In a recent Federal Register publication, the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) announced the withdrawal of the proposed rule to amend the Federal Acquisition Regulation (FAR). This rule, initially proposed on November 14, 2022, aimed to implement Executive Order 14030 by requiring major federal suppliers to disclose greenhouse gas (GHG) emissions, assess climate-related financial risks, and establish science-based reduction targets. However, due to insufficient time within the Biden-Harris Administration and the complexities highlighted by public comments, the agencies decided to abandon this effort.

The initial proposal sought to align federal procurement practices with broader climate-related initiatives by emphasizing transparency and accountability in GHG emissions reporting. Public disclosure of these emissions and climate-related risks was intended to standardize practices among suppliers and encourage environmentally responsible behavior. Despite the ambitious scope, the rule faced challenges, including divergent practices within the industry, emerging domestic and international regulations, and extensive feedback requiring further deliberation.

Public comments revealed the evolving nature of both voluntary and regulatory standards across different jurisdictions. The agencies noted discrepancies in industry practices and regulatory frameworks, which created a lack of cohesion in addressing climate-related disclosures. These factors, coupled with the complexities of finalizing the rule, prompted the agencies to withdraw the proposal and close the FAR case. However, the FAR Council remains committed to monitoring industry developments and engaging with stakeholders to consider future efforts in this area.

The withdrawal signifies a pause rather than an end to federal efforts in addressing climate-related risks in procurement. Federal suppliers, particularly those operating in multiple jurisdictions, should remain attentive to ongoing shifts in domestic and international standards. As regulatory landscapes evolve, businesses will likely face increasing expectations for sustainability and transparency, even if federal mandates are not currently in place.

The decision to withdraw this rule also underscores the challenges of achieving regulatory alignment on climate issues in a rapidly changing global environment. With various international standards emerging, companies must navigate an intricate web of requirements. This situation emphasizes the importance of adopting proactive measures to meet both current and anticipated demands for climate responsibility.

The implications for federal procurement and broader industry practices are significant. While the withdrawal delays immediate regulatory impacts, the conversation surrounding climate risk and GHG emissions in the federal supply chain continues to evolve. Suppliers should remain proactive, focusing on developing internal processes for emissions reporting and risk assessment to stay ahead of potential future requirements.

The publication credits Kimberly Smith, Acting Director of the Information Technology and Resources Management Division, Office of Program Support, and William F. Clark, Director of the Office of Government-wide Acquisition Policy, for their contributions to this decision. Their insights highlight the intricate balance between regulatory ambition and practical feasibility in government policymaking.

Disclaimer: The information provided in this blog is not guaranteed to be accurate and does not constitute legal advice. Readers should consult a qualified professional for specific legal or regulatory guidance.