[Federal Register Volume 87, Number 218 (Monday, November 14, 2022)]
[Proposed Rules]
[Pages 68312-68334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24569]



[[Page 68311]]

Vol. 87

Monday,

No. 218

November 14, 2022

Part IV





Department of Defense





General Services Administration





National Aeronautics and Space Administration





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48 CFR Parts 1, 4, 9, et al.





Federal Acquisition Regulation: Disclosure of Greenhouse Gas Emissions 
and Climate-Related Financial Risk; Proposed Rule

  Federal Register / Vol. 87, No. 218 / Monday, November 14, 2022 / 
Proposed Rules  

[[Page 68312]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 4, 9, 23 and 52

[FAR Case 2021-015, Docket No. FAR-2021-0015, Sequence No. 1]
RIN 9000-AO32


Federal Acquisition Regulation: Disclosure of Greenhouse Gas 
Emissions and Climate-Related Financial Risk

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to implement a requirement to ensure 
certain Federal contractors disclose their greenhouse gas emissions and 
climate-related financial risk and set science-based targets to reduce 
their greenhouse gas emissions.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division at the address shown below on or before 
January 13, 2023 to be considered in the formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2021-015 to the 
Federal eRulemaking portal at https://www.regulations.gov by searching 
for ``FAR Case 2021-015''. Select the link ``Comment Now'' that 
corresponds with ``FAR Case 2021-015''. Follow the instructions 
provided on the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``FAR Case 2021-015'' on your attached 
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR 
FURTHER INFORMATION CONTACT section of this document for alternate 
instructions.
    Instructions: Please submit comments only and cite ``FAR Case 2021-
015'' in all correspondence related to this case. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. Public comments may be submitted as an individual, as an 
organization, or anonymously (see frequently asked questions at https://www.regulations.gov/faq). To confirm receipt of your comment(s), 
please check https://www.regulations.gov, approximately two to three 
days after submission to verify posting.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Jennifer Hawes, Procurement Analyst, at 202-255-9194 or by email at 
[email protected]. For information pertaining to status, 
publication schedules, or alternate instructions for submitting 
comments if https://www.regulations.gov cannot be used, contact the 
Regulatory Secretariat Division at 202-501-4755 or [email protected]. 
Please cite FAR Case 2021-015.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA are proposing to revise the FAR to implement 
section 5(b)(i) of Executive Order (E.O.) 14030, Climate-Related 
Financial Risk, to require major Federal suppliers to publicly disclose 
greenhouse gas (GHG) emissions and climate-related financial risk and 
to set science-based reduction targets. As stated in the Fourth 
National Climate Assessment (https://nca2018.globalchange.gov/) and the 
Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment 
Report (https://www.ipcc.ch/report/ar6/wg2/), the intensifying impacts 
of climate change present physical risks, such as increased extreme 
weather risk leading to supply chain disruptions, and increasing risks 
to infrastructure, investments, and businesses. The global, rapid shift 
away from carbon-intensive energy sources and industrial processes 
towards decarbonized, climate-resilient economies will help to mitigate 
these risks while also enhancing U.S. competitiveness and economic 
growth, promoting environmental justice, and creating well-paying job 
opportunities for American workers. Yet, these risks and opportunities 
can remain hidden.
    The foundation to properly analyze and mitigate climate risks is 
public and standardized disclosure, which will enable the Federal 
Government to conduct prudent fiscal management of all major Federal 
suppliers. To that end, section 5(b)(i) of the E.O. directs the Federal 
Acquisition Regulatory Council (FAR Council), in coordination with the 
Council on Environmental Quality (CEQ) and the heads of relevant 
agencies, to consider an amendment to the FAR to ensure that major 
Federal suppliers disclose their GHG emissions and climate-related 
financial risk and set science-based targets to reduce their GHG 
emissions. The purpose of this proposed rule is to amend the FAR to 
establish a policy to ensure major Federal suppliers make the required 
disclosures and set targets to reduce their GHG emissions.
    On December 8, 2021, the Office of Management and Budget (OMB) 
issued memorandum M-22-06 pursuant to section 510(a) of E.O. 14057, 
Catalyzing Clean Energy Industries and Jobs Through Federal 
Sustainability. Section II.1. of the OMB memo states that the FAR 
Council should leverage existing third-party standards and systems, 
including the Task Force on Climate-related Financial Disclosures 
(TCFD) Recommendations, the CDP (formerly Carbon Disclosure Project) 
reporting system, and Science Based Targets Initiative (SBTi) criteria, 
or equivalents, in the development of regulatory amendments to promote 
contractor attention regarding reduced carbon emissions and Federal 
sustainability.
    On March 21, 2022, in response to the growth in investor demand for 
and company disclosure of information about climate change risks, 
impacts, and opportunities, the Securities and Exchange Commission 
(SEC) published on its website at https://www.sec.gov/rules/proposed.shtml a proposed rule to facilitate the disclosure of 
consistent, comparable, and reliable information on climate-related 
financial risk. The proposed rule, entitled ``The Enhancement and 
Standardization of Climate-Related Disclosures for Investors,'' was 
subsequently published in the Federal Register on April 11, 2022 (see 
87 FR 21334). The SEC is proposing to require SEC registrants, 
including publicly listed/traded companies, to disclose in their 
registration statements and annual reports their climate-related 
financial risk and related metrics, including GHG emissions metrics. 
Parts of the SEC proposed rule leverage existing standards, such as the 
GHG Protocol Corporate Accounting and Reporting Standard and the 
recommendations of the TCFD, the same standards that are leveraged in 
this proposed rule (see section II.A. of this preamble). While the SEC 
proposed rule did not include a requirement for SEC registrants to set 
science-based targets, it did propose that SEC registrants disclose 
targets if they have adopted one. While there are some similarities 
between the content of the disclosures in the SEC and FAR proposed 
rules, this proposed FAR rule specifically requires the Federal 
contractors with significant Federal contracts to provide their 
disclosures using the CDP Climate Change Questionnaire to maximize the 
consistency, comparability, and accessibility of disclosure data for 
use in managing Federal procurements and

[[Page 68313]]

supply chains. In addition, per this proposed FAR rule, major 
contractors will also be required to set science-based targets to 
reduce their GHG emissions.

II. Discussion and Analysis

    To implement the new disclosure and target requirements of E.O. 
14030, DoD, GSA, and NASA are proposing to create a new FAR subpart at 
23.XX, entitled ``Public Disclosure of Climate Information,'' to expand 
the climate-related representations in the solicitation provisions at 
FAR 52.223-22, Public Disclosure of Climate Information--
Representation, and 52.212-3, Offeror Representations and 
Certifications--Commercial Products and Commercial Services, and to 
establish a new standard of responsibility for certain contractors in 
FAR subpart 9.1. The following is a discussion and analysis of the 
proposed FAR amendments:

A. Significant and Major Contractors

    Section 5(b)(i) of E.O. 14030 directs the FAR Council to consider 
an amendment to the FAR to ensure major Federal suppliers disclose 
their GHG emissions and climate-related financial risk and set science-
based targets to reduce their GHG emissions. This rule proposes to 
separate ``major Federal suppliers'' into two categories: significant 
contractors and major contractors. Per this proposed rule, both 
significant contractors and major contractors would be subject to 
annual Scope 1 and Scope 2 GHG emissions disclosure requirements 
(discussed in section II.B.1. of this preamble), while only major 
contractors would be subject to the annual climate disclosure, which 
includes disclosure of Scope 3 GHG emissions, and science-based target 
requirements (discussed in section II.B.2. and II.B.3. of this 
preamble).
    For the purposes of this rule, an offeror is considered a 
``significant contractor'' if the offeror received $7.5 million or 
more, but not exceeding $50 million, in Federal contract obligations 
(as defined in OMB Circular A-11) in the prior Federal fiscal year as 
indicated in the System for Award Management (SAM) at https://www.sam.gov. An offeror is considered a ``major contractor'' if the 
offeror received more than $50 million in Federal contract obligations 
(as defined in OMB Circular A-11) in the prior Federal fiscal year as 
indicated in SAM. According to award data available in the Federal 
Procurement Data System (FPDS), there were approximately 4,413 entities 
that received between $7.5 million and $50 million in Federal contract 
obligations in FY 2021, of which 2,835 (64 percent) are estimated to be 
small businesses. There were approximately 1,353 entities that received 
more than $50 million in Federal contract obligations in FY 2021, of 
which 389 (29 percent) are estimated to be small businesses.
    This distinction between major contractors and significant 
contractors is important to ensure this rule collectively applies the 
requirements to entities receiving the most annual Federal contract 
obligations, to obtain the most responsibility for the management of 
GHG emissions and climate risks impacting the Federal Government's 
supply chains. The major contractor requirements would address 64 
percent of Federal Government spend and approximately 69 percent of 
supply chain GHG impacts, of which 31 percent of major contractors 
already report disclosing their GHG emissions through SAM. Significant 
contractors receive fewer contract obligations, with only 10 percent 
disclosing their GHG emissions through SAM. Therefore, the reporting 
burden is significantly lessened for these companies by only reporting 
Scope 1 and 2 emissions. Collectively, this rule will cover 86 percent 
of annual spend and about 86 percent of supply chain GHG impacts. It 
will also provide a better understanding of the Federal supply chain 
impacts, including Scope 3 emissions reported by major contractors.

B. Policy.

    As provided in paragraph (a) of the new section at FAR 23.XX03, a 
contracting officer is required to treat a significant or major 
contractor as nonresponsible, unless it has (itself or through its 
immediate owner or highest-level owner) inventoried its annual GHG 
emissions, and the significant or major contractor has disclosed its 
total annual emissions in SAM. Per paragraph (b) of FAR section 
23.XX03, a major contractor shall also be treated as nonresponsible, 
unless it has (itself or through its immediate owner or highest-level 
owner) made available on a publicly accessible website an annual 
climate disclosure that was completed using the CDP Climate Change 
Questionnaire in its current or previous fiscal year and set targets to 
reduce its emissions.
    The following is a discussion of the specific compliance 
requirements, which are subject to the exceptions and starting dates 
described in sections II.C. and II.E. of this preamble. A discussion of 
the various standards specified for compliance is provided in section 
II.D. of this preamble.
1. GHG Inventory
    A significant or major contractor (itself or through its immediate 
owner or highest-level owner) is required to have completed within its 
current or previous fiscal year a GHG inventory of its annual Scope 1 
and Scope 2 emissions. The significant or major contractor must also 
disclose in SAM at https://www.sam.gov the total annual Scope 1 and 
Scope 2 emissions identified through its most recent GHG inventory. Per 
OMB Memo M-22-06 (and as currently defined at FAR 23.001), greenhouse 
gases include carbon dioxide, methane, nitrous oxide, 
hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, and sulfur 
hexafluoride. Scope 1 emissions include GHG emissions from sources that 
are owned or controlled by the reporting company. Scope 2 emissions 
include GHG emissions associated with the generation of electricity, 
heating and cooling, or steam, when these are purchased or acquired for 
the reporting company's own consumption but occur at sources owned or 
controlled by another entity. In conducting a GHG inventory, the 
significant or major contractor (or their immediate or highest-level 
owner) must follow the GHG Protocol Corporate Accounting and Reporting 
Standard (see section II.D.1. of this preamble) to develop a quantified 
list of the Scope 1 and Scope 2 GHG emissions. Companies may calculate 
emissions using the calculation tool of their choice, as long as it is 
in alignment with the GHG Protocol Corporate Accounting and Reporting 
Standard. The Environmental Protection Agency (EPA) offers one such 
tool: a simplified GHG emissions calculator (see https://www.epa.gov/climateleadership/simplified-ghg-emissions-calculator). The inventory 
must represent emissions during a continuous period of 12 months, 
ending not more than 12 months before the inventory is completed.
    Major contractors are also required to conduct a GHG inventory of 
their relevant Scope 3 emissions, as discussed in the next section of 
this preamble. The requirement to inventory Scope 3 emissions is not 
applicable to significant contractors.
2. Annual Climate Disclosure
    A major contractor (itself or through its immediate owner or 
highest-level owner) is required to complete an annual climate 
disclosure within its current or previous fiscal year. The annual 
climate disclosure is a set of disclosures by an entity that aligns 
with recommendations of the TCFD (see section II.D.2. of this 
preamble). The

[[Page 68314]]

disclosure includes a GHG inventory of not only the Scope 1 and Scope 2 
emissions, but also relevant Scope 3 emissions, which are emissions 
that are a consequence of the operations of the reporting entity but 
occur at sources other than those owned or controlled by the entity. 
The annual climate disclosure also describes the entity's climate risk 
assessment process and any risks identified. For the purposes of this 
rule, a major contractor submits its annual climate disclosure by 
completing those portions of the CDP Climate Change Questionnaire that 
align with the TCFD as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) (see section II.D.3. of this 
preamble) within its current or previous fiscal year. The annual 
climate disclosure must be made available on a publicly accessible 
website, which could be the company's own website or the CDP website.
3. Science-Based Targets
    The major contractor (itself or through its immediate owner or 
highest-level owner) is also required to develop science-based targets 
and have the targets validated by SBTi (see section II.D.4. of this 
preamble). A science-based target is a target for reducing GHG 
emissions that is in line with reductions that the latest climate 
science deems necessary to meet the goals of the Paris Agreement to 
limit global warming to well below 2 [deg]C above pre-industrial levels 
and pursue efforts to limit warming to 1.5 [deg]C (see SBTi frequently 
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science 
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special 
Report on 1.5 [deg]C at https://www.ipcc.ch/sr15/. These targets must 
be validated by SBTi within the previous five calendar years and must 
also be made available on a publicly accessible website. Validated 
targets published by SBTi on the SBTi website satisfy this requirement.
4. Means of Compliance
    The proposed rule allows for a significant or major contractor to 
be considered in compliance with the new policy at 23.XX03 if the 
action was completed by the significant or major contractor itself or 
through its immediate or highest-level owner, except that the 
significant or major contractor itself must report the results of the 
GHG inventory in SAM (see 23.XX03(a)(2)).
    The definitions of ``immediate owner'' and ``highest-level owner'' 
currently included in the provisions at FAR 52.204-17, Ownership or 
Control of Offeror, and the commercial provision at FAR 52.212-3 are 
adopted for this rule. Specifically, an ``immediate owner'' is an 
entity, other than the offeror, that has direct control of the offeror. 
Indicators of control include, but are not limited to, one or more of 
the following: ownership or interlocking management, identity of 
interests among family members, shared facilities and equipment, and 
the common use of employees. ``Highest-level owner'' means the entity 
that owns or controls an immediate owner of the offeror, or that owns 
or controls one or more entities that control an immediate owner of the 
offeror. No entity owns or exercises control of the highest-level 
owner.

C. Exceptions

    A new FAR section at 23.XX04 outlines certain exceptions. Per FAR 
23.XX04(a), a significant or major contractor is not required to 
inventory its Scope 1 or Scope 2 emissions and a major contractor is 
not required to complete an annual climate disclosure or set science-
based targets, as described in section II.B. of this preamble, if it 
is--
     An Alaska Native Corporation, a Community Development 
Corporation, an Indian tribe, a Native Hawaiian Organization, or a 
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
     A higher education institution (defined as institutions of 
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart 
A, and 20 U.S.C. 1001);
     A nonprofit research entity;
     A state or local government; or
     An entity deriving 80 percent or more of its annual 
revenue from Federal management and operating (M&O) contracts that are 
subject to agency annual site sustainability reporting requirements.
    The exception provided for Federally-recognized tribes or tribal or 
Native corporations is in accordance with related Federal procurement 
policies and current commercial norms for sustainability reporting. The 
exception for institutions of higher education or nonprofit research 
entities is provided because a large majority of such institutions that 
are significant or major contractors either already set GHG reduction 
targets and make sustainability disclosures but are likely doing so (in 
accordance with current commercial norms for sustainability reporting) 
with standards and systems other than those specified in this rule, or 
are pass-through entities with minimal Scope 1 and 2 emissions and 
little capacity to manage Scope 3 emissions and climate risks.
    An M&O contract is an agreement under which the Government 
contracts for the operation, maintenance, or support of a Government-
owned or Government-controlled research, development, special 
production, or testing establishment wholly or principally devoted to 
one or more major programs of the contracting Federal agency (see FAR 
subpart 17.6). A market scan indicates that a majority of current M&O 
contract holders derive all, or substantially all, of their revenue 
from Federal site M&O contracts. For these contractors, it was 
determined that since all or substantially all their facilities and GHG 
emissions are already subject to comprehensive Federal sustainability 
performance and reporting requirements under their M&O contracts, 
related laws, and executive orders, it would be duplicative and 
unnecessary to require them to also report using the separate standards 
and systems required by this rule. The market scan indicated that a 
minority of current M&O contract holders are larger entities deriving 
less than 80 percent of their revenue from Federal site M&O contracts, 
indicating that they likely operate substantial facilities and emit 
substantial GHG emissions, which are not covered by other Federal 
sustainability performance and reporting requirements. For these 
entities, requiring them to report using the separate standards and 
systems required by this rule will allow the Government and the public 
to understand the scope of climate risks and impacts attributable to 
these entities' substantial non-M&O activities and encourage the 
entities to reduce those risks and impacts.
    FAR section 23.XX04(b) provides additional exceptions for certain 
major contractors. If a major contractor is considered a small business 
for the North American Industry Classification System (NAICS) code it 
has identified in its SAM registration as its primary NAICS code, or if 
it is a nonprofit organization, then it is not required to complete an 
annual climate disclosure or to set science-based targets. However, the 
major contractor is still required to complete a GHG inventory of its 
Scope 1 and Scope 2 emissions and must report these total annual 
emissions in SAM.
    The public is invited to provide public comments on the 
appropriateness of the exceptions included in this proposed rule, 
including potential alternatives to be considered in the formation of 
the final rule.

