In a win for federal contractors, on Jan. 13, the Federal Register published notification of the Federal Acquisition Regulatory Council’s withdrawal of a controversial ABC-opposed proposed rule, Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk.

At the direction of President Joe Biden’s Executive Order 14030, on Nov. 14, 2022, the FAR Council issued a proposed rule to amend the Federal Acquisition Regulation to require contractors awarded at total of $50 million in federal contracts annually to disclose their direct and some indirect greenhouse gas emissions and set GHG emission reduction targets.

Under the proposed rule, certain federal contractors would be required to inventory the annual GHG emissions of their operations, supply chain, employees and final products in certain circumstances. The proposal required federal contractors to disclose this information to the federal government and set targets for reducing GHG emissions. Federal contractors that failed to comply with these requirements would have been deemed nonresponsible and ineligible for federal awards.

On Feb. 13, 2023, ABC submitted comments opposing the proposal’s overly burdensome, costly and punitive approach to regulating GHG emissions of federal contractors.

“The withdrawal of the FAR Council’s GHG proposal is welcome news for federal contractors that cited its burdensome compliance requirements as untenable for the construction industry,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Many ABC federal contractor compliance professionals are committed to reducing carbon emissions, but expressed concerns about the ability of contractors to accurately calculate the GHG emissions of a project’s workforce and its construction materials and supply chain.”

While ABC understands the need for sensible environmental policies that balance the protection of the environment with the objectives and costs of regulatory compliance, ABC’s comments outlined how the proposed rule failed to strike that balance.

Citing a lack of sufficient time to finalize the proposed rule, “particularly given the large volume of public comments and the policy issues they raised,” the FAR Council said in a notice that it is withdrawing the proposal on Jan. 13.

In that notice, the council said, “[T]he agencies’ overall analysis of public comments indicates evolving practices and use of standards in industry, and since the publication of the proposed rule, differing domestic and international regulations covering greenhouse gas disclosures have been created.”

A final FAR Council GHG rule would have likely run into legal challenges by federal contractors and trade associations. For now, the rule is dead, but it is possible certain blue states and communities may pursue similar GHG disclosure requirements for state and local contractors.

ABC will continue to monitor and provide feedback on this issue.