Lucas wants to exclude SEC from rule that could impact farmers

An Oklahoma congressman is introducing a bill to exclude agriculture from a Securities and Exchange Commission climate disclosure rule.

U.S. Rep. Frank Lucas, who is a senior member of the Committee on Financial Services that provides oversight for the SEC, says it makes no sense to him that farmers and ranchers could be compelled to keep track of emissions data for climate control so he introduced the Protect Farmers from the SECT Act—a bill excluding them from data tracking. Lucas, a Republican, represents the Third District and is a past chairman of the House Agriculture Committee. The bill has 101 cosponsors and has been endorsed by many farm organizations.

Lucas noted that without an exclusion, the SEC could require climate-related disclosures even at the farm level. In addition to a significant amount of information about climate-related risks, a registrant would be required to provide information about its direct greenhouse gas emissions and indirect emissions from purchased energy. Further, the rule would necessitate disclosure of indirect emissions from upstream and downstream activities, known as Scope 3. The materiality standard applied to Scope 3 emissions, Lucas said, is so “unwieldy and convoluted that public companies will be forced to presume the materiality of Scope 3 emissions data.”

Ultimately, Lucas said SEC Chairman Gary Genzler, a President Joe Biden appointee who was confirmed by the U.S. Senate, has been aggressive and opinionated about climate change. “He believes, in my opinion, to use the bureaucracy to accomplish things when Congress will not pass laws.” The result is Genzler’s focus on climate disclosures and climate risk and how far down the chain it could go if left unchecked.

“My concern is the way this rule is set up. It will be passed down from the processors all the way to the farmers in the field,” Lucas said. “Farmers and ranchers should not have to report this kind of information so that bakery or packing plant somewhere can fulfill their SEC disclosure requirements. Gary is trying to use the SEC to force climate policy changes that Congress won’t pass laws to do, and I don’t want this to be a burden put on the back of every farm or ranch, which is exactly where this is headed.”

Lucas, a farmer and rancher himself, said 98% of farmers are independent operators and they don’t retain attorneys for such regulatory burdens and paperwork.

“This will be a huge burden for folks on the farm if it’s allowed to happen,” the congressman said.

“It is the way the corporate legal system works to pass the buck back down. You’ll ultimately have to declare all this stuff when you sell your wheat at the elevator or you sell your cattle at the sale barn. That’s not the way it should work and that’s not the kind of harassment that my farmers and ranchers need right now.”

In Lucas’ opinion, Genzler believes it is OK for the SEC to be involved in the direct gas emissions and related emissions enforcement process. Lucas disagrees. “It is a nightmare, and we want to head this off before it even gets started.”

The SEC was created in 1934 to make sure all public filings and corporations were accurate and securities were honest and above board, Lucas said. “It wasn’t designed to be a policy enforcement board. It was deigned to be an entity to make sure paperwork was accurate and correct.”

Its scope was never about environmental policy or to push for changes that are under the jurisdiction of Congress, he said.

The next step is to have the House parliamentarian assign it to a committee for hearings. Lucas said he would expect it to be assigned to the Committee on Financial Services and the parliamentarian may also assign it to the House Agriculture Committee. He expects that it could be assigned as early as January 2023, which is when the hearing process could start.

Dave Bergmeier can be reached at 620-227-1822 or [email protected].