[[Page 68315]]

D. Standards

    Section II.1. of OMB memorandum M-22-06 directs the FAR Council to 
leverage existing third-party standards and systems in the development 
of regulatory amendments to promote contractor attention on reduced GHG 
emissions and Federal sustainability. In alignment with the National 
Technology Transfer and Advancement Act of 1995 and OMB Circular A-119, 
which directs Federal agencies to use non-governmental private sector 
standards to meet policy and procurement objectives, as described in 
section II.B. of this preamble, this rule engages contractors through 
widely-accepted protocols and platforms that they are already using to 
publicly disclose annual climate data to a variety of other interested 
parties. The rule requires contractors to use the following four 
standards: the GHG Protocol Corporate Accounting and Reporting 
Standards and Guidance, the 2017 Recommendations of the TCFD, the CDP 
Climate Change Questionnaire, and the SBTi criteria. The public is 
invited to provide public comments on the use of these standards in 
this proposed rule, including potential alternatives to be considered 
in the formation of the final rule. The following is a summary of the 
standards proposed for disclosures by significant and major 
contractors.
1. GHG Protocol Corporate Accounting and Reporting Standards and 
Guidance
    The GHG Protocol Corporate Accounting and Reporting Standard, 2004 
revised edition (see https://ghgprotocol.org/sites/default/files//ghg-protocol-revised.pdf) is the most widely used accounting tool to track 
corporate GHG emissions. It describes how to complete a comprehensive 
GHG inventory across Scope 1, Scope 2, and relevant categories of Scope 
3 emissions. This standard is supplemented by Required Greenhouse Gases 
in Inventories: Accounting and Reporting Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf). 
Further implementing instructions for quantifying emissions can be 
referenced in GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf) and GHG Protocol Corporate Value 
Chain (Scope 3) Accounting and Reporting Standard Guidance, 2011 (see 
https://ghgprotocol.org/sites/default/files/standards/Value-Chain-Accounting-Reporing-Standard_041613_2.pdf). General information on the 
GHG Protocol Corporate Standard and related guidance is available at 
https://ghgprotocol.org/corporate-standard.
2. Task Force on Climate-Related Financial Disclosures
    In 2017, the TCFD launched recommendations to improve and increase 
reporting of climate-related financial information. The TCFD 
recommendations cover Governance, Strategy, Risk Management, and 
Metrics and Targets. Climate-related risks are considered across two 
major categories: (1) risks related to the transition to a lower-carbon 
economy, and (2) risks related to the physical impacts of climate 
change. Governments around the world are asking companies to provide 
consistent and decision-useful information to market participants in 
line with TCFD recommendations (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf). In 2021, the TCFD updated 
its implementation guidance for the 2017 Recommendations by issuing an 
annex titled ``Annex: Implementing the Recommendations of the Task 
Force on Climate-related Financial Disclosures.'' The updates reflect 
the evolution of disclosure practices, approaches, and user needs (see 
https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf).
3. CDP Climate Change Questionnaire
    CDP (formerly the Carbon Disclosure Project) is an international 
non-profit organization that runs a global environmental disclosure 
system. CDP's annual Climate Change Questionnaire enables companies to 
report GHG emissions and climate change risk through a standard process 
and make their environmental impact transparent to interested parties. 
Companies disclose once annually by submitting a response to the CDP 
Climate Change Questionnaire through CDP's online response system 
(ORS). Companies are able to utilize the GHG Protocol Corporate 
Accounting and Reporting Standard when completing their GHG inventory 
to disclose through CDP. CDP's disclosure platform provides the 
mechanism for reporting climate-related financial risks in line with 
the TCFD recommendations as well as reporting annual progress towards 
science-based targets.
    CDP operates an annual disclosure cycle that enables companies to 
disclose emissions and climate risk information at the request of 
investors, corporate and government customers, the general public, and 
other interested parties. Each year CDP issues the proposed updates to 
the questionnaire, which are opened for public consultation in the fall 
(approximately September) and the finalized questionnaire and guidance 
are available early in the new year (approximately January). The Online 
Response System (ORS) opens once annually (approximately April), and 
responses must be submitted by a summer deadline (approximately July). 
Updated calendars are published by CDP annually: https://www.cdp.net/en/companies-discloser/How-to-disclose-as-a-company.
    CDP's Climate Change Questionnaire prompts users for some 
disclosures and datapoints that are beyond the scope of this FAR rule, 
which is to obtain annual climate disclosures from major contractors 
(see II.B.2. of this preamble). These additional datapoints may be of 
interest to investors, external non-Federal Government customers, or 
the general public who also rely on CDP disclosures to evaluate 
corporate climate performance. This proposed FAR rule clarifies at 
23.XX03(b)(1) and in 52.223-22 and 52.212-3(t) that the offeror (itself 
or through its immediate owner or highest-level owner) is only required 
to complete those portions of the CDP Climate Change Questionnaire that 
align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd). This allows 
companies to determine what responses in the CDP questionnaire are 
appropriate or necessary to complete in order to provide a TCFD-aligned 
annual climate disclosure. Questions beyond those that are necessary to 
provide an annual climate disclosure for Federal use, as defined by 
this rule, are considered optional for the purposes of this rule. 
Neither the CDP climate scores, nor answers to questions beyond those 
necessary to provide a complete annual climate disclosure, will be used 
to evaluate compliance with this FAR rule. The Government seeks public 
comment regarding what, if any, additional specificity is needed beyond 
``those portions of the CDP Climate Change Questionnaire that align 
with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd)''.
4. Science-Based Targets Initiative
    SBTi is a partnership between CDP, the United Nations Global 
Compact (UNGC), the World Resources Institute (WRI), and the World Wide 
Fund for Nature (WWF, also known as the World Wildlife Fund). Science-
based targets provide a clearly-defined pathway for companies to reduce 
GHG emissions in line with reductions that the latest

[[Page 68316]]

climate science deems necessary to meet the goals of the Paris 
Agreement--limiting global warming to well below 2 [deg]C above pre-
industrial levels and pursuing efforts to limit warming to 1.5 [deg]C. 
Companies can commit to set a science-based target and then, within two 
years, must develop a science-based target and have it validated 
through the SBTi target validation process.

E. Starting Dates

    This proposed rule acknowledges that significant and major 
contractors will need time to come into compliance with the new policy 
by including delayed starting dates. A significant or major contractor 
that cannot represent on or after these starting dates that it has 
complied with the new policy will be presumed to be a nonresponsible 
prospective contractor for Federal procurements (see section II.G. of 
this preamble).
    Starting one year after publication of a final rule, a significant 
or major contractor (itself or through its immediate owner or highest-
level owner) must have completed a GHG inventory and the significant or 
major contractor must have disclosed the total annual Scope 1 and Scope 
2 emissions from its most recent inventory in SAM. This one-year period 
provides the time needed for significant or major contractors to become 
familiar with the GHG Protocol Corporate Accounting and Reporting 
Standard, to survey the GHG emissions, and for significant or major 
contractors to report in SAM the total metric tons of carbon dioxide 
equivalent (MT CO2e) of Scope 1 and Scope 2 emissions.
    The compliance requirements for major contractors will start two 
years after publication of a final rule. This delayed starting date 
provides a major contractor (or its immediate owner or highest-level 
owner) additional time to complete a GHG inventory that covers relevant 
Scope 3 emissions; conduct a climate risk assessment and identify 
risks; complete the CDP Climate Change Questionnaire; and commit to, 
develop, and obtain SBTi validation of a science-based target.

F. Annual Representation

    Amendments are proposed to the annual representations in the 
solicitation provision at FAR 52.223-22, Public Disclosure of Climate 
Information--Representation, and the corresponding representation in 
paragraph (t) of the provision at FAR 52.212-3 for acquisitions for 
commercial products or commercial services, to collect information on 
whether an offeror is in compliance with the new policy. This provision 
continues to be prescribed for use only when offerors are required to 
be registered in SAM, though the prescription has been moved to FAR 
section 23.XX07 of the new subpart. All offerors that register in SAM 
will be required to represent on an annual basis whether they are a 
significant contractor or a major contractor (see section II.A. of this 
preamble). If an offeror represents that it is a significant or major 
contractor, then the offeror will be required to represent whether it--
     Is subject to an exception (see section II.C. of this 
preamble);
     Has completed, within its current or previous fiscal year, 
a GHG inventory of the annual Scope 1 and Scope 2 emissions (evidenced 
by a report in SAM of the total annual Scope 1 and Scope 2 emissions 
identified in its most recent inventory);
     Makes available on a publicly accessible website an annual 
climate disclosure that was completed using the CDP Climate Change 
Questionnaire within its current or previous fiscal year; and
     Makes available on a publicly accessible website a 
science-based target that has been validated by SBTi.
    The new representations are intended to assist the contracting 
officer in determining whether the policy at 23.XX03 applies to an 
offeror and, if so, whether the offeror is in compliance. The new FAR 
section 23.XX05, Procedures, provides instructions for the contracting 
officer who is reviewing the representations in paragraph (d) of the 
provision at FAR 52.223-22 (or the equivalent representations in the 
commercial provision at FAR 52.212-3(t)). This section includes tables 
to illustrate the specific responses from offerors that are required to 
indicate that the offeror is in compliance. If an offeror's 
representations indicate that the offeror is a significant or major 
contractor and it is not in compliance with the policy at FAR 23.XX03 
(or if the contracting officer has reason to question the 
representations), then the contracting officer is directed to follow 
the procedures at FAR 9.104-3(e) for determining whether the offeror is 
responsible (see section II.G. of this preamble).

G. Responsibility Determinations

    Per FAR section 23.XX05(c), the contracting officer is directed to 
follow the procedures at FAR section 9.104-3(e) for determining 
responsibility when an offeror represents that it is not in compliance 
with the policy at 23.XX03 when it should be, or if there is reason to 
question the offeror's representation.
    Per the new procedures at FAR 9.104-3(e), the contracting officer 
shall presume the prospective contractor is nonresponsible pursuant to 
9.104-1, unless the contracting officer determines that--
     Noncompliance resulted from circumstances properly beyond 
the prospective contractor's control;
     The prospective contractor has provided sufficient 
documentation that demonstrates substantial efforts to comply; and
     The prospective contractor has made a public commitment to 
comply as soon as possible on a publicly accessible website (within one 
year).
    In making this determination the contracting officer is directed to 
request information from the prospective contractor to determine what 
efforts it has made to comply with each requirement at FAR 22.XX03 and 
the basis for the failure to comply.
    FAR 9.104-3(e)(3) also clarifies that a significant or major 
contractor who meets one of the exceptions at FAR 23.XX04 (see section 
II.C. of this preamble) and acquisitions that are subject to an 
exemption or waiver pursuant to FAR 23.XX06 (see section II.H. of this 
preamble) are not subject to the new responsibility standard and 
procedures.

H. Exemptions and Waivers

    The new section at 23.XX06 provides for certain exemptions from and 
waivers to the new procedures for determining responsibility at 23.XX05 
and the new responsibility standards at FAR 9.104-3(e) for determining 
whether a significant or major contractor is responsible (discussed in 
section II.G. of this preamble). For example, the new procedures do not 
apply to acquisitions listed at FAR 4.1102(a) where the offeror is 
exempt from the requirement to be registered in SAM at the time an 
offer is submitted, since enforcement of the policy at FAR 23.XX03 is 
accomplished via review of a significant or major contractor's 
representations in SAM as described in FAR section 23.XX05.
    The procedures at FAR section 23.XX05 may be waived by the senior 
procurement executive for facilities, business units, or other defined 
units for national security purposes, or for emergencies, national 
security, or other mission essential purposes. The senior procurement 
executive may also provide a waiver for a period not to exceed one 
calendar year to enable an entity an additional year to come into 
compliance. An agency must make such waivers available on its agency 
website.

[[Page 68317]]

I. Definitions

    Definitions of the following terms are provided in FAR section 
23.XX02 and in paragraph (a) of the solicitation provisions at FAR 
52.223-22 and 52.212-3: ``annual climate disclosure,'' ``GHG 
inventory,'' ``major contractor,'' ``publicly accessible website,'' 
``science-based target,'' ``Scope 1 emissions,'' ``Scope 2 emissions,'' 
``Scope 3 emissions,'' and ``significant contractor.'' The definitions 
of ``immediate owner'' and ``highest-level owner'' that are currently 
included in the provision at FAR 52.212-3(a) are added to FAR section 
23.XX02 and the solicitation provision at FAR 52.223-22. The current 
definition of ``greenhouse gases'' remains at FAR section 23.001 with 
minor spelling corrections.

J. Conforming Changes

    Given that the policy on climate disclosures is moved to a new 
subpart at FAR 23.XX, conforming changes are proposed at FAR subpart 
23.8 to remove the coverage of disclosure of GHG emissions and 
reduction goals. As a result, 23.802(c) and (d) and 23.804(b) are 
removed and the remaining paragraphs at FAR sections 23.800 and 23.804 
are renumbered accordingly. A cross-reference to the new subpart is 
added at 23.800(b). Conforming updates to the cross-references to FAR 
23.804 are also proposed in FAR 52.213-4, and the prescription 
references at FAR 52.223-11, 52.223-12, 52.223-20, and 52.223-21. In 
addition, the title of the provision at FAR 52.223-22 is updated in the 
provision at FAR 52.204-8, Annual Representations and Certifications, 
and in the list of provisions at FAR 4.1202(a).

K. Public Input

    The public is specifically invited to provide public comments on 
the following:
     The appropriateness of the exceptions identified in 
section II.C. of this preamble, including potential alternatives to be 
considered in the formation of the final rule.
     The use of the standards identified in section II.D. of 
this preamble, including potential alternatives to be considered in the 
formation of the final rule.
     With regards to the CDP Climate Change Questionnaire 
discussed in section II.D.3. of this preamble, whether any specificity 
beyond ``those portions of the CDP Climate Change Questionnaire that 
align with the TCFD as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd)'' is necessary.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), and for Commercial Services

    This rule proposes to amend the annual representation in the 
solicitation provision at FAR 52.223-22, Public Disclosure of Climate 
Information--Representation, and the corresponding representation in 
paragraph (t) of the solicitation provision at FAR 52.212-3, Offeror 
Representations and Certifications--Commercial Products and Commercial 
Services. The provision at FAR 52.223-22 will continue to be prescribed 
for use in solicitations that also include the provision at FAR 52.204-
7, System for Award Management. This prescription ensures that all 
offerors who are required to register in SAM and who received $7.5 
million or more in Federal contract obligations in the prior Federal 
fiscal year, including those who compete exclusively for contracts for 
commercial products or commercial services or those valued at or below 
the SAT, provide a response to the revised representations.
    The new procedures at FAR 22.XX05 and new standards at FAR 9.104 
for determining the responsibility of a prospective contractor, if it 
is a significant or major contractor, will apply to acquisitions of 
commercial products (including COTS items) or commercial services, and 
to acquisitions valued at or below the SAT. Failure to apply the new 
procedures and standards for responsibility determinations to these 
types of acquisitions would not accomplish the intended policy 
objective of the Executive Order. These procedures ensure the 
Government is able to enforce the disclosure requirements for 
significant and major contractors.

