The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation which will require select government vendors, from landlords to defense contractors, to indicate if and where they publicly disclose greenhouse gas emissions.
In 2015, the Obama Administration announced a new target to reduce Federal government greenhouse gas emissions by 40 percent below 2008 levels by 2025.
In response, DoD, GSA, and NASA are now proposing to revise the FAR to add an annual representation for vendors to indicate if and where they publicly disclose GHG emissions and GHG reduction goals or targets. This representation would be mandatory for vendors who received $7.5 million or more in Federal contract awards in the preceding fiscal year. The representation would be voluntary for all other vendors.
Additionally, in furtherance of E.O. 13653, “Preparing the United States for the Impacts of Climate Change” DoD, GSA, and NASA are by this proposed regulation considering the development of means and methods to enable agencies to evaluate and reduce climate change related risks to, and vulnerabilities in, agency operations and missions in both the short and long term, with respect to agency suppliers, supply chain, real property investments, and capital equipment purchases. This consideration reflects growing Executive Branch interest in operational and supply chain risks associated with climate change facing agency suppliers and steps those suppliers are taking to identify and manage those risks.
This proposed regulation is at best overreaching when this Executive Branch action, without legislative authority, attempts to ‘draft’ on the fact that Federal vendors that are public companies are already subject to requirements to disclose material risks associated with climate change, per Securities and Exchange Commission Interpretation “Commission Guidance Regarding Disclosure Related to Climate Change.” There is simply no material connection between that existing SEC disclosure requirement and this Executive Branch proposed GHG test.
Moreover, this law firm works with a broad breadth or public companies and their counsel, and most undertaking the SEC analysis determine there are no material risks associated with climate change, resulting in no disclosures and certainly no disclosures of GHG emissions. It is in this wrong context that DOD, GSA, and NASA are purportedly considering by this regulation approaches to make disclosures of climate change risk analyses from government suppliers available to agencies (.. but this proposed disclosure regulation is not about analysis of climate change risks?).
The existing SEC climate change disclosures require significant work and depending upon the industry can be quite onerous and expensive. Such should also be anticipated for GHG specific emissions disclosures. Not to mention that adding a new prerequisite to the Federal Acquisition Regulation has significant implications when the Federal government is among the planet’s largest purchaser of goods and services.
This proposed rule is not based in statute, so public comment may be particularly important in determining the scope of a final rule, if any. Comments should be submitted on or before July 25, 2016 to be considered in the formation of the final rule, however, skeptics have suggested it may be the result in the Presidential election that determines if this Administration driven GHG litmus test has legs?