Contractors with an annual volume of $50 million or more in federal work—categorized as “major” contractors—would be required to disclose Scope 1, Scope 2 and some Scope 3 emissions each year. Contractors with an annual volume between $7.5 million and $50 million—categorized as “significant” contractors—would have fewer reporting requirements. Contractors with an annual volume of less than $7.5 million would be exempt.

Firms that failed to comply with these requirements would be deemed “nonresponsible” and ineligible for federal contract awards.

The proposal does not apply to firms that primarily receive federal assistance through state revolving funds or state DOTs but do not work directly on federal contracts.

The administration says the proposed Federal Supplier Climate Risks and Resilience Rule, which implements provisions outlined in a December 2021 executive order, would strengthen the resilience of vulnerable federal supply chains and reduce risks linked to climate change.

Environmental advocates praised the proposed rule, saying that it will force federal contractors and businesses up and down the supply chain to reduce emissions. “This proposed rule adds rigor and transparency to the U.S. government’s efforts to drive down emissions. It also raises the bar for other governments and businesses to leverage their influence and opportunities across the supply chains to advance ambitious climate goals,” said Pankaj Bhatia, global director of the Greenhouse Gas Protocol, which develops guidance for governments and corporations related to greenhouse gas reductions, in a statement. 
 

Construction Industry Concerns

Construction groups say the proposal does not recognize the unique nature of the industry. Unlike manufacturers, who tend to use the same materials and products consistently, construction contractors change staffing, resources and materials with every project.

“We [would] have to do this on every single project,” said Melinda Tomaino, director of environmental services at the Associated General Contractors of America, adding that the requirements could frustrate small contractor participation on federal projects. Some large firms have a sustainability officer or team that could manage meeting additional reporting requirements, but smaller firms might be discouraged from even bidding on federal projects because of the extra time and costs associated with tracking and reporting emissions, she told ENR. 

Ben Brubeck, vice president of regulatory, labor and state affairs for the Associated Builders and Contractors, said in an email, “Requiring major contractors to set greenhouse gas reduction targets or forfeit the ability to win federal contracts is a significant and concerning expansion of executive power not authorized by Congress and may be subject to legal challenge.” He said this would create “additional risks and uncertainty” for federal contractors, particularly small businesses.  

Brian Turmail, AGC’s vice president of public affairs and strategic communications, said, “If you really want to achieve meaningful environmental improvements, come to the table with the construction community, so we can figure out effective ways to actually make our operations more efficient than they are now.” 

The public comment period for the proposed rule closes on Jan. 13, 2023.