IV. Expected Impact of the Rule

    This rule proposes to create a new standard of responsibility. 
Specifically, a prospective contractor that is a significant or major 
contractor will be presumed to be nonresponsible unless--
     Starting one year after publication of a final rule, the 
significant or major contractor (itself or through its immediate owner 
or highest-level owner) has completed a GHG inventory of its annual 
Scope 1 and Scope 2 GHG emissions, and the significant or major 
contractor has reported the total annual Scope 1 and Scope 2 emissions 
from its most recent inventory in SAM at https://www.sam.gov; and
     Starting two years after publication of a final rule, a 
major contractor (itself or through its immediate owner or highest-
level owner) has submitted an annual climate disclosure within its 
current or previous fiscal year by completing those portions of the CDP 
Climate Change Questionnaire that align with the TCFD recommendations 
as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) and has developed a science-based target and had 
the target validated by SBTi within the previous five calendar years.
    When making a responsibility determination, a contracting officer 
will rely on the representation of a prospective contractor in the 
revised solicitation provision at FAR 52.223-22 (or the equivalent 
representations in the commercial provision at FAR 52.212-3(t)) 
regarding whether the prospective contractor is a significant or major 
contractor and, if so, whether it is in compliance with the new 
disclosure and target requirements, as applicable. If a prospective 
contractor's representation indicates that it is a significant or major 
contractor, is not subject to an exception, and is not in compliance, 
then the contracting officer will request additional information from 
the prospective contractor regarding the efforts it has made to comply 
before making a responsibility determination, unless an exemption or 
waiver applies.

A. General Compliance Requirements

1. Representations in SAM
    All offerors that register in SAM will be required to represent in 
paragraph (d)(1) of the provision at FAR 52.223-22 (or the equivalent 
representations in the commercial provision at FAR 52.212-3(t)(3)(i)) 
whether the offeror meets the definition of a significant or major 
contractor. An offeror is considered a ``significant contractor'' if 
the offeror received $7.5 million or more, but not exceeding $50 
million, in Federal contract obligations in the prior Federal fiscal 
year. An offeror is considered a ``major contractor'' if the offeror 
received more than $50 million in Federal contract obligations in the 
prior Federal fiscal year. Only offerors that represent that they are a 
significant or major contractor will be required to complete the 
remaining representations in paragraphs (d)(2) through (d)(5) of the 
provision at FAR 52.223-22 (or the equivalent representations in the 
commercial provision at FAR 52.212-3(t)(3)(ii) through (v)).
    An offeror will represent in paragraph (d)(2) of the provision 
whether the offeror meets an exception to the new

[[Page 68318]]

policy per the new section at FAR 23.XX04. The contracting officer uses 
the offeror representations in this paragraph to determine if an 
offeror who represents in paragraph (d)(1) of the provision that it is 
a significant or major contractor is subject to the new disclosure and 
compliance requirements.
    The representation in paragraph (d)(3) of the provision gathers 
information about whether a significant or major contractor (itself or 
through its immediate owner or highest-level owner) has completed 
within its current or previous fiscal year a GHG inventory of its 
annual Scope 1 and Scope 2 emissions. Offerors will be required to 
report in this representation the total Scope 1 and Scope 2 emissions 
identified in its most recent GHG inventory.
    The representations in paragraph (d)(4) and (d)(5) of the provision 
gather information regarding whether a major contractor (itself or 
through its immediate owner or highest-level owner) makes available on 
a publicly accessible website:
     An annual climate disclosure that was completed using the 
CDP Climate Change Questionnaire within its current or previous fiscal 
year; and
     A science-based target that has been validated by SBTi 
within the previous five calendar years.
    An offeror that is a major contractor is also required to report in 
paragraph (e) of the provision at FAR 52.223-22 (or in paragraph (t)(4) 
of the commercial provision at FAR 52.212-3) the website(s) where the 
annual climate disclosure and validated science-based target are made 
publicly available. While the compliance requirements referenced in the 
last two representations at paragraphs (d)(4) and (d)(5) are only 
applicable to major contractors, both significant and major contractors 
will be required to complete these representations. This allows the 
Government to monitor whether significant contractors are taking steps 
to provide enhanced climate disclosures and to reduce their GHG 
emissions.
2. GHG Inventory
    Starting one year after publication of a final rule, a significant 
and major contractor (or their immediate owner or highest-level owner) 
must follow the GHG Protocol Corporate Accounting and Reporting 
Standard (see section II.D.1. of this preamble) to complete a GHG 
inventory of the Scope 1 and Scope 2 emissions. Starting two years 
after publication of a final rule, major contractors will also 
inventory relevant Scope 3 emissions. Companies completing a GHG 
inventory for the first time will often begin by reviewing accounting 
standards and methods, determining organizational and operational 
boundaries, and choosing a reporting and base year. They will collect 
data aligned to that year from across the business (including but not 
limited to fuel purchases, such as gasoline and heating oil, and 
electricity bills) and utilize a GHG calculator to determine the 
associated GHG emissions emitted across Scope 1, Scope 2, and (if 
applicable) relevant Scope 3 emissions expressed in MT CO2e. Companies 
will likely develop a GHG Inventory Management Plan to formalize data 
collection procedures, in order to ensure consistency on an annual 
basis.
3. Annual Climate Disclosure
    Starting two years after publication of a final rule, a major 
contractor (or its immediate or highest-level owner) must provide an 
annual climate disclosure that aligns with the 2017 recommendations of 
the TCFD and the 2021 TCFD update (see sections II.B.2 and II.D.2. of 
this preamble). Companies following the TCFD recommendations will 
assess two types of climate risks: (1) transition risks associated with 
the transition to a lower-carbon global economy, the most common of 
which relate to policy and legal actions, technology changes, market 
responses, and reputational considerations; and (2) physical risks 
emanating from climate change, which can be event-driven (acute) such 
as increased severity of extreme weather events (e.g., cyclones, 
droughts, floods, and fires) as well as longer-term shifts (chronic) in 
precipitation and temperature and increased variability in weather 
patterns (e.g., sea level rise).
    The major contractor (or its immediate or highest-level owner) must 
provide its annual climate disclosures by completing those portions of 
the CDP Climate Change Questionnaire that align with the TCFD as 
identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd). Companies receive an invitation to disclose once annually 
through CDP on behalf of all investors, corporate customers, and/or 
Government customers requesting their response. Companies who have not 
received an invitation can indicate their intention to disclose as a 
``self-selected company (SSC)'' by contacting [email protected]. 
Companies complete and submit their response to the CDP Climate Change 
Questionnaire through CDP's online response system (ORS). The CDP 
Climate Change Questionnaire can be saved in draft form in the ORS, 
exported for internal completion and review, and then submitted through 
the ORS prior to the relevant deadline. CDP provides detailed guidance 
to support companies in understanding and completing the questionnaire 
(see https://www.cdp.net/en/guidance/guidance-for-companies).
4. Science-Based Targets
    Starting two years after publication of a final rule, a major 
contractor will also be required to develop (itself or through its 
immediate or highest-level owner) a science-based target and have the 
target validated by SBTi. Companies can commit to set a science-based 
target by submitting a letter to SBTi and will be recognized as 
``committed'' on the SBTi website. Once committed, a company has 24 
months to submit their targets to SBTi for validation. Companies 
independently develop their science-based target in line with science-
based criteria (including sector-specific guidance, where relevant), 
which are available on the SBTi website (https://sciencebasedtargets.org/). Companies then submit the science-based 
target to SBTi for validation. Validated targets are published one 
month after validation, unless otherwise instructed. Targets not 
receiving validation are provided with detailed feedback from expert 
reviewers and an opportunity to resubmit. Following validation, 
companies should disclose emissions annually and monitor progress on 
reaching the target.

B. Benefit

    The Federal Government is the world's single largest purchaser of 
goods and services, spending over $650 billion in contracts in fiscal 
year 2020 alone. Public procurement can shift markets, drive 
innovation, and be a catalyst for adoption of new norms and global 
standards. Requiring significant and major contractors to publicly 
disclose their GHG emissions and requiring major contractors to 
publicly disclose their climate-related financial risk and set science-
based reduction targets will give visibility to major annual sources of 
GHG emissions and climate risks throughout the Federal supply chain and 
could, in turn, provide insights into the entire U.S. economy. While 
disclosure alone does not reduce emissions and climate risk, the 
expectation of increased public transparency and accountability may 
prompt suppliers to take action following a ``what gets measured gets 
managed'' mantra, and thus increase the resilience of the Federal 
supply chain.
    Several discrete categories of benefits are expected from this 
regulation to

[[Page 68319]]

include: identifying areas for increased efficiency and reduced risks; 
understanding and reduction of supply chain vulnerabilities; aligning 
targets to address climate change; improved transparency, 
accountability, and ability of Federal agencies to collaborate with 
contractors; and increased efficiency of disclosure via 
standardization.
1. Identifying Areas for Increased Efficiency and Reduced Risks
    Companies who are required to publicly disclose their GHG emissions 
and climate risks may be prompted to thoroughly investigate their 
operations and supply chains, which may, in turn, reveal opportunities 
to realize efficiencies and manage risks. Any efficiency improvements 
would, in turn, flow into the company's performance on Federal 
contracts. The activity data that is examined (e.g., fuel and 
electricity bills) to conduct a GHG inventory can reveal areas where 
efficiencies may be realized. After conducting a GHG inventory, many 
companies may choose to address sources of emissions. For example, the 
Federal Government's assessment of its GHG footprint has revealed the 
most significant areas of GHG emissions and climate risks across the 
Federal Government's own operations and supply chains, which prompted 
the Federal Sustainability Plan to establish ambitious programs to 
address them: zero emissions vehicles, carbon pollution free 
electricity, net zero buildings, and net zero procurement. Companies 
take widely varied approaches to managing operational efficiencies 
relevant to their GHG emissions, ranging from no action to 
opportunistic system upgrades to purchasing offsets to address 
emissions outside of a company's boundaries. By requiring the 
development, maintenance, and public disclosure of contractor GHG 
inventories and reduction targets, this rule may prompt contractors to 
undertake a comprehensive analysis of their energy and fuel use, 
electricity procurement, and other emissions sources (e.g., 
refrigerants, agricultural and industrial activities), which may prompt 
action to invest in GHG management opportunities across their 
facilities, operations, and supply chains with multi-year paybacks. 
Well-managed contractors may choose to voluntarily manage GHGs and cost 
savings, but these expanded expectations will set a level playing field 
for a wider range of contractors to get started.
    Those contractors who choose to address GHG emissions may 
experience benefits in cost savings, as shown by the Government's own 
experience as well as that of contractors who have voluntarily 
disclosed emissions. The Federal Government has tracked and publicly 
disclosed its Scope 1 and 2 emissions annually since 2008, while 
implementing targets for energy and water efficiency and emissions 
reduction. The Government's practice of setting and meeting these 
targets has led to a reduction of 32.2 percent in Federal agency 
emissions from standard operations since 2008, reduction in total 
annual energy use (including all facility and mobile sources) from 
approximately 1,143,000 Billion British thermal units (BBtu) in 2008 to 
849,000 BBtu in 2020 (25 percent reduction), and a reduction of total 
annual energy costs from $29.4 billion in 2008 to $17.1 billion in 2020 
(reduction of $12.3 billion annually, or 41.8 percent, in inflation-
adjusted dollars). Similarly, in 2021, companies (including, but not 
limited to, Federal contractors) disclosing emissions and climate risk 
through the CDP disclosure system independently reported emissions and 
cost savings from emissions reduction activities implemented in the 
given reporting year; in aggregate, these benefits collectively 
amounted to 1.8 billion metric tons (MT) CO2e in emissions reductions 
with over $29 billion in associated cost savings for those suppliers. 
Public disclosure of this information in a standardized format creates 
a global database that can be utilized for tracking year-over-year 
progress, sharing ideas among companies with similar emissions 
profiles, and enabling benchmarking of performance.
2. Understanding and Reduction of Supply Chain Vulnerabilities
    In accordance with E.O. 14030, this proposed rule would require 
major contractors who have a significant share of Government business 
to identify their climate-related financial risks, including physical 
and transition risks. These risks could impact the contractor's 
business operations in the short, medium, and long-term. The required 
disclosures will prompt entities to investigate and understand these 
risks, develop plans to mitigate them, and communicate the risks and 
mitigation plans to the public and Federal agencies. These disclosures 
will enable the Government to understand how and when the risks faced 
by major contractors (some of which are mission-critical) and their 
supply chains, including but not limited to increased likelihood of 
disruptive climate and weather events and material and energy cost 
fluctuations, may impact the agencies' own missions and activities. 
This understanding will increase the effectiveness of the Federal 
supply chain by enabling agencies to develop and improve their own 
plans to safeguard their assets and missions, ensuring uninterrupted 
provision of critical services to the U.S. public. Currently, the 
Federal Government and general public have significantly reduced 
visibility into the preparedness of major contractors upon whom the 
Government relies on for products and services (some of which are 
critical). For example, per a U.S. Government Accountability Office 
report (GAO-16-32, Federal Supply Chains: Opportunities to Improve the 
Management of Climate-Related Risks), in October 2012, Superstorm Sandy 
caused widespread damage to logistics and transportation networks 
throughout the Northeast, leading to major fuel shortages for agencies 
to overcome while providing critical Federal services, such as disaster 
relief and mail delivery, and causing an estimated $70 billion in 
direct damages and lost economic output.
    Mitigating the effects of climate change by reducing emissions can 
provide important economic, ecological, and social benefits by 
significantly reducing major risks to the U.S. economy. According to 
the U.S. Fourth National Climate Assessment (see Key Message 2, Chapter 
29) published by the U.S. Global Change Research Program in 2018, a 
Congressionally mandated, joint report of thirteen U.S. agencies with 
research programs and expertise on changes in the global environment 
and their implications for society:

    In the absence of more significant global mitigation efforts, 
climate change is projected to impose substantial damages on the 
U.S. economy, human health, and the environment. Under scenarios 
with high emissions and limited or no adaptation, annual losses in 
some sectors are estimated to grow to hundreds of billions of 
dollars by the end of the century. It is very likely that some 
physical and ecological impacts will be irreversible for thousands 
of years, while others will be permanent.
3. Aligning Targets To Address Climate Change
    The Federal Government has committed to reducing its Scope 1, 2, 
and 3 GHG emissions, including those associated with Federal 
procurement activities, to achieve a net zero economy by 2050. As the 
single largest purchaser in the world, Federal procurement represents 
both a substantial contribution to climate change emissions and a 
significant opportunity to reduce them. GSA has estimated that 
emissions from contractors performing Federal contracts are 
significantly

