioned, is what’s critical here. But I think a lot of the small to medium sized companies that are also involved in the fertilizer supply chain are the ones that we would be most concerned about. And then ultimately, any of the Scope Three emissions that Zippy referenced I think is going to be really difficult when it comes to these fertilizer companies that would have to report any of that up and downstream.

Brown: While I don’t have a policy on that, I’ll address that under the banner of regulation. In the chicken industry alone on sustainability, over the last ten years, we have reduced land use by 13%, greenhouse gas emissions by 18%, fossil fuel-based resources by 22%, and particulate forming emissions by 22%, all done without the hand of a government mandate.

Lucas: Clearly it shows that industry responds. You don’t have to have an economic baseball bat. 

Last month, Lucas introduced the Protect Farmers from the SEC Act, which would  protect family farmers and ranchers from burdensome greenhouse gas (GHG) emissions reporting rules proposed by the SEC.  U.S. Senator John Boozman (R-AR), Ranking Member of the Senate Committee on Agriculture, Nutrition, and Forestry, and U.S. Senator Mike Braun (R-IN) introduced a Senate companion.

In July of 2022, Lucas joined then-House Republican Leader Kevin McCarthy and House Agriculture Committee Republican Leader Glenn “GT” Thompson in sending a 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.

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