“What the advocates ask for is impossible, plus we’re already doing it!”
That’s how clean energy advocate Rob Sargent describes the arguments utilities use to lobby against renewable power. It’s strikingly similar to how manufacturers argue against Right to Repair -- reforms that would enable more options for how we get modern devices fixed.
Companies routinely tout their inadequate repair programs as complete, while saying the sky would fall if people were to have everything they need for repair. And as Right-to-Repair campaigns move forward, these arguments are starting to raise more questions -- including from the shareholders of the companies making these contradictory claims.
Nothing runs away like a Deere
In September, Green Century Capital Management°, PIRG's affiliated socially responsible mutual fund company, announced it had filed a shareholder resolution with Deere & Co.*, calling for an account of the company’s “anti-competitive repair policies.”
Earlier this month, Green Century announced that Deere had petitioned the Securities and Exchange Commission (SEC) to block the resolution rather than allow the issue to go before shareholders. According to Green Century, one of the arguments that Deere made to the SEC was that the company had already publicly addressed Right to Repair. But Green Century’s release notes its questions are very much unanswered.
“We filed our resolution because we have questions about Deere’s approach to repair that haven’t been clearly addressed,” said Green Century Shareholder Advocate Andrea Ranger in their statement. “There is now a tsunami of right-to-repair legislation, potential action by the Federal Trade Commission on restrictive repair practices, a presidential order that specifically calls out concerns about tractor repair, and mounting bad press facing Deere. As investors, that’s a great deal of risk for us to take on.”
“It doesn’t add up,” Green Century’s Ranger concluded.
A lot of risk for “2% of repairs”
Deere’s response to Right to Repair has been to suggest that they give farmers plenty of repair support, specifically that farmers can do 98% of repairs already.
Despite that claim, farmers and advocates continue to demonstrate how repair restrictions harm farm operations. The Right to Repair campaign has led to an executive order from President Joe Biden that encourages the Federal Trade Commission to take action on repair restrictions, “such as the restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment.” The FTC has shown readiness to carry out this charge, voting unanimously to support Right to Repair, with Chairwoman Lina Khan pledging to “move forward on this issue with new vigor.” And state legislators across the country are pushing for bills to restore farmers’ Right to Repair.
Crackdowns and lawsuits from the federal government will be expensive endeavors for Deere, and the reputational risk is perhaps as high. If Deere’s 98% claim is true, it means that they are asking shareholders to assume big-time risk to protect a mere 2% of repair. By complying with calls for Right to Repair now, they could avoid the negative PR and instill deeper brand loyalty by showing that they listen to their customers. Instead, Deere continues to ignore farmers and its own shareholders by conducting a nationwide lobbying effort to protect that tiny portion of repair.
“Company representatives argue that Deere provides materials to support almost all equipment repairs, yet the regulatory, legal, and reputational risks posed to the Company continue to escalate,” Green Century stated in the resolution. “Investors seek insight into the value of limiting access to the remaining repair materials versus the risks that the Company is incurring by withholding them.”
Expanding on their view of legal risks, Green Century also notes: “Because of the size of Deere’s market share, the Company could also be subject to lawsuits on tying arrangements.”
The FTC announced in July it would target “tying arrangements” connected to repair for enforcement, such as using repair restrictions to tie a customer into manufacturer controlled repair services. These issues could also be grounds for a private lawsuit against Deere.
Is the EPA blocking Deere from letting farmers fix?
Deere has argued this remaining 2% of repairs must be restricted due to concerns over environmental and safety controls. Grant Suhre, John Deere’s manager of customer support for the U.S. and Canada, said in testimony before the Nebraska legislature that Deere “certainly provide[s] all the tools that are required” to fix equipment, but the one “exemption” is “reprogramming” and that “we're required as a manufacturer to protect the emissions controls.”
Suhre asserted the company is “liable to the EPA under the Clean Air Act to ensure that the emissions controls remain functional and perform.” Moreover, he implied that Right to Repair could end with Deere being shut down by the EPA: “And if we don't comply with [EPA] requirements, they can, up to and including stop us from building engines. So the … motto ‘Nothing runs like a Deere’ becomes a bit of a moot point if there's no engine.”
Speaking to the news outlet The Verge, John Deere Chief Technical Officer Jahmy Hindman, responded to a question about Right to Repair by saying, “Where we differ with the right-to-repair folks is that software, in many cases, it’s regulated. So let’s take the diesel engine example. We are required, because it’s a regulated emissions environment, to make sure that diesel engine performs at a certain emission output, nitrous oxide, particulate matter, etc., and so on. Modifying software changes that.”
This is perplexing. For one, repair isn’t modification, it is restoring equipment to original working order. It’s also perplexing because the Environmental Protection Agency has no authority to prevent John Deere from “building engines” because of post-sale engine owners’ modifications. In fact, owners are even permitted to bypass emissions controls in the case of an emergency (see Title 40 §1068.101(b)).
Willie Cade, a member of the Nebraska Farm Bureau, requested the EPA to clarify their view after the February hearing where Mr. Suhre testified. Francisco J. Acevedo, the Mobile Source Program Manager for U.S. EPA - Region 5, responded to Cade’s concerns in an email string he shared with us, found here.
Acevedo explained that “the Clean Air Act gives EPA the authority to set emissions standards and all that goes along with that, but it does not give EPA the authority to regulate the usage or operation of such engines by the end user. Because of that, manufacturers are not responsible for the end user tampering with their engines/equipment.”
Debunking the “modification” claims
Embedded in the argument Deere and other agriculture equipment lobbying groups make is if they give farmers what Right to Repair asks for, that along with repair tools will come an ability to modify the equipment’s safety and emissions systems.
We researched this question in the report Deere in the Headlights and found that the repair tools and software modification tools are completely separate. In order to bypass emissions systems, you don’t use the dealership repair tools, you use black market software, which requires purging original Deere software from the equipment.
In fact, we would argue that restricting access to what you need to actually fix equipment ends up encouraging the kind of modification Deere says they oppose. If you are a farmer and your equipment breaks in such a way that a restricted software tool is needed to complete repairs, you have two options. The first is to wait for whenever the dealership representative can service your equipment, which could cause a delay that might cost you a critical planting or harvesting window. The other choice is to turn to options outside of John Deere, such as hacked software tools available out of Eastern Europe.
It would seem to follow that if Deere was concerned about customers using modified software, it would provide access to the tools that program equipment to the precise factory settings intended by Deere. Because the company does not, and farming is a business of tight windows, the lack of options can push farmers to turn to unsafe options.
Deere maintains that lawmakers shouldn’t pass Right to Repair laws because farmers already have enough repair support, and what remains is “restricted.” Not only does this argument fail to convince farmers, who continue to press for more repair access, it also doesn’t satisfy their shareholders.
Maybe that’s because, as Ranger says, their story “doesn’t add up.”
U.S. PIRG is not a registered investment adviser. U.S. PIRG is not providing any investment advice to any recipient of this communication.
About Green Century Capital Management
°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds). The Green Century Funds are the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. Green Century Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
*As of September 30, 2021, Deere & Co. comprised 0.71%, 0.51% and 0.00% of the Green Century Balanced Fund, the Green Century Equity Fund, and the Green Century International Index Fund respectively. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
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