[[Page 68320]]

greater (150 million MT CO2e in Fiscal Year 2019) than emissions from 
Federal buildings and non-tactical fleets (37 million MT CO2e) (see 
https://www.gsa.gov/Governmentwide-initiatives/Federal-highperformance-green-buildings/resource-library/sustainable-acquisition). The Federal 
Government has committed to a 65 percent reduction in its Scope 1 and 2 
operational emissions by 2030 (from 2008 levels), demonstrating it is 
doing its part via internal operations to achieve the U.S. Nationally 
Determined Contribution of a 50-52 percent economy-wide reduction in 
emissions by 2030. In order to similarly reduce its much greater Scope 
3 emissions, the Federal Government's best solution is to require that 
its major contractors quantify their GHG emissions and set science-
based targets to align ambitions and identify areas for collaboration 
on shared goals.
    According to the EPA, in addition to global or national economic 
benefits, forward thinking organizations also recognize internal 
benefits of setting and publicly disclosing GHG reduction targets, 
including increasing senior management attention and funding for 
investing in GHG reduction projects, encouraging innovation, improving 
employee morale, and helping to recruiting and retain qualified 
employees (see https://www.epa.gov/climateleadership/target-setting). 
CDP's 2021 post-disclosure survey found that 76 percent of responding 
companies say climate disclosure helps ``boost their competitive 
advantage'' and 86 percent say that ``protecting and improving the 
reputation of my organization'' is an important benefit of disclosure 
(see https://www.cdp.net/en/companies-discloser).
    More than 3,600 companies globally, representing over one third of 
the global economy's market capitalization, have voluntarily committed 
to setting science-based targets for reducing emissions (see https://sciencebasedtargets.org/). A 2018 survey of 185 company executives from 
SBTi-committed businesses found that 79 percent of companies 
experienced a brand reputation boost, 63 percent saw an increase in 
innovation, 55 percent reported that preparing for a low-carbon 
transition led to a newly earned competitive advantage (see https://sciencebasedtargets.org/blog/six-business-benefits-of-setting-science-based-targets). Companies with targets validated by SBTi are reducing 
emissions at an accelerating pace, collectively achieving 12 percent 
Scope 1 and 2 emissions reduction in 2020 and a total emissions 
decrease of 29 percent between 2015 and 2020. According to SBTi's 
science-based target setting methodologies, an annual emissions 
reduction of at least 4.2 percent is required to align organizations 
with the Paris Agreement goal of 1.5[deg]C maximum global temperature 
rise (see https://sciencebasedtargets.org/reports/sbti-progress-report-2021). Requiring that major contractors set, disclose, and maintain 
validation of such ambitious climate targets can thus be an effective 
tool for addressing the Federal Government's Scope 3 emissions and 
associated risks of climate change to the national economy, while 
providing economic and other benefits to the contractors themselves.
4. Improved Transparency, Accountability, and Ability To Collaborate 
With Suppliers
    Without knowledge of existing ``hot spots'' (emissions-intensive 
sectors and activities) and cost-effective emissions reduction 
opportunities, it may be difficult for Federal agencies and contractors 
to understand where to start in seeking to reduce emissions, how to 
prioritize emissions reduction programs and activities, and how much to 
invest in each. Public disclosure provides transparency into the 
historical costs and impacts of organizational strategies and 
activities, the current management strategies of peer and partner 
organizations, and their future-focused targets. Disclosure of climate 
risks and management strategies enables benchmarking and collaborative 
opportunities (1) between Federal contractors and (2) between 
contractors and the Government, thereby increasing economy of efforts. 
Public disclosures thus benefit collective accountability for the 
shared challenge of addressing climate change throughout the global 
economy and enable transparent tracking of progress over time.
    Furthermore, for companies with significant Scope 3 emissions, 
supply chain engagement can be an opportunity for further efficiency, 
collaboration and innovation. In 2021, of the 13,000 companies 
reporting through CDP, 71 percent of companies reported their Scope 1 
and 2 emissions, while only 20 percent reported emissions associated 
with products and goods they purchase (Scope 3). However, Scope 3 
emissions for a company are, on average, over 11 times higher than 
operational emissions. Companies can calculate Scope 3 emissions using 
a hybrid approach of disclosed and modeled data that improves over time 
as data quality and supplier engagement improve. Only 38 percent of 
companies who disclose through CDP currently report that they engage 
their own suppliers on sustainability, however those who do engage 
suppliers realize significant cost and emissions savings; companies 
engaging their suppliers through CDP resulted in a reduction of 231 
million tons of CO2e in 2021. Supplier engagement represents an 
opportunity for many companies to drive additional benefits for the 
Federal government and national economy by encouraging contractors to 
work with their suppliers, contractors, and other entities in their 
supply chains to identify cost-effective ways to reduce emissions. 
Through this rule, the Federal Government will communicate to its 
prospective contractors and their supply chains that transparent 
disclosure and management of supply chain GHG emissions and climate 
risk can be a matter of social license to operate and contractual 
access to important customers, thus multiplying the potential for 
reducing energy costs and associated emissions.
5. Increased Efficiency of Disclosure via Standardization
    In addition to the above benefits, this rule will lead to increased 
efficiency in the processes and industries by which major contractors 
disclose climate related financial risks. By aligning with global 
standards such as the TCFD recommendations and SBTi target-setting 
methodologies, as well as the leading centralized data platform CDP 
(which implements and is aligned with TCFD), this rule will reinforce 
existing industry trends toward standardization around these systems, 
which are already used by large numbers of U.S. companies because they 
are required in order to meet the demands of other entities, such as 
non-Federal customers and investors. The standards and systems required 
by this rule will thus allow affected companies to develop disclosures 
that efficiently meet multiple requirements for Federal procurement 
(this rule), access to capital markets (investors' needs), and other 
existing market requirements (such as ratings and rankings systems). 
Much of this standardization to date has occurred outside of the 
Federal Government, led by NGOs, investors, companies and ratings and 
rankings platforms as well as cities, states, and other national 
governments. As discussed in section I. of this preamble, the SEC 
recently proposed a regulation that if adopted would require similar 
annual disclosures of climate related financial risk for SEC 
registrants, including publicly listed/traded companies, many of whom 
are also Federal contractors. To the extent that there may be alignment 
between the

[[Page 68321]]

SEC's proposed rule and this rule if both are adopted, companies making 
these disclosures and users of the information (e.g., the Federal 
Government, investors, and other entities) will benefit from greater 
standardization of climate-related disclosures.

C. Estimated Public Costs

    The total estimated public costs associated with this FAR rule in 
millions over a ten-year period (calculated at a 3-percent and 7-
percent discount rate) are as follows:

------------------------------------------------------------------------
                                            3% Discount     7% Discount
             Estimated costs                   rate            rate
------------------------------------------------------------------------
Present Value...........................          $3,935          $3,262
Annualized..............................             461             464
------------------------------------------------------------------------

    The following is a summary from the Regulatory Impact Analysis 
(RIA) of the estimated costs impact for each general compliance 
requirement on significant and major contractors (see section II.A. of 
this preamble). The full RIA is available at https://www.regulations.gov (search for ``FAR Case 2021-015'' click ``Open 
Docket,'' and view ``Supporting Documents''). The RIA includes a 
detailed discussion of the assumptions and methodologies used to 
estimate the cost of this regulatory action, including the specific 
impact and costs for small businesses. On March 15, 2021, the SEC's 
Acting Chair Allison Herren Lee posted a request for information (RFI) 
on costs associated with preparation of annual climate disclosures for 
consideration in the development of their proposed rule (see discussion 
in section I of this preamble). Several respondents to the RFI provided 
specific cost data for companies that currently provide annual climate 
disclosures that align with the TCFD or other voluntary disclosure 
frameworks. Additionally, consulting firms submitted information on 
prices charged for associated climate consultant services. The cost 
information considered by the SEC in their proposing release was used 
to estimate the potential costs of this proposed FAR rule. This 
includes information provided in response to the RFI and information 
from the impact assessment produced by the United Kingdom (UK) 
Department for Business, Energy & Industrial Strategy, as part of its 
Green Finance Strategy, for a UK rule that requires certain TCFD-
aligned disclosures from suppliers (see https://assets.publishing.service.gov.uk/Government/uploads/system/uploads/attachment_data/file/1055931/tcfd-final-stage-ia.pdf).
1. Regulatory Familiarization
    Regulatory familiarization includes the amount of time and effort 
it takes a company to become familiar with the requirements of the 
proposed rule and the references standards. A page count of the rule, 
the various standards, the CDP Climate Change Questionnaire, and the 
SBTi Guidance is used to calculate the cost for regulatory 
familiarization. We assume individuals who review the documents will 
spend 6 minutes per page. Significant contractors (regardless of 
business size) and major contractors that are small businesses will be 
required to become familiar with the requirements of this rule and the 
GHG Protocol Corporate Standard (except Scope 3 guidance). The total 
page count is 360 pages, which take 36 hours per person to review (360 
pages * 0.1 hours/page). Major contractors that are other than small 
business will be required to become familiar with the rule and all GHG 
Protocol, TCFD, CDP, and SBTi guidance referenced in this rule. The 
total page count is 967 pages, which take 97 hours per person to review 
(967 pages * 0.1 hours/page rounded to the nearest whole number). The 
per entity and total costs are summarized as follows:
     For a significant contractor that is other than a small 
business, it is estimated that 1 manager at a rate of $94 per hour, 1 
management analyst at a rate of $77 per hour, and 2 business 
specialists at a rate of $61 per hour will review the relevant 
documents, a total cost of $10,548 per contractor. The total estimated 
cost for regulatory familiarization in the first year of implementation 
is $16,644,744 (1,578 contractors * $10,548/contractor).
     For a significant contractor that is a small business, it 
is estimated that 1 manager and 1 management analyst will review the 
relevant documents, a total cost of $6,156 per contractor. The total 
estimated cost is $17,452,260 (2,835 contractors * $6,156/contractor).
     For a major contractor that is other than a small 
business, it is estimated that 1 manager, 2 management analysts, and 4 
business specialists will review the relevant documents, a total cost 
of $47,724. The total estimated cost is $46,005,936 (964 contractors * 
$47,724/contractor).
     For a major contractor that is a small business, it is 
estimated that 1 manager and 1 business specialist will review the 
relevant documents, a total cost of $8,928 per contractor. The total 
estimated cost is $17,452,260 (389 contractors * $8,928/contractor).
2. Annual Representations
    All 491,690 entities that are registered in SAM as interested in 
pursuing Government contracts, of which 364,290 entities are considered 
small for their primary NAICS code, will be required to complete the 
first representation in SAM for the provision at FAR 52.223-22(d)(1) 
and/or the commercial provision at FAR 52.212-3(t)(3)(i) regarding 
whether they meet the definition of a significant or major contractor. 
It is estimated that, on average for each registration, it will take a 
business specialist six minutes at an hourly rate of $61 to determine 
whether they meet the definition of a significant or major contractor. 
The total estimated annual cost is $2,999,309 (491,690 registrants * 
0.1 hours/registrant * $61/hour), of which $2,222,169 is attributed to 
364,290 small businesses. The estimated cost to complete the 
representation is the same in subsequent years.
    The 5,766 significant and major contractors expected to be impacted 
by this rule will be required to complete the remaining representations 
regarding whether the offeror meets an exemption and whether the 
offeror (itself or through its immediate owner or highest-level owner) 
has completed the GHG inventory of scope 1 and 2 emissions, made an 
annual climate disclosure via CDP, and set science-based targets. It is 
estimated that, on average for each registrant, it will take a business 
specialist one hour to complete the remaining representations. The 
total estimated annual cost is $351,726 (5,766 registrants * 1 hour/
registrant * $61/hour), of which $196,664 is attributed to 3,224 small 
businesses. The estimated cost to complete the representations is the 
same in subsequent years.
3. GHG Inventory of Scope 1 and 2 Emissions
    The following is a summary of the costs for significant contractors

[[Page 68322]]

(regardless of size) and major contractors (small businesses only) to 
complete inventories of their Scope 1 and Scope 2 emissions. It is 
expected that a contractor will use a mix of internal personnel and 
external consultants to complete the annual greenhouse gas inventory. 
Internal personnel costs include the cost for contractor employees to 
gather, compile, and review GHG emissions data. A contractor may use 
external consultants to assist with, and advise on, GHG inventories. It 
is also assumed that contractors will see a 25 percent reduction in 
burden after the first year of implementation.
    For a significant contractor that is other than a small business, 
it is estimated that it takes two business specialists 40 hours each at 
an hourly rate of $61 to gather information, one management analyst 20 
hours at an hourly rate of $77 to process and compile the information, 
and one senior manager 2 hours at an hourly rate of $94 to review the 
compiled information. It is estimated that a significant contractor 
that is other than a small business will require approximately 409 
external consultant hours at an hourly rate of $104. The total 
estimated cost per entity is $63,868 in the initial year of 
implementation and $47,983 annually thereafter.
    For significant and major contractors that are small businesses, it 
is estimated that it will take half as much time to conduct a GHG 
inventory, or 20 hours for one business specialist, 10 hours for one 
management analyst, and 1 hour for one senior manager. These 
contractors are also estimated to require approximately 153 external 
consultant hours. The total estimated cost per entity is $24,724 in the 
initial year of implementation and $18,640 annually thereafter.
    Therefore, for the 1,578 other than small business significant 
contractors, the total estimated cost to conduct Scope 1 and 2 GHG 
inventories is $100,783,704 (1,578 contractors * $63,868/contractor) in 
the initial year of implementation and $75,717,174 (1,578 contractors * 
$47,983/contractor) annually thereafter. For the 2,835 significant 
contractors and 389 major contractors that are small businesses, the 
total estimated cost is $79,710,176 (3,224 contractors * $24,724/
contractor) in the initial year of implementation and $60,095,360 
(3,244 contractors * $18,640/contractor) annually thereafter.
4. Annual Climate Disclosure and Science-Based Targets
    The estimate of internal and external costs for major contractors 
that are other than small businesses to prepare an annual climate 
disclosure, submit the disclosure via the CDP Climate Change 
Questionnaire, set a science-based target, and have the target 
validated by SBTi, is based on cost information shared by respondents 
in response to the RFI. The RIA available at https://www.regulations.gov (search for ``FAR Case 2021-015'' click ``Open 
Docket,'' and view ``Supporting Documents'') includes a summary of the 
respondent information and assumptions made to estimate these costs. As 
stated in the SEC proposed rule, the respondents to the RFI provided 
information on general costs for climate disclosures. Some respondent 
estimates included costs for activities not covered by this rule, which 
is similar to the FAR rule. Other respondents provided an aggregate 
cost estimate making it difficult to determine how representative the 
costs are. Actual costs for individual contractors impacted by this 
rule may vary significantly depending on the contractor's size, 
industry, business model, corporate structure, level of experience with 
climate disclosures, etc.
    Approximately 671 of the 964 major contractors that are other than 
small businesses currently represent that they do not publicly disclose 
information about their emissions or reduction goals. As such, it is 
assumed that these contractors have no experience with climate 
disclosures or targets. It is estimated that these contractors will 
have internal personnel costs of approximately $257,103 and external 
consultant costs of approximately $201,600, a total of $458,703 per 
contractor in the first year of implementation. The estimated annual 
cost after the first year is $412,825, a 10 percent reduction. These 
contractors will also be required to pay a $9,500 fee for SBTi to 
validate their science-based target every five years, an annualized 
cost of $1,900 per year. Therefore, the total estimated cost for these 
major contractors is $309,064,613 (671 * $460,603/contractor) in the 
initial year of implementation, and $278,280,475 (671 * $414,725/
contractor) annually thereafter.
    Of the 964 major contractors that are other than small business, 
approximately 293 represent that they do publicly disclose information 
about their emissions. An analysis of the websites reported by these 
major contractors indicates that there are 122 distinct disclosures 
associated with these 293 contractors. In other words, of the 293 
contractors, approximately 42 percent appear to be disclosing data 
attributed to (or compiled by) their immediate or highest-level owner, 
whereas the other 58 percent are performing the calculations and 
compiling the climate disclosures directly. Given that these major 
contractors (or their owners) already have policies and procedures in 
place to inventory and publicly disclose their emissions (and in many 
cases to also set and disclose reduction goals), the burden associated 
with complying with this FAR rule is estimated to be 50 percent of the 
cost of starting with no prior disclosure experience. Therefore, it is 
estimated that the internal personnel and external consultant costs 
associated with these disclosures is approximately $229,390 in the 
first year of implementation and $206,451 annually thereafter. The 
$9,500 SBTi fee for validation of the science-based target also 
applies. Therefore, the total estimated costs attributed to this rule 
for the major contractors that currently disclose either themselves or 
through an immediate or highest-level owner is $28,217,380 (122 
disclosing entities * $231,290/entity) in the initial year of 
implementation and $25,418,822 (122 disclosing entities * $208,351/
entity) annually thereafter.
5. Summary of Public Costs
    The total estimated cost of compliance with this proposed rule is 
$604,702,840 in the initial year of implementation and $442,826,866 
annually thereafter.
D. Estimated Government Costs
    The total estimated Government costs associated with this FAR rule 
in millions over a ten-year period (calculated at a 3-percent and 7-
percent discount rate) are as follows:

------------------------------------------------------------------------
                                            3% Discount     7% Discount
             Estimated costs                   rate            rate
------------------------------------------------------------------------
Present Value...........................             $10              $8
Annualized..............................               1               1
------------------------------------------------------------------------


[[Page 68323]]

