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In a major and largely unprecedented development for federal contractors, the White House announced on November 10, 2022 that the FAR Council will publish early next week a proposed rule that would, if finalized, require many federal contractors receiving more than $7.5 million in annual federal contracts to inventory and publicly disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions on an annual basis.  Contractors deemed “major”—those that receive annual federal contracts in excess of $50 million—would be further required to disclose annually their Scope 3 GHG emissions and climate-related financial risk assessment process.  Beyond disclosures, and perhaps more significantly, major contractors would also be required to set emission-reduction targets to meet the goals of the Paris Agreement, and have those targets validated by the Science Based Targets Initiative (SBTi). This last element of the proposal is a notable departure—and escalation—from similar pending proposals from the U.S. Securities and Exchange Commission, which only propose to require GHG disclosures from regulated companies and funds, not substantive goals or changes. Continue Reading Your Climate Disclosures or Your Contracts? Federal Contractors Face Unprecedented Proposed Rule for Mandatory Climate Disclosures

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Last month, in Seife v. U.S. Food and Drug Administration, the U.S. Court of Appeals for the Second Circuit became the first appellate court to address a significant question left unanswered by the Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media: what impact, if any, did the 2016 FOIA Improvement Act (“FIA”) have on FOIA Exemption 4?  The answer: a submitter of information ostensibly subject to Exemption 4 must demonstrate competitive harm—though not “substantial” harm—resulting from disclosure in order to invoke the exemption.

Argus clarified the applicability of Exemption 4, which protects from disclosure “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”  5 U.S.C. § 552(b)(4).  The Argus Court rejected the longstanding National Parks test, which applied Exemption 4 only where the submitter of such information could demonstrate “substantial competitive harm” resulting from its disclosure.  Instead, the Argus Court held Exemption 4 applied, at the very least, where the submitter of such information kept it confidential and submitted it to the government with an assurance of privacy.  Given the difficulties inherent in establishing “substantial competitive harm,” Argus was welcome news for contractors seeking Exemption 4 protection.  (We have previously written about Argus and the district court decisions that followed.) 

In 2016, Congress enacted the FIA in response to concerns that FOIA’s exemptions were being overused. The FIA amended FOIA to allow for an exemption’s invocation only if “the agency reasonably foresees that disclosure would harm an interest protected by an exemption” or if disclosure is “prohibited by law.”  5 U.S.C. § 552(a)(8)(A).  Since Argus, multiple plaintiffs have argued the FIA effectively codified the National Parks test.  (Argus considered a FOIA dispute that commenced prior to the passage of the FIA; the Court there had no reason to address the question.)Continue Reading Second Circuit Holds FOIA Exemption 4 Still Requires Showing of “Competitive Harm” Resulting from Disclosure, Though Not a “Substantial” One

The start of a new year is a perfect opportunity for government contractors to refocus and rejuvenate their compliance efforts. Regardless of whether a company is contractually required to have a compliance program, contractors should take time to determine the contractual obligations and risks they face now and in the year ahead. Is your company…