Legislation Targeting SEC’s Greenhouse Gas Reporting Rule Introduced
This week, Oklahoma Congressman Frank Lucas introduced his Protect Farmers from the Securities and Exchange Commission (SEC) Act. Nebraska Congressmen Mike Flood (NE-1), Don Bacon (NE-2), and Adrian Smith (NE-3) all signed on as original cosponsors of the legislation (still confirming this). This important bill comes in response to an April 2022 proposal from the SEC which would require climate-related disclosures for publicly traded companies. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, including their Scope 3 or supply chain emissions. This provision would require farmers and ranchers to report their emissions to those publicly traded companies who they do business with. This requirement would include almost certain technical challenges, significant financial and operational disruption, and the risk of financially crippling legal liabilities.
Rep. Lucas’ bill would:
- Prohibit 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.
- Offer precise definitions for what constitutes a farm, agricultural or horticultural commodities, upstream and downstream activities, and greenhouse gases.
- Remove the SEC’s exemptive authority in relation to this Act.
EPA Withdraws Interim Glyphosate Decision
The Environmental Protection Agency (EPA) is going back to the drawing board on its interim review decision for glyphosate.
In a memo published last week, the agency said it now plans to complete the registration in 2026. EPA’s interim decision was published in Feb. 2020 and “did not identify any human health risks of concern from exposure to glyphosate but did identify potential ecological risks,” the agency’s memo stated.
That decision concluded that under the Federal Insecticide, Fungicide, and Rodenticide Act the benefits of glyphosate outweigh the potential ecological risks when glyphosate is used in accordance with labels.
In June of this year, a federal appeals court ruled that EPA failed to make an effects determination before issuing the interim decision. The court imposed an Oct. 1, 2022 deadline for the agency to issue another interim registration review — or a final decision.
EPA said it was unable to meet that deadline, citing the need for more time to address the issues raised in the ecological portion of the review and other logistical hurdles, including a mandatory public comment period before issuing a final registration. The agency now intends to “revisit and better explain its evaluation of the carcinogenic potential of glyphosate and to consider whether to do so for other aspects of its human health analysis.”
Nebraska Farm Bureau has urged EPA to register glyphosate, with its decades of data backing its effectiveness and safety as a crop protection product. Making glyphosate unavailable would unquestionably compromise the rapid growth of conservation-based no-till soil practices. Any effort by EPA to make glyphosate unavailable would directly and negatively affect thousands of our members, increasing their costs of production, potentially reducing yields, and harming their profitability.
Tax Options Amid Drought Conditions
With recent drought conditions across the state, now it a good time to review drought related tax laws.
A one-year tax deferral is available for all types of livestock (draft, dairy, breeding and feeding) if you qualify as a cash basis farmer or rancher who sold livestock early due to drought conditions. Draft, dairy, and breeding livestock producers have a second option of a four-year deferral as well.
Additionally, crop producers can elect to defer income for crop insurance payments due to drought; however, there are a few specific caution areas of which producers should be aware before making a final decision.
Draft, dairy, and breeding livestock have a second option. If you have to sell a draft, dairy or breeding animal, you have four years to replace the animal and defer the gain. The gain from the sale of the animal will reduce the basis of the replacement animal, much like trading a piece of equipment. If the drought continues beyond four years, you can extend the replacement period to one year after the drought ends.
You also have the option, after four years to replace the animals with other assets that can be used in your farming business if it is still not feasible to replace the animals. Real property (specifically land) is excluded from this option, but you can use the proceeds of the livestock sale to purchase a tractor and defer the gain on the sale of the livestock. You must wait until the end of the four-year period to use this option. Until that time, you can only replace livestock with livestock of the same purpose. For example, you can only replace beef with beef and dairy with dairy.
You must be able to prove that the drought did in fact cause the livestock to be sold. If your county or one that borders you has been declared a Federal Disaster Area, you have sufficient cause to use the elections. Other things to use as proof are the release of CRP for grazing or haying.
As in any tax situation, each case is unique and the circumstances surrounding each year is unique. The important thing to remember is that options exist, and that the election doesn’t have to be made until the return is filed. Please contact your tax preparer to discuss how the elections will affect your tax return.