Recent Op-Eds

Regulation and the Real World

By Sen. John Thune

December 9, 2022

In the last two years, South Dakotans have literally paid the price for the Biden administration’s agenda. Democrats’ reckless spending contributed to the highest inflation in 40 years. Recent tax increases on energy producers are likely to increase utility costs. And the Biden administration’s regulatory agenda may drive utility bills even higher and put our energy and food security in jeopardy in its rush toward a Green New Deal future.

The Biden administration has a disturbing track record of using the financial regulatory system to advance its climate priorities. Using financial regulatory agencies to push through environmental, social, and governance (ESG) regulations risks discouraging investment in industries essential to our economy, like energy and agriculture. For instance, earlier this year the Securities and Exchange Commission (SEC) proposed a climate disclosure rule that would require publicly traded companies to disclose information not only about their own greenhouse gas emissions, but also about those of their suppliers and their customers – neither of which they can control. Because this disclosure requirement is simply unworkable, companies would likely choose to stop doing business in certain industries altogether.

The SEC is unfortunately not alone in being used to advance Democrats’ climate goals. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve have issued draft principles for large banks on “climate-related financial risk management.” And the Federal Reserve recently established a pilot program to analyze climate-related financial risks at the nation’s largest banks, which I believe clearly exceeds its statutory authority. The National Credit Union Administration issued a since-rescinded strategic plan that seemed to recommend credit unions reduce their membership and loan offerings in farming communities. And the Department of Labor finalized a rule to require pension fiduciaries to consider climate-change factors when making certain investment decisions.

The practical effect of these and similar regulations would be for financial institutions and other firms to choke off investment in oil, natural gas, fertilizer, and agriculture, which would in turn increase prices on consumers. I recently sent a letter to President Biden outlining these concerns and requested that his administration actually take into account the impact its ESG regulations would have on food and energy prices prior to implementing them. This may not be common sense to bureaucrats in Washington, but I know it makes a lot of sense to business owners and families across South Dakota.

Discouraging investment in critical industries like agriculture and energy would be misguided at any time, but it is especially concerning at a time when working families are paying increased utility bills and agricultural producers are facing higher input costs. I’ll continue to push back on this administration’s ill-conceived attempts to force its radical environmental agenda onto the American economy through the financial regulatory system to ensure that industries essential to South Dakota and our economy continue to have access to the resources they need to keep feeding and fueling the world.