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New Greenhouse Gas Emissions Proposed Rule for Federal Contractors

Stephanie Salmon

The Federal Acquisition Regulation (FAR) Council recently released a proposed rule (FAR Case 2021-015) that would create new and burdensome reporting requirements for virtually every federal contractor. The FAR Council’s new proposed rule creates two new categories for federal contractors and triggers significant reporting requirements related to greenhouse gas emissions and climate-related financial risk, leveraging existing third-party standards and systems. This will likely pull in some metalcasters that supply castings to federal contractors as well.  

The proposed rule’s two new categories for federal contractors, are “significant contractors” and “major contractors.” Significant contractors, $7.5 million to $50 million in federal contract obligations (not revenue) in the prior fiscal year, will be required to inventory greenhouse gas Scope 1 (fuel) and Scope 2 emissions (electricity) and complete an annual greenhouse gas emissions inventory on www.SAM.gov. Major contractors, more than $50 million in federal contract obligations (not revenue) will have the same reporting requirements as significant contractors but will also have to report on Scope 3 emissions (essentially a contractor’s supply chain), publicly report climate emissions through responses to a third-party questionnaire, and develop a climate-based target for reducing emissions and have the targets validated by the Science Based Targets Initiative (SBTi), among other requirements. 

The council has built in a few exceptions, including for some small business contractors that may be exempt from the requirements specific to “major” contractors (only) if the contractor is considered a small business for the North American Industry Classification System (NAICS) code (most foundries are deemed to be small businesses) as it has been identified in its SAM registration. Starting one year after publication of a final rule, a significant or major contractor must have completed a greenhouse gas inventory and must have disclosed the total annual Scope 1 and Scope 2 emissions at www.SAM.gov. The additional compliance requirements for major contractors will start two years after publication of a final rule. 

The FAR Council’s proposed rule is the federal government’s latest attempt to shift away from carbon-intensive energy sources and industrial processes toward decarbonized, climate-resilient solutions. The proposed rule would be a significant expansion of government contractors’ role in this effort. AFS previously reported on the Securities and Exchange Commission’s (SEC) proposed GHG rule. 

Many of AFS’s concerns are similar for this proposed rule. However, the proposed rule differs in its application to virtually every federal contractor. AFS is working closely with a group of stakeholders to weigh-in on these important proposed changes to federal contracting rules. 

AFS-Supported Legislation Providing $38 Billion in Funding for Water Projects Signed into Law as Part of the National Defense Authorization Act

Included in the final version of the defense bill is a reauthorization of the Water Resources Development Act (WRDA) of 2022. A critical piece of bipartisan, biennial legislation, the WRDA supports the Army Corps of Engineers water projects including from flood control and navigation. The WRDA will continue to help maintain a strong water infrastructure system, including ports, harbors, and inland waterways. WRDA provides the funding to address critical navigation and flood control projects in all 50 states. AFS members supply critical castings for these projects. The bipartisan bill was included as part of the Fiscal Year 2023 National Defense Authorization Act (NDAA). AFS joined several other stakeholders in actively supporting their passage of the act. 

“AFS thanks the House and Senate for passing WRDA 2022 and appreciates their continued support of the biennial process for this critical infrastructure legislation,” said Doug Kurkul, AFS CEO. 

This final version comes months after negotiations to reconcile House- and Senate- passed versions.