    This is a summary of the costs associated with this proposed rule. 
Additional information on this cost estimate in the RIA available at 
https://www.regulations.gov (search for ``FAR Case 2021-015'' click 
``Open Docket,'' and view ``Supporting Documents'').
1. Updates to SAM
    The Government will be required to update the representations 
associated with FAR 52.223-22 and 52.212-3 in SAM. The adjustment to 
the representation is considered a medium level of effort that will 
cost approximately $260,000 to complete.
2. Workforce Development
    Government contracting officers will need to become familiar with 
the new policy at FAR 23.XX, the new standard of responsibility at FAR 
9.104, and the representations in the provisions at FAR 52.223-22 and 
52.212-3. The procedures at FAR 23.XX05 provides tables to help 
contracting officers evaluate offeror representations. Similarly, FAR 
9.104-3(e) includes information on the type of information a 
contracting officer should request from an offeror that represents that 
it is in compliance with the new policy and the minimum requirements 
that must be met in order to determine a contractor responsible. No 
specialized training is required for Government contracting officers. 
The requirement to remain current on policies for Government 
procurement, such as changes to the FAR, is considered a part of the 
normal duties of contracting personnel. As such, this analysis does not 
quantify the time and effort for contracting officers to become 
familiar with the rule. In addition, there are Federal resources 
allocated to assisting small businesses in procurement, particularly in 
the Small Business Administration. It is acknowledged that this there 
is time and effort for these Federal workforces to become familiar with 
the rule or the tools available and to assist contractors with 
compliance, though those potential burden hours and costs are not 
quantified.
3. Responsibility Determinations
    Starting one year after publication of a final rule, Government 
contracting officers will begin validating prospective contractor 
representations for FAR 52.223-22(d) and 52.212-3(t)(3) to ensure that 
significant and major contractors have completed the GHG inventory of 
Scope 1 and 2 emissions. Starting two years after publication of a 
final rule, contracting officers will also validate that major 
contractors have completed annual climate disclosures and set a 
science-based targets. For each award, the contracting officer will log 
into https://www.sam.gov, search ``Entity Information'' for the 
prospective contractor, select the prospective contractor's 
registration, click on ``Reps and Certs,'' and (depending on the type 
of acquisition) click on FAR 52.212-3 or 52.223-22 to view the 
offeror's representations. If the prospective contractor represents 
that it is a significant or major contractor, then it must complete all 
of the remaining representations in the solicitation provision. The 
contracting officer may use the tables at FAR 23.XX05, Procedures, to 
assist in determining whether the prospective contractor is subject to 
an exception and, if not, whether the prospective contractor complies 
with the policy. Per FAR 23.XX05(c), a contracting officer may rely on 
these representations when making a responsibility determination, 
unless the contracting officer has reason to question the 
representation. If a representation indicates noncompliance, then the 
contracting officer will request additional information from the 
prospective contractor to assist in making a responsibility 
determination.
    It is not possible to quantify how often contracting officers will 
need to request additional information from prospective contractors. 
Most offerors registering in SAM will represent that they are not a 
significant or major contractor. It is expected that the majority of 
significant and major contractors will represent that they are in 
compliance with the new policy. While it will take longer for a 
contracting officer to review the representations for a significant or 
major contractor, it is estimated that it will take the contracting 
officer three minutes to review most representations. According to FPDS 
data for FY 2021, there were approximately 276,467 awards valued over 
the micro-purchase threshold, where contracting officers would be 
required to make a responsibility determination prior to awarding a 
contract. We assume that the majority of responsibility determinations 
are made by a GS-12/step 5 contracting officer at a loaded rate of $66 
per hour. Therefore, the total estimated cost is $912,341 (276,467 
awards * 0.05 hours/award * $66/hour).
4. Policy Development
    Contract policy offices for Government departments and agencies 
will need to develop procedures for requesting senior procurement 
executive (SPE) approval of waivers in accordance with FAR 23.XX06(b). 
Specifically, the SPE approve a waiver for specific facilities, 
business units, or other defined units for national security purposes 
or for emergencies, national security, or other mission essential 
purposes. In addition, the SPE may approve a waiver to enable a 
significant or major contractor to come into compliance with the policy 
at 23.XX03 for a period not to exceed 1 calendar year. Such waivers 
must be made publicly available on the agency's website. Developing 
policies and procedures to support the contracting activities of a 
department or agency are considered a part of the normal course of 
doing business for contract policy offices. As such, this analysis does 
not quantify the time and effort for contracting officers to become 
familiar with the rule.
5. Analysis of Annual Climate Disclosures
    The Government will also use the disclosures made pursuant to this 
FAR rule to inform development of policies and programs to reduce 
climate risks and GHG emissions associated with Federal procurement 
activities, and to incentivize and enable technologies critical to 
achieving a national economy and industrial sector that are resilient 
to the physical and transition risks of climate change and net zero 
emissions by 2050. As stated in OMB Memo M-22-06, to assist the Federal 
Government in assessing the results of efforts to reduce supply chain 
emissions, and as requested by CEQ and OMB, GSA will provide periodic 
recommendations on further actions to reduce supply chain emissions, 
based on information and data collected through supplier disclosures 
pursuant to this FAR rule and other publicly available information. The 
estimated annual cost for the Government to obtain a report of the data 
disclosed to CDP is $47,000. GSA further estimates that the annual cost 
to analyze the data provided is approximately $200,000.
6. Summary of Government Costs
    The total estimate cost to the Government in the initial year of 
implementation is $1,419,341. This includes the costs to update SAM, 
for reviewing offeror representations, and analyzing annual climate 
disclosure information. In subsequent years, the estimate cost to the 
Government is $1,159,341, which includes only the cost for reviewing 
offeror representations and analyzing annual climate disclosure 
information.

[[Page 68324]]

E. Total Estimated Costs
    The total estimated overall costs associated with this FAR rule in 
millions over a ten-year period (calculated at a 3-percent and 7-
percent discount rate) are as follows:

------------------------------------------------------------------------
                                            3% Discount     7% Discount
             Estimated costs                   rate           rate *
------------------------------------------------------------------------
Present Value...........................          $3,945          $3,270
Annualized..............................             462             466
------------------------------------------------------------------------
* Total of Government and public costs is higher due to rounding.

F. Alternatives Considered
    The Government considered other mechanisms for enforcement of the 
compliance requirements. One alternative was to use a contract clause 
to require submission of the GHG inventory, annual climate disclosure, 
and validated science-based target as a deliverable under Government 
contracts. However, given the intent to require disclosure at the 
entity-level, disclosure on a contract-by-contract basis is not 
appropriate.
    The Government also considered making noncompliance a go/no-go 
decision for award. In this alternative, a significant or major 
contractor would be ineligible for award of Government contracts unless 
the significant or major contractor represents that it complies with 
the new policy. The Government ultimately determined that treatment of 
contractor compliance as a matter of responsibility, not only 
establishes the Government's position that responsible contractors take 
action to address and reduce climate-related financial risk, but also 
allows contracting officers some flexibility to determine what actions 
a noncompliant contractor has taken to comply.
    The Government also considered the following thresholds when 
establishing a definition of ``major Federal supplier,'' the term used 
in E.O. 14030: $7.5 million, $50 million, and $250 million. The 
Government also considered whether the threshold should be based on the 
total Government contract award value, or the total Government contract 
funds obligated. Currently, many larger Federal suppliers provide some 
disclosure, but few set science-based targets. Even fewer smaller 
suppliers disclose GHG emissions and climate-related risk, and science-
based targets are very rare. Ultimately, the Government settled on dual 
thresholds to ensure smaller Federal suppliers (i.e., ``significant 
contractors'' with $7.5 million to $50 million in obligations in the 
prior FY) take steps to understand their GHG emissions and the larger 
Federal suppliers (i.e., ``major contractors'' with more than $50 
million in obligations in the prior FY) take steps to disclose climate-
related financial risks and to reduce their GHG emissions.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is anticipated to be an economically significant regulatory action 
and, therefore, was subject to review under section 6(b) of E.O. 12866, 
Regulatory Planning and Review, dated September 30, 1993.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD, GSA, and NASA will 
send the rule and the ``Submission of Federal Rules Under the 
Congressional Review Act'' form to each House of the Congress and to 
the Comptroller General of the United States. A major rule cannot take 
effect until 60 days after it is published in the Federal Register. 
This proposed rule is anticipated to be a major rule under 5 U.S.C. 
804.

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA expect this rule may have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601-612. An Initial Regulatory 
Flexibility Analysis (IRFA) has been performed and is summarized as 
follows:

    DoD, GSA, and NASA are proposing to amend the FAR to implement 
section 5(b)(i) of E.O. 14030, Climate-Related Financial Risk. 
Section 5(b)(i) of the E.O. directs the Federal Acquisition 
Regulatory Council to ensure that major Federal suppliers publicly 
disclose their greenhouse gases and climate-related financial risk 
and set science-based targets.
    The objective of this rule is to implement the E.O. by creating 
a new FAR subpart at 23.XX, which establishes the requirement for a 
major Federal supplier to publicly disclose certain climate 
information. For the purposes of this rule, a major Federal supplier 
is categorized as either a significant contractor or a major 
contractor. A significant contractor is an offeror who received $7.5 
million or more, but not exceeding $50 million, in Federal contract 
obligations in the prior Federal fiscal year. A major contractor is 
an offeror who received more than $50 million in Federal contract 
obligations in the prior Federal fiscal year. The legal basis for 
this rule is 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 
20113.
    Per the new policy proposed at 23.XX03, a contracting officer 
will presume that an offeror who is a significant or major 
contractor is nonresponsible unless--
     Starting one year after publication of a final rule, 
the significant or major contractor (itself or through its immediate 
owner or highest-level owner) has completed a GHG inventory of the 
annual Scope 1 and Scope 2 GHG emissions within its current or 
previous fiscal year, and the significant or major contractor has 
reported the total annual Scope 1 and Scope 2 emissions from its 
most recent inventory in SAM at https://www.sam.gov; and
     Starting two years after publication of a final rule, 
the major contractor (itself or through its immediate owner or 
highest-level owner) has submitted an annual climate disclosure 
within its current or previous fiscal year by completing those 
portions of the CDP Climate Change Questionnaire that align with the 
TCFD and has developed a science-based target and had the reduction 
target validated by SBTi within the previous five calendar years.
    This proposed rule provides exceptions at FAR 23.XX04(a). A 
significant or major contractor is not required to complete a GHG 
inventory of Scope 1 and Scope 2 emissions, if it is one of the 
following: an Alaska Native Corporation, a Community Development 
Corporation, an Indian tribe, a Native Hawaiian Organization, or a 
Tribally owned concern, as those terms are defined at 13 CFR 124.3; 
a higher education institution (defined as institutions of higher 
education in the OMB Uniform Guidance at 2 CFR part 200, subpart A, 
and 20 U.S.C. 1001); a nonprofit research entity; or, an entity 
deriving 80 percent or more of its annual revenue from Federal M&O 
contracts that are subject to agency annual site sustainability 
reporting requirements. Per 23.XX04(b), a major

[[Page 68325]]

contractor who is registered in SAM as a small business for its 
primary NAICS code or is a nonprofit organization, is exempt from 
the requirement to complete an annual climate disclosure and to set 
a science-based target.
    This proposed rule will revise the annual representations in the 
provisions at FAR 52.223-22 and 52.212-3 to collect information a 
contracting officer will need to determine whether an offeror is a 
significant or major contractor is in compliance with the new 
policy. The contracting officer will follow the proposed procedures 
at FAR 23.XX05 and FAR 9.104-3(e) when making the responsibility 
determination.
    According to SAM, as of January 2022, 491,690 entities are 
registered in SAM, of which approximately 364,290 (74 percent) were 
registered as small for their primary NAICS code. According to award 
data available in FPDS for FY 2021, there were approximately 4,413 
entities that meet the definition of a significant contractors and 
are not subject to an exception, of which 2,835 (64 percent) are 
estimated to be small businesses. There were approximately 1,353 
entities that meet the definition of a major contractor, of which 
389 (29 percent) are estimated to be small businesses.
    SAM registrants will be required to complete annual 
representations and certifications in SAM will be required to 
complete the first representation in FAR 52.223-22(d)(1) (or the 
equivalent representation in the commercial provision in FAR 52.212-
3(t)(3)(i)) regarding whether the registrant meets the definitions 
of a significant or major contractor. A registrant that represents 
that it is a significant or major contractor, will be required to 
complete the remaining representations in FAR 52.223-22(d)(2) 
through (5) (or equivalent representations in FAR 52.212-3(t)(3)(ii) 
through (v)) regarding whether they have conducted a GHG inventory, 
made an annual climate disclosure, and a set science-based target. 
Starting one year after publication of a final rule, significant or 
major contractors will be required to have conducted (itself or 
through its immediate or highest-level owner) within its current or 
previous FY a GHG inventory of its annual Scope 1 and 2 emissions 
and reported in SAM the results of its most recent inventory.
    A significant or major contractor that represents that it has 
not conducted a GHG inventory of its annual Scope 1 and Scope 2 
emissions or has not provided the results of the most recent 
inventory in SAM, will be presumed to be a nonresponsible 
prospective contractor. In such cases the contracting officer will 
follow the proposed procedures at FAR 9.104-3(e) and seek 
information from the significant contractor on the efforts it has 
made to comply before making a responsibility determination. Per the 
existing procedures at FAR 9.104-3(d)(1), upon making a 
determination of nonresponsibility with regard to a small business 
concern, the contracting officer shall refer the matter to the Small 
Business Administration, which will decide whether to issue a 
Certificate of Competency (see FAR subpart 19.6).
    A RIA has been prepared for this proposed FAR rule, which 
includes a detailed discussion and explanation about the assumptions 
and methodology used to estimate the cost of this regulatory action, 
including the specific impact and costs for small businesses. Costs 
for small businesses expected to be impacted by this rule include 
the cost of regulatory familiarization, completing the annual SAM 
representations, and conducting the Scope 1 and 2 GHG inventory each 
year. The total estimated cost to small businesses is $103,054,261 
(17 percent of the total estimated public costs) in the initial year 
of implementation and $62,514,193 (14 percent of the total estimated 
public cost) in subsequent years. The following is a summary of the 
estimated cost of per entity for small business significant and 
major contractors:

                                     Estimated Cost of Compliance per Entity
----------------------------------------------------------------------------------------------------------------
                   Entity type                        Significant contractor             Major contractor
----------------------------------------------------------------------------------------------------------------
                                                                    Subsequent                      Subsequent
             Compliance requirement                Initial year        years       Initial year        years
----------------------------------------------------------------------------------------------------------------
Familiarization.................................          $6,156             N/A          $8,928             N/A
First SAM Rep...................................               6              $6               6              $6
Other SAM Reps..................................              61              61              61              61
GHG Inventory...................................          24,724          18,640          24,724          18,640
                                                 ---------------------------------------------------------------
    Total Cost..................................          30,947          18,707          33,719          18,707
----------------------------------------------------------------------------------------------------------------

    A summary of the RIA is provided in section IV. of this 
preamble. The full RIA is available at https://www.regulations.gov 
(search for ``FAR Case 2021-015'' click ``Open Docket,'' and view 
``Supporting Documents'').
    The SEC is proposing to require climate-related financial risk 
disclosures from SEC registrants, including publicly listed/traded 
companies (see 87 FR 21334, April 11, 2022). Both the SEC proposed 
rule and the FAR proposed rule leverage the GHG Protocol Corporate 
Accounting and Reporting Standard; therefore, the rules are 
considered to be in alignment. Per the exceptions at FAR 23.XX04(b), 
the requirement to provide an annual climate disclosure and set a 
science-based target is not applicable to a company that is 
registered in SAM as a small business for its primary NAICS code.
    The burden imposed on small entities is the minimum necessary to 
implement the requirements of section 5(b)(i) of E.O. 14030. To 
minimize the burden on Federal contractors, this rule leverages 
standards that are widely used by companies to inventory their GHG 
emissions and analyze their climate risks. Efforts were also taken 
to align with the approach of the SEC proposed rule, which further 
minimizes burden for small businesses. As a result of this rule, a 
small business that received $7.5 million in Federal contract 
obligations in the prior Federal fiscal year is considered a 
significant contractor and will be required to complete the GHG 
inventory of Scope 1 and Scope 2 emissions. However, those entities 
that received more than $50 million in Federal contract obligations 
in the prior Federal fiscal year (a major contractor) and are 
registered in SAM as a small business for their primary NAICS code 
are exempt from the requirement to complete an annual climate 
disclosure and set a science-based target. Several alternatives were 
considered but not accepted as they would not accomplish the 
intended policy objective of the E.O. The alternatives considered 
include:
     Exemption for small business. One alternative 
considered was an exemption for small businesses who are significant 
contractors from the requirement to inventory and publicly disclose 
their Scope 1 and 2 emissions. It was determined that the limited 
Scope 1 and 2 reporting will be beneficial for these small 
businesses and the Government. By inventorying their Scope 1 and 2 
emissions, small businesses--including those that are not ``carbon 
intensive'' can find opportunities to minimize climate risks both in 
their operations and their own supply chains. This rule will also 
prepare these small businesses to respond to requests for similar 
data from customers besides the Federal Government. It is also 
beneficial for the Government to collect this data from these small 
businesses to have a more complete understanding of the impact of 
GHG emissions on the Federal supply chain and to calculate its own 
emissions and set its own reduction targets.
     Delayed or rolling compliance dates. Another 
alternative considered was a delay in the effective date of the 
Scope 1 and 2 reporting requirements for small business significant 
contractors. Consideration was given to a two-year delay, or a 
rolling effective date based on Federal contract obligations in the 
prior fiscal year. Ultimately, it was determined that given the 
widely adopted and simple exercise of quantifying Scope 1 and 2 
emissions, and the E.O. target of a net-zero emissions economy by no 
later than 2050, it may be confusing

