[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                        A BAR TOO HIGH: CONCERNS
                     WITH CEQ'S PROPOSED REGULATORY
                     HURDLE FOR FEDERAL CONTRACTING

=======================================================================
                               HEARING

                              BEFORE THE

                     SUBCOMMITTEE ON INVESTIGATIONS
                             AND OVERSIGHT

                                 OF THE

                      COMMITTEE ON SCIENCE, SPACE,
                             AND TECHNOLOGY

                                 OF THE

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                           SEPTEMBER 20, 2023

                               ----------                              

                           Serial No. 118-25

                               ----------                              

 Printed for the use of the Committee on Science, Space, and Technology
 
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
53-476                     WASHINGTON : 2024                    
          
----------------------------------------------------------------------------------- 


              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                  HON. FRANK LUCAS, Oklahoma, Chairman
BILL POSEY, Florida                  ZOE LOFGREN, California, Ranking 
RANDY WEBER, Texas                       Member
BRIAN BABIN, Texas                   SUZANNE BONAMICI, Oregon
JIM BAIRD, Indiana                   HALEY STEVENS, Michigan
DANIEL WEBSTER, Florida              JAMAAL BOWMAN, New York
MIKE GARCIA, California              DEBORAH ROSS, North Carolina
STEPHANIE BICE, Oklahoma             ERIC SORENSEN, Illinois
JAY OBERNOLTE, California            ANDREA SALINAS, Oregon
CHUCK FLEISCHMANN, Tennessee         VALERIE FOUSHEE, North Carolina
DARRELL ISSA, California             KEVIN MULLIN, California
RICK CRAWFORD, Arkansas              JEFF JACKSON, North Carolina
CLAUDIA TENNEY, New York             EMILIA SYKES, Ohio
RYAN ZINKE, Montana                  MAXWELL FROST, Florida
SCOTT FRANKLIN, Florida              YADIRA CARAVEO, Colorado
DALE STRONG, Alabama                 SUMMER LEE, Pennsylvania
MAX MILLER, Ohio                     JENNIFER McCLELLAN, Virginia
RICH McCORMICK, Georgia              TED LIEU, California
MIKE COLLINS, Georgia                SEAN CASTEN, Illinois,
BRANDON WILLIAMS, New York             Vice Ranking Member
TOM KEAN, New Jersey                 PAUL TONKO, New York
VACANCY
                                 ------                                

              Subcommittee on Investigations and Oversight

                HON. JAY OBERNOLTE, California, Chairman
BRIAN BABIN, Texas                   VALERIE FOUSHEE, North Carolina, 
MAX MILLER, Ohio                         Ranking Member
RICH McCORMICK, Georgia              KEVIN MULLIN, California
VACANCY                              JEFF JACKSON, North Carolina
                         
                         
                         C  O  N  T  E  N  T  S

                           September 20, 2023

                                                                   Page

Hearing Charter..................................................     2

                           Opening Statements

Statement by Representative Jay Obernolte, Chairman, Subcommittee 
  on Investigations and Oversight, Committee on Science, Space, 
  and Technology, U.S. House of Representatives..................     5
    Written Statement............................................     6

Statement by Representative Valerie Foushee, Ranking Member, 
  Subcommittee on Investigations and Oversight, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..     7
    Written Statement............................................     8

Written statement by Representative Zoe Lofgren, Ranking Member, 
  Committee on Science, Space, and Technology, U.S. House of 
  Representatives................................................     9

                               Witnesses:

Mr. Eric Fanning, President and Chief Executive Officer, 
  Aerospace Industries Association
    Oral Statement...............................................    10
    Written Statement............................................    12

Mr. Chad Whiteman, Vice President, U.S. Chamber of Commerce
    Oral Statement...............................................    18
    Written Statement............................................    20

Mr. Steven M. Rothstein, Managing Director, Ceres Accelerator for 
  Sustainable Capital Markets
    Oral Statement...............................................    24
    Written Statement............................................    26

Ms. Victoria Killion, Legislative Attorney, Congressional 
  Research Service
    Oral Statement...............................................    33
    Written Statement............................................    35

Discussion.......................................................    53

             Appendix I: Answers to Post-Hearing Questions

Mr. Eric Fanning, President and Chief Executive Officer, 
  Aerospace Industries Association...............................    66

Mr. Chad Whiteman, Vice President, U.S. Chamber of Commerce......    70

Mr. Steven M. Rothstein, Managing Director, Ceres Accelerator for 
  Sustainable Capital Markets....................................    76

Ms. Victoria Killion, Legislative Attorney, Congressional 
  Research Service...............................................    78

