On January 13, the Federal Acquisition Regulation (FAR) Council withdrew the proposed rule, “Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk.” AGC of America submitted extensive comments explaining the significant challenges the proposal would have posed to the construction industry while advocating for commonsense and workable regulations. The proposed regulation would have introduced carbon reporting and disclosure requirements for two new categories of federal contractors: “significant contractors” and “major contractors.”
Under the proposal:
- Significant contractors (defined as those with $7.5 – $50 million in federal contract obligations, not revenue, in the prior fiscal year) would have been required to inventory Greenhouse Gas (“GHG”) Scope 1 (fuel) and Scope 2 emissions (electricity) and complete an annual GHG emissions inventory on SAM.gov.
- Major contractors (defined as those with more than $50 million in federal contract obligations, not revenue, in the prior fiscal year) would have faced additional reporting requirements, including reporting on Scope 3 emissions (primarily emissions from a contractor’s supply chain) and developing climate-based target for reducing emissions, among other requirements.
Had the rule been finalized, significant contractors would have been required to complete and disclose their Scope 1 and Scope 2 emissions inventory within one year of publication of a final rule. Major contractors would have had two years after the publication of a final rule to comply with additional Scope 3 reporting requirements and emissions reduction targets. Moreover, once the requirements took effect, contracting officers would have been directed to presume that noncompliant contractors were “nonresponsible” unless an exception applied.
In its comments, AGC expressed concern over the feasibility of reporting scope 3 emissions from the supply chain. The rule would have also created significant new inequities and competitive advantages within the industry, depending on how a construction firm contracts and is organized. AGC will continue to oppose costly and unworkable regulations that will increase risk and liability to the construction industry.
For more information, contact Jordan Howard at Jordan.Howard@agc.org.