Federal Government Withdraws Proposed Climate Disclosure Requirements for Federal Contractors
On January 13, 2025, the federal government withdrew a proposed rule that would have required government contractors to publicly disclose their greenhouse gas (GHG) emissions and set emissions reduction goals. The withdrawal comes on the eve of the transition to the second Trump administration, which is expected to take a very different approach to climate regulation and disclosure than has been advanced during the Biden administration.
As jointly proposed on November 14, 2022, by the Federal Acquisition Regulatory Council — comprised of the Department of Defense, the General Services Administration, the National Aeronautics and Space Administration, and chaired by the Office of Federal Procurement Policy in the Office of Management and Budget — the proposed rule would have required contractors to make these disclosures in order to qualify for future federal procurement contracts.
Among other requirements, contractors would have had to submit annual GHG inventories covering their direct (Scope 1) and indirect (Scope 2) GHG emissions. Each “major” contractor (above $50 million) would also have been required to disclose its “value chain” (Scope 3) GHG emissions, which extend beyond the contractor’s operations to include any emissions that are a consequence of the contractor’s operations, but occur elsewhere at sources outside the contractor’s control, indirectly compelling the development of expansive climate monitoring and accounting practices for companies within such value chains.[1] These requirements would have gone beyond the climate-related disclosure rules finalized by the Securities and Exchange Commission on March 6, 2024 — which have been stayed pending judicial review and are likewise expected to rescinded by the incoming administration.[2]
As their rationale in the notice of withdrawal, the agencies pointed to: (1) a lack sufficient time during the Biden administration to finalize, and (2) public comments that reflect an “evolving” regulatory landscape and industry standards.
[1] See Sidley Environmental Update, “Proposed Climate Disclosure Requirements for Federal Contractors Go Beyond the SEC’s Proposed Disclosures” (Nov. 16, 2022), for more information on the proposed rule.
[2] See Sidley Update, “SEC Finalizes Climate-Related Disclosure Rules Ushering in a New Era of Public Company Climate Reporting” (Mar. 12, 2024), for more information on the Commission’s stayed disclosure rules.
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