            Appendix II: Additional Material for the Record

Subcommittee on Investigations and Oversight, Investigative 
  Portfolio, submitted by Representative Jay Obernolte, Chairman, 
  Subcommittee on Investigations and Oversight, Committee on 
  Science, Space, and Technology, U.S. House of Representatives
    Letter to Mathew C. Blum, Chair, Federal Acquisition 
      Regulatory Council, Office of Management and Budget, from 
      Frank Lucas, Chairman, House Committee on Science, Space, 
      and Technology, et al......................................   108
    Letter to Brenda Mallory, Chair, Council on Environmental 
      Quality, The White House, from Frank Lucas, Chairman, House 
      Committee on Science, Space, and Technology, et al.........   113
    Letter to the Honorable Jay Obernolte, Chairman, Subcommittee 
      on Investigations and Oversight, Committee on Science, 
      Space, and Technology, from Wintta M. Woldemariam, 
      Associate Director, Office of Legislative Affair, Executive 
      Office of the President, Office of Management and Budget...   118
    Letter to Shalanda Young, Director, Office of Management and 
      Budget, from Remy Nathan, Senior Vice President of Policy, 
      Aerospace Industries Association...........................   119
    Letter to Bill Nelson, Administrator, National Aeronautics 
      and Space Administration, from Frank Lucas, Chairman, House 
      Committee on Science, Space, and Technology................   122
    Letter to the Honorable Frank D. Lucas, Chairwoman, Committee 
      on Science, Space, and Technology, U.S. House of 
      Representatives, from Alicia Brown, Associate Administrator 
      for Legislative and Intergovernmental Affairs, National 
      Aeronautics and Space Administration.......................   127
    Letter to Luiz Amaral, Chief Executive Officer, Science Based 
      Target Initiative, from Frank Lucas, Chairman, House 
      Committee on Science, Space, and Technology................   128
    Letter to the Honorable Frank Lucas, Chairman, Committee on 
      Science, Space, and Technology, U.S. House of 
      Representatives, from Karen Elizabeth Christian, Raphael A. 
      Prober, Counsel for SBTi...................................   132
    Letter to the Honorable Shalanda Young, Director, Office of 
      Management and Budget, from Frank Lucas, Chairman, House 
      Committee on Science, Space, and Technology................   137
    Letter to the Honorable Frank Lucas, Chairman, Committee on 
      Science, Space, and Technology, from Wintta M. Woldemariam, 
      Associate Director, Office of Legislative Affairs, 
      Executive Office of the President, Office of Management and 
      Budget.....................................................   142
    Letter to Ms. Jennifer Hawes, Procurement Analyst, Regulatory 
      Secretariat Division, Government Services Administration, 
      from John Luddy, Vice President, National Security Policy, 
      David Silver, Vice President, Civil Aviation, the Aerospace 
      Industries Association.....................................   146
    ``Amazon's approach to setting Science-Based Targets,'' 
      Amazon Staff, www.aboutamazon.com..........................   160
    Letter to Representative Frank D Lucas, Chair, Representative 
      Zoe Lofgren, Ranking Member, U.S. House of Representatives, 
      Committee on Science, Space, and Technology, from Bill 
      Baue, Senior Director, r3.0 (Redesign for Resilience & 
      Regeneration), Original Instigator, Science Based Targets 
      initiative.................................................   162
    ``Russia's Quiet War Against European Fracking,'' Keith 
      Johnson, Foreign Policy....................................   173
    ``Group judging corporate climate claims overhauls itself 
      after criticism,'' Tommy Wilkes and Ross Kerber, Reuters...   176
    Letter to Lesley A. Field, Acting Administrator, Office of 
      Federal Procurement Policy, Office of Management and 
      Budget, et al., from Martin J. Durbin, President, Global 
      Energy Institute, and Senior Vice President, Policy, U.S. 
      Chamber of Commerce........................................   187

Report submitted by Representative Valerie Foushee, Ranking 
  Member, Subcommittee on Investigations and Oversight, Committee 
  on Science, Space, and Technology, U.S. House of 
  Representatives
    ``Ceres Comments on Proposed Federal Acquisition Regulation: 
      Disclosure of Greenhouse Gas Emissions and Climate-Related 
      Financial Risk [FAR Case 2021-015]''.......................   224

Documents submitted by Representative Claudia Tenney, 
  Subcommittee on Investigations and Oversight, Committee on 
  Science, Space, and Technology, U.S. House of Representatives
    ``Who We Are--The New Venture Fund works with change leaders 
      who share our purpose of creating positive impact in our 
      communities, our country, and our world,'' 
      www.newventurefund.org.....................................   272
    Science Based Targets Initiative LTD, Certificate of 
      Incorporation of a Private Limited Company, the Registrar 
      of Companies for England and Wales.........................   277
    ``Grants and Program Associate,'' We Mean Business...........   322

 
                        A BAR TOO HIGH: CONCERNS
                     WITH CEQ'S PROPOSED REGULATORY
                     HURDLE FOR FEDERAL CONTRACTING

                              ----------                              


                     WEDNESDAY, SEPTEMBER 20, 2023

                  House of Representatives,
      Subcommittee on Investigations and Oversight,
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.

