New GHG Proposed Rule for Federal Contractors

The FAR Council’s new proposed rule creates two new categories for federal contractors – significant contractors and major contractors – which trigger significant reporting requirements related to greenhouse gas emissions.

On November 14, the Federal Acquisition Regulation (FAR) Council released a proposed rule (FAR Case 2021-015) that would create new and onerous reporting requirements for virtually every federal construction contractor.

The proposed rule introduces two new categorizes for federal contractors, “significant contractors” and “major contractors.” Significant contractors, $7.5 - $50 million in federal contract obligations (not revenue) in prior fiscal year will be required to inventory Green House Gas (“GHG”) Scope 1 (fuel) and 2 emissions (electricity) and complete an annual GHG emissions inventory on 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) and develop a climate-based target for reducing emissions, among other requirements. Starting one year after publication of a final rule, a significant or major contractor must have completed a GHG inventory and must have disclosed the total annual Scope 1 and Scope 2 emissions in The additional compliance requirements for major contractors will start two years after publication of a final rule.

Once the requirements are in effect, contracting officers shall presume prepositive contractors are not responsible unless an exception applies. AGC of America previously reported on the Securities and Exchange Commission’s proposed GHG rule. Many of AGC’s concerns are similar to this proposed rule. However, the proposed rule differs in its application to virtually every federal contractor.

For more information, contact Jordan Howard at [email protected] or (703) 837-5368.

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