[[Page 68326]]

to have separate tiers and timelines for significant contractor 
reporting while failing to advance the E.O.'s stated goals. 
Furthermore, since GHG emissions inventory occurs once a year 
retroactively based on the previous year's data, no additional 
actions or changes to business practice would need to be taken to 
prepare for this reporting, and thus there would be no minimized 
burden from a delay.
     Use other sources of data. Other sources of data on 
Scope 1 and 2 emissions were also considered, such as current CDP 
data, corporate websites, and/or corporate reports. Third party 
``modeled emissions'' using industry averages were also considered. 
However, it was determined that this alternative would not advance 
the stated target of the E.O. for a variety of reasons: the lack of 
standardization, reduced accuracy of models to capture the actual 
business practices unique to producing goods and services for the 
Federal Government, and the lack of GHG emissions reporting by many 
small businesses. Furthermore, the burden to comply with this 
proposed rule for small businesses who currently inventory their GHG 
emissions will be extremely low, only requiring two numbers the 
entity has already generated (or are easily calculated using free 
Excel tools) to be entered into SAM.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. DoD, GSA, and NASA invite comments from small 
business concerns and other interested parties on the expected impact 
of this rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2021-015), 
in correspondence.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies because 
the proposed rule contains information collection requirements. 
Accordingly, the Regulatory Secretariat Division has submitted to OMB a 
request for approval of a revision to ``OMB Control Number 9000-0107, 
Federal Acquisition Regulation Part 23 Requirements'' concerning the 
information collection requirements in the provision at FAR 52.223-22 
or its equivalent at FAR 52.212-3(t).

A. Public Reporting Burden

    Public reporting burden for the following collections of 
information include the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information in the provision 
at FAR 52.223-22 or its equivalent at 52.212-3(t). The contracting 
officer uses this information to determine whether a prospective 
contractor is a significant or major contractor and, if so, if the 
prospective contractor is responsible (see FAR 9.104-3(e)). A 
prospective contractor that is a significant or major contractor is 
presumed to be nonresponsible if it represents that it is not in 
compliance with the GHG inventory, annual climate disclosure, and 
science-based target setting requirements, as applicable. In such 
situations the contracting officer will ask for additional information 
from the prospective contractor to determine what efforts have been 
made to comply. The Government will also use the disclosures made 
pursuant to this FAR rule to inform development of policies and 
programs to reduce climate risks and GHG emissions associated with 
Federal procurement activities, and to incentivize and enable 
technologies critical to achieving a national economy and industrial 
sector that are resilient to the physical and transition risks of 
climate change and net zero emissions by 2050. As stated in OMB 
Memorandum M-22-06, to assist the Federal Government in assessing the 
results of efforts to reduce supply chain emissions, and as requested 
by CEQ and OMB, GSA will provide periodic recommendations on further 
actions to reduce supply chain emissions, based on information and data 
collected through supplier disclosures pursuant to this FAR rule and 
other publicly available information.
1. First Representation
    The representations in the provision at FAR 52.223-22 (and the 
commercial equivalent at FAR 52.212-3(t)) are being revised to require 
an offeror, when initially registering or when updating a registration 
in SAM at https://www.sam.gov, to represent whether it is a significant 
or major contractor. A significant contractor is an offeror who 
received $7.5 million or more in Federal contract obligations in the 
prior Federal fiscal year. A major contractor is an offeror who 
received $50 million or more in Federal contract obligations in the 
prior Federal fiscal year. Public reporting burden for this collection 
of information is estimated to average 0.1 hours per response. The 
annual reporting burden is estimated as follows:
    Respondents: 491,690.
    Total Annual Responses: 491,690.
    Total Burden Hours: 49,169.
2. Remaining Representations
    If the offeror represents that it is a significant or major 
contractor, then the offeror is required to complete additional 
representations in the provision regarding whether it meets an 
exception and whether it has (itself or through its immediate owner or 
highest-level owner) completed a GHG inventory of Scope 1 and 2 
emissions, provided an annual climate disclosure, and set a science-
based target. If an offeror represents that it publicly discloses an 
annual climate disclosure or science-based target, it also must report 
the websites where disclosures and targets are made publicly available. 
Public reporting burden for this collection of information is estimated 
to average one hour per response. The annual reporting burden is 
estimated as follows:
    Respondents: 5,766.
    Total Annual Responses: 5,766.
    Total Burden Hours: 5,766.
3. GHG Inventory of Scope 1 and 2 Emissions
    Unless an exception at 23.XX04(a) applies, a significant or major 
contractor must (itself or through its immediate owner or highest-level 
owner) conduct a GHG inventory of the annual Scope 1 and Scope 2 
emissions. The significant or major contractor itself must report the 
results of the most recent GHG inventory in SAM. Public reporting 
burden for the GHG inventory of Scope 1 and 2 emissions is estimated to 
average approximately 255 hours per response. The annual reporting 
burden is estimated as follows:
    Respondents: 4,802.
    Total Annual Responses: 4,802.
    Total Burden Hours: 1,222,983.
4. Annual Climate Disclosure and Science-Based Targets
    Unless an exception at 23.XX04(b) applies, a major contractor must 
submit an annual climate disclosure and set science-based targets. To 
make the annual climate disclosure, the major contractor must (itself 
or through its immediate owner or highest-level owner) conduct a GHG 
inventory of relevant Scope 3 emissions (in addition to the Scope 1 and 
2 inventory), conduct a climate risk assessment, develop disclosures 
aligned with the Recommendations of the Task Force on Climate Related 
Financial Risk, and complete relevant portions of the CDP (formerly 
Carbon Disclosure Project) Climate Change Questionnaire within its 
previous or current fiscal year. The major contractor must (itself or 
through its immediate owner or highest-level

[[Page 68327]]

owner) also set science-based targets to reduce its emissions and have 
the science-based targets validated by SBTi within the previous five 
calendar years. A major contractor will likely support its preparation 
of the disclosure and setting targets. Public reporting burden for the 
annual climate disclosure is estimated to average approximately 1,946 
hours per response. The annual reporting burden is estimated as 
follows:
    Respondents: 793.
    Total Annual Responses: 793.
    Total Burden Hours: 3,265,025.

B. Request for Comments Regarding Paperwork Burden

    Submit comments on this collection of information no later than 
January 13, 2023 through https://www.regulations.gov and follow the 
instructions on the site. All items submitted must cite OMB Control No. 
9000-0107, Federal Acquisition Regulation Part 23 Requirements. 
Comments received generally will be posted without change to https://www.regulations.gov, including any personal and/or business 
confidential information provided. To confirm receipt of your 
comment(s), please check https://www.regulations.gov, approximately two 
to three days after submission to verify posting. If there are 
difficulties submitting comments, contact the GSA Regulatory 
Secretariat Division at 202-501-4755 or [email protected].
    Public comments are particularly invited on:
     The necessity of this collection of information for the 
proper performance of the functions of Federal Government acquisitions, 
including whether the information will have practical utility;
     The accuracy of the estimate of the burden of this 
collection of information;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
     Ways to minimize the burden of the collection of 
information on respondents, including the use of automated collection 
techniques or other forms of information technology.
    Requesters may obtain a copy of the supporting statement from the 
General Services Administration, Regulatory Secretariat Division by 
calling 202-501-4755 or emailing [email protected]. Please cite OMB 
Control Number 9000-0107, Federal Acquisition Regulation Part 23 
Requirements, in all correspondence.

List of Subjects in 48 CFR Parts 1, 4, 9, 23, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 1, 4, 
9, 23, and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 4, 9, 23, and 52 
continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

0
2. In section 1.106, amend the table by revising the entry for 
``52.223-22'' to read as follows:


1.106  OMB approval under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                            OMB control
                       FAR segment                              No.
------------------------------------------------------------------------
 
                                * * * * *
52.223-22...............................................       9000-0107
 
                                * * * * *
------------------------------------------------------------------------

PART 4--ADMINISTRATIVE AND INFORMATION MATTERS

0
3. Amend section 4.1202 by revising paragraph (a)(26) to read as 
follows:


4.1202   Solicitation provision and contract clause.

    (a) * * *
    (26) 52.223-22, Public Disclosure of Climate Information--
Representation.
* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

0
4. Amend section 9.104-1 by revising paragraph (g) to read as follows:


9.104-1   General standards.

* * * * *
    (g) Be otherwise qualified and eligible to receive an award under 
applicable laws and regulations (for example, see the inverted domestic 
corporation prohibition at 9.108 and requirements at 9.104-3(e) and 
subpart 23.XX for certain contractors to disclose climate information).
0
5. Amend section 9.104-3 by adding paragraph (e) to read as follows:


9.104-3   Application of standards.

* * * * *
    (e) Public disclosure of climate information. Starting on the dates 
specified at 23.XX03(a) and (b), the following procedures apply:
    (1) Except as provided in paragraph (e)(3) of this section, the 
contracting officer shall presume that a prospective contractor is 
nonresponsible pursuant to 9.104-1 if the prospective contractor is a 
significant or major contractor (see definitions in 23.XX02) who has 
not complied with the policy at 23.XX03 (see procedures at 23.XX05), 
unless the contracting officer determines that--
    (i) The noncompliance resulted from circumstances properly beyond 
the prospective contractor's control;
    (ii) The prospective contractor has provided documentation 
sufficient for purposes of award that demonstrates substantial efforts 
taken to comply, e.g., the prospective contractor has performed one or 
more of the actions described in 23.XX03; and
    (iii) The prospective contractor has made a public commitment to 
comply as soon as possible (within 1 calendar year) on a publicly 
accessible website as defined at 23.XX02.
    (2) When making the determination, the contracting officer shall--
    (i) Request information from the prospective contractor to 
determine what efforts it has made to comply and the basis for its 
failure to comply; and
    (ii) Consider the information provided by the prospective 
contractor relevant to each requirement at 23.XX03 and determine 
responsibility based on the prospective contractor's efforts to comply 
with each requirement.
    (3) Upon making a determination of nonresponsibility with regard to 
a small business concern, the contracting officer shall refer the 
matter to the Small Business Administration in accordance with 
paragraph (d)(1) of this section.
    (4) A significant or major contractor is not subject to the 
standard in paragraph (e)(1) of this section if--
    (i) It is an entity described in 23.XX04(a);
    (ii) For a major contactor, it is an entity described in 
23.XX04(b); or
    (iii) An exemption or waiver described in 23.XX06 applies.

PART 23--ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY 
TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

0
6. Amend section 23.001 by removing the definition ``Greenhouse gases'' 
and adding a definition for ``Greenhouse gas'' in its place to read as 
follows:

[[Page 68328]]

23.001   Definitions.

* * * * *
    Greenhouse gas means carbon dioxide, methane, nitrous oxide, 
hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, or sulfur 
hexafluoride.
* * * * *
0
7. Revise section 23.800 to read as follows:


23.800   Scope of subpart.

    (a) This subpart sets forth policies and procedures for the 
acquisition of items that--
    (1) Contain, use, or are manufactured with ozone-depleting 
substances; or
    (2) Contain or use high global warming potential 
hydrofluorocarbons.
    (b) For coverage of public disclosure of climate information, 
including greenhouse gas emissions, see subpart 23.XX.


23.802   [Amended]

0
8. Amend section 23.802 by--
0
a. In paragraph (a), removing the words ``release or'' and adding 
``release, or'' in its place, and adding the word ``and'' to the end of 
the paragraph after the semicolon;
0
b. In paragraph (b)(2), removing the semicolon and adding a period in 
its place; and
0
c. Removing paragraphs (c) and (d).
0
9. Revise section 23.804 to read as follows:


23.804   Contract clauses.

    Except for contracts for supplies that will be delivered outside 
the United States and its outlying areas, or contracts for services 
that will be performed outside the United States and its outlying 
areas, insert the following clauses:
    (a) 52.223-11, Ozone-Depleting Substances and High Global Warming 
Potential Hydrofluorocarbons, in solicitations and contracts for--
    (1) Refrigeration equipment (in product or service code (PSC) 
4110);
    (2) Air conditioning equipment (PSC 4120);
    (3) Clean agent fire suppression systems/equipment (e.g., installed 
room flooding systems, portable fire extinguishers, aircraft/tactical 
vehicle fire/explosion suppression systems) (in PSC 4210);
    (4) Bulk refrigerants and fire suppressants (in PSC 6830);
    (5) Solvents, dusters, freezing compounds, mold release agents, and 
any other miscellaneous chemical specialty that may contain ozone-
depleting substances or high global warming potential 
hydrofluorocarbons (in PSC 6850);
    (6) Corrosion prevention compounds, foam sealants, aerosol mold 
release agents, and any other preservative or sealing compound that may 
contain ozone-depleting substances or high global warming potential 
hydrofluorocarbons (in PSC 8030);
    (7) Fluorocarbon lubricants (primarily aerosols) (in PSC 9150); and
    (8) Any other manufactured end products that may contain or be 
manufactured with ozone-depleting substances.
    (b) 52.223-12, Maintenance, Service, Repair, or Disposal of 
Refrigeration Equipment and Air Conditioners, in solicitations and 
contracts that include the maintenance, service, repair, or disposal 
of-
    (1) Refrigeration equipment, such as refrigerators, chillers, or 
freezers; or
    (2) Air conditioners, including air conditioning systems in motor 
vehicles.
    (c) 52.223-20, Aerosols, in solicitations and contracts--
    (1) For products that may contain high global warming potential 
hydrofluorocarbons as a propellant, or as a solvent; or
    (2) That involve maintenance or repair of electronic or mechanical 
devices.
    (d) 52.223-21, Foams, in solicitations and contracts for--
    (1) Products that may contain high global warming potential 
hydrofluorocarbons or refrigerant blends containing hydrofluorocarbons 
as a foam blowing agent, such as building foam insulation or appliance 
foam insulation; or
    (2) Construction of buildings or facilities.
0
10. Add subpart 23.XX to read as follows:

Subpart 23.XX--Public Disclosure of Climate Information

Sec.
23.XX00 Scope.
23.XX01 Authorities.
23.XX02 Definitions.
23.XX03 Policy.
23.XX04 Exceptions.
23.XX05 Procedures.
23.XX06 Exemptions and waivers.
23.XX07 Solicitation provision.

Subpart 23.XX--Public Disclosure of Climate Information


23.XX00   Scope.

    This subpart implements requirements for certain Federal 
contractors to publicly disclose their greenhouse gas emissions and 
climate-related financial risk and to set science-based targets to 
reduce their greenhouse gas emissions.


23.XX01   Authorities.

    (a) Section 1 of Executive Order 13990 of January 20, 2021, 
Protecting Public Health and the Environment and Restoring Science to 
Tackle the Climate Crisis.
    (b) Section 206 of Executive Order 14008 of January 27, 2021, 
Tackling the Climate Crisis at Home and Abroad.
    (c) Section 5(b)(i) of Executive Order 14030 of May 20, 2021, 
Climate-Related Financial Risk.
    (d) Section 302 of Executive Order 14057 of December 8, 2021, 
Catalyzing Clean Energy Industries and Jobs Through Federal 
Sustainability, and section II.1. of the accompanying Office of 
Management and Budget Memorandum M-22-06.


23.XX02   Definitions.