    The Subcommittee met, pursuant to notice, at 10 a.m., in 
room 2318, Rayburn House Office Building, Hon. Jay Obernolte 
[Chairman of the Subcommittee] presiding.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Chairman Obernolte. Good morning, everyone. The hour of 10 
o'clock having arrived, I will convene this hearing of the 
Science, Space, and Technology Subcommittee on Investigations 
and Oversight. Without objection, the Chair is authorized to 
declare a recess of the Committee at any time. Hearing none, so 
ordered.
    I will begin by recognizing myself for five minutes for an 
opening statement.
    I'd like to thank all of our witnesses and our Committee 
Members and Ranking Member Foushee for participating in our 
hearing today. I'd like to begin by requesting unanimous 
consent that the Subcommittee's investigative portfolio be 
submitted for the record. Hearing none, so ordered.
    Today's hearing will focus on a proposed regulation by the 
Federal Acquisition Regulatory (FAR) Council that would require 
Federal contractors to disclose greenhouse gas (GHG) emissions 
and set reduction targets. The rule would further require that 
a London-based company validate those targets. To be clear, 
today's hearing is not about climate change or whether or not 
companies should reduce their greenhouse gas emissions. In 
fact, many companies have voluntarily chosen to reduce 
emissions and are verifying those reductions in a variety of 
ways already. Instead, today's hearing concerns government 
overreach and questionable processes that result in the 
Administration picking winners and losers in the marketplace.
    Regardless of political affiliation, every Member of this 
institution should be concerned by regulatory policies that 
usurp Congress' legislative authority. And every Member of 
Congress should be concerned with any regulatory action that 
arbitrarily selects one company to do business with the Federal 
Government without a meritorious selection process. The 
government should not be in the business of picking winners and 
losers when it comes to Federal contracting.
    However, unfortunately, that is exactly the case in this 
instance. This Administration published a proposed rule in 
November which decreed that all major Federal contractors will 
be required to set greenhouse gas emission reduction targets 
and then hire a specified private foreign company to validate 
those targets. The company anointed by the Administration to 
perform this task is called the Science Based Targets 
initiative or SBTi.
    According to the information that this Committee has 
gathered, SBTi did not go through a competitive selection 
process before being chosen for this role. Documents provided 
by the OMB (Office of Management and Budget) indicate that 
representatives from SBTi met with the Council on Environmental 
Quality (CEQ) to discuss this proposed regulation only twice. 
There was no other email traffic, no formal vetting or 
application. It appears SBTi did not even have to submit a 
single piece of paper explaining why they were the company best 
suited for this job.
    The choice of SBTi is not only concerning this Committee 
and the proposed rule, but because of the rule's poor drafting, 
it raises multiple practical financial and national security 
issues. For instance, ceding the authority to approve the 
emissions targets of Federal contractors to a foreign entity 
means that we have no way to verify that SBTi's processes are 
based in sound science. In fact, both Congress and the Federal 
Government have very little oversight of the decisions being 
made here.
    In addition, companies specializing in oil and gas 
production may not even have the ability to submit proposals 
that meet SBTi's science-based targets, which could have a 
severe impact on our Nation's mission readiness in industries 
such as space and national defense. Our hope is that this 
hearing will surface these issues and help our Members consider 
these concerns as we move forward.
    The Investigations and Oversight Subcommittee has 
investigated this issue since February of this year. It 
reviewed many documents, sent multiple letters, and met with 
numerous individuals, including representatives from government 
agencies and stakeholders in order to get to this point. The 
council has invited Chair Mallory of CEQ and the head of the 
FAR Council to join us today to answer our remaining questions 
regarding how this proposed rule came into being, questions 
only they can answer. Unfortunately, they have declined to be 
here this morning.
    Therefore, the witnesses at this hearing are experts who 
are here to help Congress understand the legal, practical, 
financial, and national security concerns associated with this 
proposed regulation. It's my hope that your testimonies today 
will cover four main issue areas: first, the constitutionality 
of this proposed regulation; second, the practical impacts that 
the proposed regulation would have, specifically as it pertains 
to industry and national security; third, the issues regarding 
the delegation of a quasi-government regulatory authority to 
SBTi and the conflict-of-interest concerns inherent in having a 
single entity act as both standard setter and validator; 
fourth, and finally, the impossibility of either the executive 
or the legislative branches to conduct meaningful oversight of 
SBTi, a foreign entity which answers to neither.
    I look forward to a robust discussion on these topics. I'd 
like to thank everyone for your willingness to be here and to 
have a dialog on this important topic.
    [The prepared statement of Chairman Obernolte follows:]

