FAR Council Seeks Comments on Amendments to Address Climate Risk

Vinson & Elkins LLP

Vinson & Elkins LLP

On October 15, 2021, the FAR Council published a Federal Register Notice announcing the opening of a public comment period on potential amendments to the Federal Acquisition Regulation to address climate-related financial risks. The Advance Notice of Proposed Rulemaking involves one of two cases the FAR Council opened in response to the Biden administration’s May 2021 Executive Order 14030 on Climate-Related Financial Risks:

  • FAR Case No. 2021-015, Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk, implements section 5(b)(i) of Executive Order 14030, which directs the FAR Council to consider amending the FAR to require major Federal suppliers to publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets.
  • FAR Case No. 2021-016, Minimizing the Risk of Climate Change in Federal Acquisitions, implements section 5(b)(ii) of Executive Order 14030, which directs the FAR Council to consider amending the FAR to ensure that major agency procurements minimize the risk of climate change and consider the social cost of greenhouse gas emissions in procurement decisions.

Our previous analysis of Executive Order 14030 and how it may be implemented in the FAR can be found here. The Notice builds on the White House’s release, of a broader “Roadmap to Build an Economy Resilient to Climate Change Impacts.”

The Notice involves the second of the two FAR cases, No. 2021-016, and broadly seeks comment on the incorporation of greenhouse gas emissions information into the Federal procurement process and use of the Federal procurement process to mitigate climate-related financial risks. The Notice seeks feedback on a number of questions, including:

  • How can greenhouse gas emissions, including the social cost of greenhouse gases, best be qualitatively and quantitatively considered in Federal procurement decisions, both domestic and overseas? How might this vary across different sectors?
  • What are usable and respected methodologies for measuring the greenhouse gases emissions over the lifecycle of the products procured or leased, or of the services performed?
  • How might the Federal Government best standardize greenhouse gas emission reporting methods? How might the Government verify greenhouse gas emissions reporting?
  • How might the Federal Government give preference to bids and proposals from suppliers, both domestic and overseas, to achieve reductions in greenhouse gas emissions or reduce the social cost of greenhouse gas emissions most effectively?

These questions underscore the pervasive and sweeping scope of potential changes that could be to the FAR to implement Executive Order 14030, including climate disclosures, data validation, and self-certification, which could ultimately raise new enforcement risks under the False Claims Act. V&E’s more detailed analysis of this issue is presented in the article linked above. The questions also emphasize the potential that Executive Order 14030 could substantially alter the manner in which Federal procuring agencies consider climate-related risks as part of their best value determinations in individual procurements.

Comments on the proposed rule are due not later than December 14, 2021.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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