    As used in this subpart--
    Annual climate disclosure means an entity's set of disclosures 
that--
    (1) Aligns with--
    (i) The 2017 Recommendations of the Task Force on Climate-Related 
Financial Disclosures (TCFD) (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf), which cover governance, 
strategy, risk management, and metrics and targets (see figure 4 of the 
2017 recommendations for an outline of disclosures); and
    (ii) The 2021 TCFD Annex: Implementing the Recommendations of the 
Task Force on Climate-related Financial Disclosures, which includes 
updates to reflect the evolution of disclosure practices, approaches, 
and user needs (see https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf); and
    (2) Includes--
    (i) A greenhouse gas inventory of its Scope 1, Scope 2, and 
relevant Scope 3 emissions; and
    (ii) Descriptions of the entity's climate risk assessment process 
and any risks identified.
    Greenhouse gas inventory means a quantified list of an entity's 
annual greenhouse gas emissions that--
    (1) Represents emissions during a continuous period of 12 months, 
ending not more than 12 months before the inventory is completed; and
    (2) Is conducted in accordance with the Greenhouse Gas Protocol 
Corporate Accounting and Reporting Standard, which includes the 
following, as applicable:
    (i) Greenhouse Gas Protocol Corporate Standard, 2004 revised 
edition (see https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf).
    (ii) Required Greenhouse Gases in Inventories: Accounting and 
Reporting

[[Page 68329]]

Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
    (iii) GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf).
    (iv) GHG Protocol Corporate Value Chain (Scope 3) Accounting and 
Reporting Standard Guidance, 2011 (see https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf).
    Highest-level owner means the entity that owns or controls an 
immediate owner of the offeror, or that owns or controls one or more 
entities that control an immediate owner of the offeror. No entity owns 
or exercises control of the highest-level owner.
    Immediate owner means an entity, other than the offeror, that has 
direct control of the offeror. Indicators of control include, but are 
not limited to, one or more of the following: ownership or interlocking 
management, identity of interests among family members, shared 
facilities and equipment, and the common use of employees.
    Major contractor means an offeror who received more than $50 
million in total Federal contract obligations (as defined in OMB 
Circular A-11) in the prior Federal fiscal year as indicated in the 
System for Award Management at https://www.sam.gov.
    Publicly accessible website means a website that the general public 
can discover using commonly used search engines and read without cost. 
It includes a website of the offeror or a website managed by a 
recognized third-party greenhouse gas emissions reporting program.
    Science-based target means a target for reducing greenhouse gas 
emissions that is in line with reductions that the latest climate 
science deems necessary to meet the goals of the Paris Agreement to 
limit global warming to well below 2[deg]C above pre-industrial levels 
and pursue efforts to limit warming to 1.5[deg]C (see SBTi frequently 
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science 
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special 
Report on 1.5[deg]C at https://www.ipcc.ch/sr15/.
    Scope 1 emissions means direct greenhouse gas emissions from 
sources that are owned or controlled by the reporting entity.
    Scope 2 emissions means indirect greenhouse gas emissions 
associated with the generation of electricity, heating and cooling, or 
steam, when these are purchased or acquired for the reporting entity's 
own consumption but occur at sources owned or controlled by another 
entity.
    Scope 3 emissions means greenhouse gas emissions, other than those 
that are Scope 2 emissions, that are a consequence of the operations of 
the reporting entity but occur at sources other than those owned or 
controlled by the entity.
    Significant contractor means an offeror who received $7.5 million 
or more, but not exceeding $50 million, in total Federal contract 
obligations (as defined in OMB Circular A-11) in the prior Federal 
fiscal year as indicated in the System for Award Management at https://www.sam.gov.


23.XX03   Policy.

    The Government's policy is that the contracting officer shall treat 
a prospective contractor that is a significant or major contractor as 
nonresponsible under 9.104-3(e), except as provided in sections 23.XX04 
and 23.XX06, unless the following requirements are met:
    (a) Significant and major contractors. Starting on [date 1 year 
after publication of a final rule], the significant or major contractor 
(see 23.XX02) has--
    (1) Completed (itself or through its immediate owner or highest-
level owner) within its current or previous fiscal year a greenhouse 
gas inventory of its annual Scope 1 and Scope 2 emissions; and
    (2) Reported in the System for Award Management (SAM) (https://www.sam.gov) the total annual Scope 1 and Scope 2 emissions identified 
through its most recent greenhouse gas inventory.
    (b) Major contractors. Starting on [date 2 years after publication 
of final rule], the major contractor has (itself or through its 
immediate owner or highest-level owner)--
    (1) Submitted an annual climate disclosure, as defined in 23.XX02, 
by completing those portions of the CDP Climate Change Questionnaire 
that align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) within its 
current or previous fiscal year and made the annual climate disclosure 
available on a publicly accessible website; and
    (2) Developed a science-based target, as defined in 23.XX02; had 
the science-based target validated by the Science-Based Targets 
Initiative (see https://sciencebasedtargets.org/) within the previous 5 
calendar years; and made the validated science-based target available 
on a publicly accessible website.


23.XX04   Exceptions.

    (a) The requirements in section 23.XX03(a) and (b) do not apply to 
a significant or major contractor who is--
    (1) An Alaska Native Corporation, a Community Development 
Corporation, an Indian tribe, a Native Hawaiian Organization, or a 
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
    (2) A higher education institution (defined as institutions of 
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart 
A, and 20 U.S.C. 1001);
    (3) A nonprofit research entity;
    (4) A state or local government; or
    (5) An entity deriving 80 percent or more of its annual revenue 
from management and operating contracts (see subpart 17.6) that are 
subject to agency annual site sustainability reporting requirements.
    (b) The requirements in paragraph (b) of section 23.XX03 do not 
apply to a major contractor who is--
    (1) Considered a small business for the North American Industry 
Classification System (NAICS) code identified in its SAM registration 
as its primary NAICS code; or
    (2) A nonprofit organization.


23.XX05   Procedures.

    (a) Starting on [date 1 year after publication of a final rule], 
unless an exemption or waiver applies in accordance with section 
23.XX06, the contracting officer shall review an offeror's 
representations in paragraph (d) of the provision at 52.223-22 or its 
equivalent at 52.212-3(t)(3) (see paragraph (b) of this section) when 
determining whether the offeror is a responsible prospective contractor 
(see section 9.104-3).
    (1) Other than a significant or major contractor. If an offeror 
represents in 52.223-22(d)(1) that it ``is not'' a significant 
contractor and ``is not'' a major contractor, then the offeror is not 
subject to the policy at 23.XX03 and no other representations are 
required.
    (2) Significant contractor. If an offeror represents that it ``is'' 
a significant contractor (see 52.223-22(d)(1)(i)) and ``is not'' an 
excepted entity (see 52.223-22(d)(2)(i)), the following responses 
indicate that the offeror is in compliance with the policy at 
23.XX03(a):

[[Page 68330]]



                         Significant Contractors
------------------------------------------------------------------------
     Representations in 52.223-22(d) or
        equivalent at 52.212-3(t)(3)              Offeror responses
------------------------------------------------------------------------
(i) Paragraph (d)(3)(i) or (t)(3)(iii)(A).   Response must be ``has''.
 Greenhouse gas inventory..
(ii) Paragraph (d)(3)(ii) or                 Scope 1 and Scope 2 totals
 (t)(3)(iii)(B). Greenhouse gas inventory..   must be provided.
(iii) Paragraph (d)(4) or (t)(3)(iv).        Response may be ``does'' or
 Annual climate disclosure..                  ``does not''.
(iv) Paragraph (d)(5) or (t)(3)(v). Science- Response may be ``does'' or
 based targets..                              ``does not''.
------------------------------------------------------------------------

    (3) Major contractor. Starting on [date 2 years after publication 
of a final rule], if an offeror represents that it ``is'' a major 
contractor (see 52.223-22(d)(1)(ii)) and ``is not'' an excepted entity 
(see 52.223-22(d)(2)(i)), the following responses indicate that the 
offeror is in compliance with the policy at 23.XX03(b):

                            Major Contractors
------------------------------------------------------------------------
                                            Offeror responses
                                ----------------------------------------
Representations in 52.223-22(d)                        Other than small
or equivalent at 52.212-3(t)(3)   Small business or       business or
                                      nonprofit            nonprofit
                                     organization        organization
------------------------------------------------------------------------
(i) Paragraph (d)(2)(ii) or      If Offeror checked   If Offeror checked
 (t)(3)(ii)(B). Excepted          ``is'' for (A) or    ``is not'' for
 entities..                       (B), then:           (A) and (B),
                                                       then:
(ii) Paragraph (d)(3)(i) or      Response must be     Response must be
 (t)(3)(iii)(A). Greenhouse gas   ``has''.             ``has''.
 inventory..
(iii) Paragraph (d)(3)(ii) or    Scope 1 and Scope 2  Scope 1 and Scope
 (t)(3)(iii)(B). Greenhouse gas   totals must be       2 totals must be
 inventory..                      provided.            provided.
(iv) Paragraph (d)(4) or         Response may be      Response must be
 (t)(3)(iv). Annual climate       ``does'' or ``does   ``does''.
 disclosure..                     not''.
(v) Para (d)(5) or (t)(3)(v).    Response may be      Response must be
 Science-based targets..          ``does'' or ``does   ``does''.
                                  not''.
------------------------------------------------------------------------

    (b) For an acquisition of commercial products or commercial 
services, the contracting officer shall look for equivalent 
representations from a significant or major contractor in the 
solicitation provision at 52.212-3(t)(3).
    (c) The contracting officer may rely on the offeror's 
representations in the provisions at 52.223-22(d) or 52.212-3(t)(3) 
that it is not a significant or major contractor, that it is subject to 
an exception, or that it is in compliance with the policy at 23.XX03. 
If the significant or major contractor's representations indicate that 
the offeror is not in compliance with the policy at 23.XX03, or if the 
contracting officer questions the representations, then the contracting 
officer shall follow the procedures at 9.104-3(e) for determining 
responsibility.


23.XX06   Exemptions and waivers.

    (a) Exemptions. The procedures at 23.XX05 do not apply to 
acquisitions listed at 4.1102(a) where the offeror or quoter is exempt 
from the requirement to be registered in System for Award Management at 
the time an offer or quotation is submitted.
    (b) Waivers. The senior procurement executive may provide the 
following types of waivers:
    (1) Waiver of procedures. The senior procurement executive may 
waive the procedures at 23.XX05 and the requirement to consider whether 
a significant or major contractor is in compliance with the policy at 
23.XX03 when determining responsibility for--
    (i) Facilities, business units, or other defined units for national 
security purposes; or
    (ii) Emergencies, national security, or other mission essential 
purposes; and
    (2) Entity waiver. The senior procurement executive may provide a 
waiver to enable a significant or major contractor to come into 
compliance with the policy at 23.XX03. The period for such waivers 
shall not exceed 1 calendar year. Agencies shall make such waivers 
publicly available on the agency's website.


23.XX07   Solicitation provision.

    The contracting officer shall insert the provision at 52.223-22, 
Public Disclosure of Climate Information--Representation, in 
solicitations only when 52.204-7, System for Award Management, is 
included in the solicitation (see 52.204-8, Annual Representations and 
Certifications).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
11. Amend section 52.204-08 by revising the date of the provision and 
paragraph (c)(1)(xix) to read as follows:


52.204-8   Annual Representations and Certifications.

* * * * *
    Annual Representations and Certifications (DATE)
* * * * *
    (c)(1) * * *
    (xix) 52.223-22, Public Disclosure of Climate Information--
Representation. This provision applies to solicitations that include 
the clause at 52.204-7.
* * * * *
0
12. Amend section 52.212-3 by--
0
a. Revising the date of the provision;
0
b. In paragraph (a):
0
i. Adding in alphabetical order definitions for ``Annual climate 
disclosure'', ``Greenhouse gas'', and ``Greenhouse gas inventory'';
0
ii. In the definition of ``Highest-level owner'' removing from the 
second sentence the words ``highest level'' and adding ``highest-
level'' in its place;
0
iii. Adding in alphabetical order definitions for ``Major contractor'', 
``Publicly accessible website'', ``Science-based target'', ``Scope 1 
emissions'', ``Scope 2 emissions'', ``Scope 3 emissions'', and 
``Significant contractor''; and
0
c. Revising paragraph (t).
    The revisions and additions read as follows:

[[Page 68331]]

52.212-3   Offeror Representations and Certifications--Commercial 
Products and Commercial Services.

* * * * *
    Offeror Representations and Certifications-Commercial Products and 
Commercial Services (DATE)
* * * * *
    (a) Definitions. As used in this provision--
    Annual climate disclosure means an entity's set of disclosures 
that--
    (1) Aligns with--
    (i) The 2017 Recommendations of the Task Force on Climate-Related 
Financial Disclosures (TCFD) (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf), which covers governance, 
strategy, risk management, and metrics and targets (see figure 4 of the 
2017 recommendations for an outline of disclosures); and
    (ii) The 2021 TCFD Annex: Implementing the Recommendations of the 
Task Force on Climate-related Financial Disclosures, which includes 
updates to reflect the evolution of disclosure practices, approaches, 
and user needs (see https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf); and
    (2) Includes--
    (i) A greenhouse gas inventory of its Scope 1, Scope 2, and 
relevant Scope 3 emissions; and
    (ii) Descriptions of the entity's climate risk assessment process 
and any risks identified.
* * * * *
    Greenhouse gas means carbon dioxide, methane, nitrous oxide, 
hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, or sulfur 
hexafluoride.
    Greenhouse gas inventory means a quantified list of an entity's 
annual greenhouse gas emissions that--
    (1) Represents emissions during a continuous period of 12 months, 
ending not more than 12 months before the inventory is completed; and
    (2) Is conducted in accordance with the Greenhouse Gas Protocol 
Corporate Accounting and Reporting Standard, which includes the 
following, as applicable:
    (i) Greenhouse Gas Protocol Corporate Standard, 2004 revised 
edition (see https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf).
    (ii) Required Greenhouse Gases in Inventories: Accounting and 
Reporting Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
    (iii) GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf).
    (iv) GHG Protocol Corporate Value Chain (Scope 3) Accounting and 
Reporting Standard Guidance, 2011 (see https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf).
* * * * *
    Major contractor means an offeror who received more than $50 
million in total Federal contract obligations (as defined in OMB 
Circular A-11) in the prior Federal fiscal year as indicated in the 
System for Award Management at https://www.sam.gov.
* * * * *
    Publicly accessible website means a website that the general public 
can discover using commonly used search engines and read without cost. 
It includes a website of the offeror or a website managed by a 
recognized third-party greenhouse gas emissions reporting program.
* * * * *
    Science-based target means a target for reducing greenhouse gas 
emissions that is in line with reductions that the latest climate 
science deems necessary to meet the goals of the Paris Agreement to 
limit global warming to well below 2[deg]C above pre-industrial levels 
and pursue efforts to limit warming to 1.5[deg]C (see SBTi frequently 
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science 
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special 
Report on 1.5[deg]C at https://www.ipcc.ch/sr15/.
    Scope 1 emissions means direct greenhouse gas emissions from 
sources that are owned or controlled by the reporting entity.
    Scope 2 emissions means indirect greenhouse gas emissions 
associated with the generation of electricity, heating and cooling, or 
steam, when these are purchased or acquired for the reporting entity's 
own consumption but occur at sources owned or controlled by another 
entity.
    Scope 3 emissions means greenhouse gas emissions, other than those 
that are Scope 2 emissions, that are a consequence of the operations of 
the reporting entity but occur at sources other than those owned or 
controlled by the entity.
* * * * *
    Significant contractor means an offeror who received $7.5 million 
or more, but not exceeding $50 million, in total Federal contract 
obligations (as defined in OMB Circular A-11) in the prior Federal 
fiscal year as indicated in the System for Award Management at https://www.sam.gov.
* * * * *
    (t) Public Disclosure of Climate Information (Executive Order 
14030). Applies in all solicitations that require offerors to register 
in SAM (12.301(d)(1)).
    (1) Responsibility. Except as provided in paragraph (t)(2) of this 
provision, an offeror that is a significant or major contractor will be 
treated as nonresponsible pursuant to FAR section 9.104-3(e) unless the 
following requirements are met:
    (i) Significant or major contractor. Starting on [date 1 year after 
publication of a final rule], if the offeror is a significant or major 
contractor, then the offeror shall have--
    (A) Completed (itself or through its immediate owner or highest-
level owner) within its current or previous fiscal year a greenhouse 
gas inventory of its annual Scope 1 and Scope 2 emissions; and
    (B) Reported in SAM (https://www.sam.gov) the total annual Scope 1 
and Scope 2 emissions identified through its most recent greenhouse gas 
inventory.
    (ii) Major contractor. Starting on [date 2 years after publication 
of a final rule], if the offeror is a major contractor, then the 
offeror (itself or through its immediate owner or highest-level owner) 
shall have completed the following:
    (A) Annual climate disclosure. Submitted its annual climate 
disclosure, as defined in paragraph (a) of this provision, by 
completing those portions of the CDP Climate Change Questionnaire that 
align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) within its 
current or previous fiscal year and made the annual climate disclosure 
available on a publicly accessible website. The time periods for 
submitting the CDP Climate Change Questionnaire are identified at 
https://www.cdp.net/en/guidance/guidance-for-companies.
    (B) Science-based target. Developed a science-based target, as 
defined in paragraph (a) of this provision; had the science-based 
target validated by the Science-Based Targets Initiative (see https://sciencebasedtargets.org/) within the previous 5 calendar years; and 
made the validated science-based target available on a publicly 
accessible website. The validation process and time period are 
identified at https://sciencebasedtargets.org/set-a-target.

[[Page 68332]]

    (2) Exceptions. (i) The requirements in paragraphs (t)(1)(i) and 
(t)(1)(ii) of this provision do not apply to a significant or major 
contractor who is--
    (A) An Alaska Native Corporation, a Community Development 
Corporation, an Indian tribe, a Native Hawaiian Organization, or a 
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
    (B) A higher education institution (defined as institutions of 
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart 
A, and 20 U.S.C. 1001);
    (C) A nonprofit research entity;
    (D) A state or local government; or
    (E) An entity deriving 80 percent or more of its annual revenue 
from management and operating contracts (see FAR subpart 17.6) that are 
subject to agency annual site sustainability reporting requirements.
    (ii) The requirements in paragraph (t)(1)(ii) of this provision do 
not apply to a major contractor who is--
    (A) Considered a small business for the North American Industry 
Classification System (NAICS) code identified in its SAM registration 
as its primary NAICS code; or
    (B) A nonprofit organization.
    (3) Representations. The Offeror shall complete the representation 
at paragraph (t)(3)(i) of this provision. If the Offeror represents in 
paragraph (t)(3)(i) that it ``is'' a significant contractor or major 
contractor, then the Offeror shall complete the representations in 
paragraphs (t)(3)(ii) through (v).
    (i) Significant or major contractor. The Offeror represents the 
following:
    (A) It [ ] is, [ ] is not a significant contractor (see definition 
in paragraph (a) of this provision).
    (B) It [ ] is, [ ] is not a major contractor (see definition in 
paragraph (a) of this provision).
    (ii) Excepted entities. The Offeror represents the following:
    (A) It [ ] is, [ ] is not an excepted entity described in paragraph 
(t)(2)(i) of this provision.
    (B) For the purposes of applying the exception to the requirement 
of paragraph (t)(1)(ii) of this provision--
    (1) It [ ] is, [ ] is not considered a small business for the NAICS 
code identified in its SAM registration as its primary NAICS code; and
    (2) It [ ] is, [ ] is not a nonprofit organization.
    (iii) Greenhouse gas inventory. [Inventory is required for a 
significant or major contractor, except as provided in paragraph 
(t)(2)(i) of this provision.] The Offeror represents that--
    (A) It [ ] has, [ ] has not (itself or through its immediate owner 
or highest-level owner) completed within its current or previous fiscal 
year a greenhouse gas inventory of its annual Scope 1 and Scope 2 
emissions; and
    (B) Its most recent greenhouse gas inventory indicates the 
following total annual greenhouse gas emissions in metric tons of 
carbon dioxide equivalent (MT CO2e):
    Scope 1 emissions: _
    [Offeror to enter total MT CO2e].
    Scope 2 emissions: _
    [Offeror to enter total MT CO2e].
    (iv) Annual climate disclosure. [Disclosure is required for a major 
contractor, except as provided in paragraphs (t)(2)(i) and (t)(2)(ii) 
of this provision.] The Offeror represents that it [ ] does, [ ] does 
not (itself or through its immediate owner or highest-level owner) make 
available on a publicly accessible website an annual climate disclosure 
that was completed using the CDP Climate Change Questionnaire in its 
current or previous fiscal year.
    (v) Science-based targets. [Target is required for a major 
contractor, except as provided in paragraphs (t)(2)(i) and (ii) of this 
provision.] The Offeror represents that it [ ] does, [ ] does not 
(itself or through its immediate owner or highest-level owner) make 
available on a publicly accessible website a science-based target that 
has been validated by the Science-Based Targets Initiative within the 
previous 5 calendar years.
    (4) Website(s). If the Offeror checked ``does'' in paragraph 
(t)(3)(iv) or (v) of this provision, then the Offeror shall provide the 
publicly accessible website(s) where the required disclosures and 
targets are reported: _.
* * * * *
0
13. Amended section 52.213-4 by
0
a. Revising the date of the clause; and
0
b. In paragraph (b)(1)(xii), removing the phrase ``at FAR 
23.804(a)(1)'' and adding ``in FAR 23.804(a)'' in its place.
    The revision reads as follows:


52.213-4  Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Products and Commercial Services).

* * * * *
    Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Products and Commercial Services) (DATE)
* * * * *
0
14. Amend section 52.223-11 by revising the introductory text to read 
as follows:


52.223-11   Ozone-Depleting Substances and High Global Warming 
Potential Hydrofluorocarbons.

    As prescribed in 23.804(a), insert the following clause:
* * * * *
0
15. Amend section 52.223-12 by revising the introductory text to read 
as follows:


52.223-12   Maintenance, Service, Repair, or Disposal of Refrigeration 
Equipment and Air Conditioners.

    As prescribed in 23.804(b), insert the following clause:
* * * * *
0
16. Amend section 52.223-20 by revising the introductory text to read 
as follows:


52.223-20   Aerosols.

    As prescribed in 23.804(c), insert the following clause:
* * * * *
0
17. Amend section 52.223-21 by revising the introductory text to read 
as follows:


52.223-21   Foams.

    As prescribed in 23.804(d), insert the following clause:
* * * * *
0
18. Revise section 52.223-22 to read as follows:


52.223-22   Public Disclosure of Climate Information--Representation.

    As prescribed in 23.XX07, insert the following provision:
    Public Disclosure of Climate Information--Representation (DATE)
    (a) Definitions. As used in this provision--
    Annual climate disclosure means an entity's set of disclosures 
that--
    (1) Aligns with--
    (i) The 2017 Recommendations of the Task Force on Climate-Related 
Financial Disclosures (TCFD) (see https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf), which covers governance, 
strategy, risk management, and metrics and targets (see figure 4 of the 
2017 recommendations for an outline of disclosures); and
    (ii) The 2021 TCFD Annex: Implementing the Recommendations of the 
Task Force on Climate-related Financial Disclosures, which includes 
updates to reflect the evolution of disclosure practices, approaches, 
and user needs (see https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Implementing_Guidance.pdf); and
    (2) Includes--
    (i) A greenhouse gas inventory of its Scope 1, Scope 2, and 
relevant Scope 3 emissions; and
    (ii) Descriptions of the entity's climate risk assessment process 
and any risks identified.
    Greenhouse gas means carbon dioxide, methane, nitrous oxide, 
hydrofluorocarbons, perfluorocarbons,

[[Page 68333]]

nitrogen trifluoride, or sulfur hexafluoride.
    Greenhouse gas inventory means a quantified list of an entity's 
annual greenhouse gas emissions that--
    (1) Represents emissions during a continuous period of 12 months, 
ending not more than 12 months before the inventory is completed; and
    (2) Is conducted in accordance with the Greenhouse Gas Protocol 
Corporate Accounting and Reporting Standard, which includes the 
following, as applicable:
    (i) Greenhouse Gas Protocol Corporate Standard, 2004 revised 
edition (see https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf).
    (ii) Required Greenhouse Gases in Inventories: Accounting and 
Reporting Amendment, 2013 (see https://www.ghgprotocol.org/sites/default/files/ghgp/NF3-Amendment_052213.pdf).
    (iii) GHG Protocol Scope 2 Guidance, 2015 (see https://ghgprotocol.org/sites/default/files/standards/Scope%202%20Guidance_Final_Sept26.pdf).
    (iv) GHG Protocol Corporate Value Chain (Scope 3) Accounting and 
Reporting Standard Guidance, 2011 (https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf).
    Highest-level owner means the entity that owns or controls an 
immediate owner of the offeror, or that owns or controls one or more 
entities that control an immediate owner of the offeror. No entity owns 
or exercises control of the highest-level owner.
    Immediate owner means an entity, other than the offeror, that has 
direct control of the offeror. Indicators of control include, but are 
not limited to, one or more of the following: ownership or interlocking 
management, identity of interests among family members, shared 
facilities and equipment, and the common use of employees.
    Major contractor means an offeror who received more than $50 
million in total Federal contract obligations (as defined in OMB 
Circular A-11) in the prior Federal fiscal year as indicated in the 
System for Award Management at https://www.sam.gov.
    Publicly accessible website means a website that the general public 
can discover using commonly used search engines and read without cost. 
It includes a website of the offeror or a website managed by a 
recognized third-party greenhouse gas emissions reporting program.
    Science-based target means a target for reducing greenhouse gas 
emissions that is in line with reductions that the latest climate 
science deems necessary to meet the goals of the Paris Agreement to 
limit global warming to well below 2[deg]C above pre-industrial levels 
and pursue efforts to limit warming to 1.5[deg]C (see SBTi frequently 
asked questions at https://sciencebasedtargets.org/faqs#what-are-science-based-targets). For information on the latest climate science 
see 2018 Intergovernmental Panel on Climate Change (IPCC) Special 
Report on 1.5[deg]C at https://www.ipcc.ch/sr15/.
    Scope 1 emissions means direct greenhouse gas emissions from 
sources that are owned or controlled by the reporting entity.
    Scope 2 emissions means indirect greenhouse gas emissions 
associated with the generation of electricity, heating and cooling, or 
steam, when these are purchased or acquired for the reporting entity's 
own consumption but occur at sources owned or controlled by another 
entity.
    Scope 3 emissions means greenhouse gas emissions, other than those 
that are Scope 2 emissions, that are a consequence of the operations of 
the reporting entity but occur at sources other than those owned or 
controlled by the entity.
    Significant contractor means an offeror who received $7.5 million 
or more, but not exceeding $50 million, in total Federal contract 
obligations (as defined in OMB Circular A-11) in the prior Federal 
fiscal year as indicated in the System for Award Management at https://www.sam.gov.
    (b) Responsibility. Except as provided in paragraph (c) of this 
provision, an offeror that is a significant or major contractor will be 
treated as nonresponsible pursuant to Federal Acquisition Regulation 
(FAR) section 9.104-3(e) unless the following requirements are met:
    (1) Significant or major contractor. Starting on [date 1 year after 
publication of a final rule], if the offeror is a significant or major 
contractor, then the offeror shall have--
    (i) Completed (itself or through its immediate owner or highest-
level owner) within its current or previous fiscal year a greenhouse 
gas inventory of its annual Scope 1 and Scope 2 emissions; and
    (ii) Reported in the System for Award Management (SAM) the total 
annual Scope 1 and Scope 2 emissions identified through its most recent 
greenhouse gas inventory.
    (2) Major contractor. Starting on [date 2 years after publication 
of a final rule], if the offeror is a major contractor, then the 
offeror (itself or through its immediate owner or highest-level owner) 
shall have completed the following:
    (i) Annual climate disclosure. Submitted its annual climate 
disclosure, as defined in paragraph (a) of this provision, by 
completing those portions of the CDP Climate Change Questionnaire that 
align with the TCFD recommendations as identified by CDP (https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd) within its 
current or previous fiscal year and made the annual climate disclosure 
available on a publicly accessible website. The time periods for 
submitting the CDP Climate Change Questionnaire are identified at 
https://www.cdp.net/en/guidance/guidance-for-companies.
    (ii) Science-based target. Developed a science-based target, as 
defined in paragraph (a) of this provision; had the science-based 
target validated by the Science-Based Targets Initiative (see https://sciencebasedtargets.org/) within the previous 5 calendar years; and 
made the validated science-based target available on a publicly 
accessible website. The validation process and time period are 
identified at https://sciencebasedtargets.org/set-a-target.
    (c) Exceptions. (1) The requirements in paragraphs (b)(1) and 
(b)(2) of this provision do not apply to a significant or major 
contractor who is--
    (i) An Alaska Native Corporation, a Community Development 
Corporation, an Indian tribe, a Native Hawaiian Organization, or a 
Tribally owned concern, as those terms are defined at 13 CFR 124.3;
    (ii) A higher education institution (defined as institutions of 
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart 
A, and 20 U.S.C. 1001);
    (iii) A nonprofit research entity;
    (iv) A State or local government; or
    (v) An entity deriving 80 percent or more of its annual revenue 
from management and operating contracts (see FAR subpart 17.6) that are 
subject to agency annual site sustainability reporting requirements.
    (2) The requirements in paragraph (b)(2) of this provision do not 
apply to a major contractor who is--
    (i) Considered a small business for the North American Industry 
Classification System (NAICS) code identified in its SAM registration 
as its primary NAICS code; or
    (ii) A nonprofit organization.
    (d) Representations. [The Offeror shall complete the representation 
at paragraph (d)(1) of this provision. If the Offeror represents in 
paragraph (d)(1) that it ``is'' a significant contractor or major 
contractor, then the Offeror shall

[[Page 68334]]

complete the representations in paragraphs (d)(2) through (d)(5)].
    (1) Significant or major contractor. The Offeror represents the 
following:
    (i) It [ ] is, [ ] is not a significant contractor (see definition 
in paragraph (a) of this provision).
    (ii) It [ ] is, [ ] is not a major contractor (see definition in 
paragraph (a) of this provision).
    (2) Excepted entities. The Offeror represents the following:
    (i) It [ ] is, [ ] is not an excepted entity described in paragraph 
(c)(1) of this provision.
    (ii) For the purposes of applying the exception to the requirements 
of paragraph (b)(2) of this provision--
    (A) It [ ] is, [ ] is not considered a small business for the NAICS 
code identified in its SAM registration as its primary NAICS code; and
    (B) It [ ] is, [ ] is not a nonprofit organization.
    (3) Greenhouse gas inventory. [Inventory is required for a 
significant or major contractor, except as provided in paragraph (c)(1) 
of this provision.] The Offeror represents that--
    (i) It [ ] has, [ ] has not (itself or through its immediate owner 
or highest-level owner) completed within its current or previous fiscal 
year a greenhouse gas inventory of its annual Scope 1 and Scope 2 
emissions; and
    (ii) Its most recent greenhouse gas inventory indicates the 
following total annual greenhouse gas emissions in metric tons of 
carbon dioxide equivalent (MT CO2e):
    Scope 1 emissions: _
    [Offeror to enter total MT CO2e].
    Scope 2 emissions: _
    [Offeror to enter total MT CO2e].
    (4) Annual climate disclosure. [Disclosure is required for a major 
contractor, except as provided in paragraphs (c)(1) and (c)(2) of this 
provision.] The Offeror represents that it [ ] does, [ ] does not 
(itself or through its immediate owner or highest-level owner) make 
available on a publicly accessible website an annual climate disclosure 
that was completed using the CDP Climate Change Questionnaire within 
its current or previous fiscal year.
    (5) Science-based target. [Target is required for a major 
contractor, except as provided in paragraphs (c)(1) and (c)(2) of this 
provision]. The Offeror represents that it [ ] does, [ ] does not 
(itself or through its immediate owner or highest-level owner) make 
available on a publicly accessible website a science-based target that 
has been validated by the Science-Based Targets Initiative within the 
previous 5 calendar years.
    (e) website(s). If the Offeror checked ``does'' in paragraphs 
(d)(4) or (d)(5) of this provision, then the Offeror shall provide the 
publicly accessible website(s) where the required disclosures and 
targets are reported: _.
    (End of provision)

[FR Doc. 2022-24569 Filed 11-10-22; 8:45 am]
BILLING CODE 6820-EP-P