    Today's hearing will focus on a proposed regulation by the 
Federal Acquisition Regulatory (FAR) Council that would require 
federal contractors to disclose greenhouse gas (GHG) emissions 
and set reduction targets. Further, the rule would require that 
a London-based company validate those targets.
    Today's hearing is not about climate change or whether 
companies should or should not reduce their greenhouse 
emissions. In fact, many companies have voluntarily chosen to 
reduce emissions and are verifying those reductions in a 
variety of ways. Today's hearing is about government overreach 
and questionable processes that result in the Administration 
picking winners and losers.
    Regardless of political affiliation, every member of this 
institution should be bothered by regulatory policies that 
usurp Congress' legislative authority.
    And every member of Congress should be concerned with any 
regulatory action that arbitrarily selects one company to do 
business with the federal government without a meritorious 
selection process. The federal government should not be in the 
business of picking winners and losers.
    However, that is exactly the case in this instance. This 
Administration published a proposed rule in November, which 
declared that all major contractors would have to set 
greenhouse gas emission reduction targets, and then hire a 
specific private foreign-based company to validate those 
targets. The company anointed by the Administration to perform 
this task is called the Science Based Target Initiative or 
SBTi.
    From what this Committee has gathered, SBTi did not go 
through a competitive selection process before being chosen. 
According to documents provided by OMB, representatives from 
SBTi met with the Council on Environmental Quality (CEQ) to 
discuss this proposed regulation TWICE. There was no other 
email traffic, no formal vetting or application, and it appears 
SBTi did not even have to submit a single piece of paper 
explaining why they were the best for the job.
    The choice of SBTi is not the only concern this Committee 
has with this proposed rule. Because of its poor drafting, it 
has multiple practical, financial, and national security 
issues.
    For instance, ceding this authority to a foreign entity 
means that we cannot verify that SBTI's processes are based in 
sound science. We will have very little oversight of the 
decisions being made.
    What's more, companies specializing in oil and gas may not 
even be able to submit proposals to meet SBTi's science-based 
targets and that could have a severe impact on our mission 
readiness in industries like space and national defense.
    Our hope is that this hearing will highlight these issues 
and help our members consider these concerns as we move 
forward.
    The Investigations and Oversight Subcommittee has 
investigated this issue since February of this year. It 
reviewed many documents, sent multiple letters, and met with 
quite a few individuals, including representatives from 
government agencies and stakeholders, in order to get to this 
point.
    The Committee invited Chair Mallory of CEQ and the head of 
the FAR Council to join us today to answer our remaining 
questions regarding how this proposed rule came into being--
questions only they can answer.
    Unfortunately, they are not here today.
    Therefore, today's witnesses are experts who are here to 
help Congress understand the legal, practical, financial, and 
national security concerns associated with this proposed 
regulation.
    We hope your testimonies today will generally cover four 
main issues. First, the Constitutionality of this proposed 
regulation.
    Second, the practical impacts that the proposed regulation 
would have, specifically as it pertains to industry and 
national security.
    Third, the issues regarding the delegation of a quasi-
government regulatory authority to SBTi and the conflict of 
interest concerns inherent in having a single entity act as 
both standard setter and validator.
    Fourth and finally, the inability of both the executive and 
legislative branches to conduct oversight of SBTi. 
Specifically, into the standards and scientific methods 
implemented by SBTi when they provide these services. I look 
forward to robust discussion.
    Thank you all for your willingness to be here.

    Chairman Obernolte. I now recognize Ranking Member Foushee 
for her opening statement.
    Mrs. Foushee. Thank you, Chairman Obernolte, and thank you 
to our witnesses for joining us here today to discuss this 
proposed rulemaking.
    As we on the Science Committee know, science-based 
information is crucial in Federal decisionmaking. The Federal 
Government has the responsibility of ensuring that taxpayer 
money is properly stewarded and improves the lives of all 
Americans and the functioning of our government. Procurement 
policy is a significant part of this responsibility. The 
Federal Government outlays enormous sums to contractors. 
Therefore, agencies should gather as much information as 
possible before selecting companies to receive massive 
contracts.
    When it comes to ensuring science-based decisionmaking in 
this space, I can think of no more important issue than 
combating climate change. The proposed rule we're here to 
discuss has not yet been finalized. The Administration is 
working through public comments, and today, we have an 
opportunity for a productive conversation about how to ensure 
this rule can best achieve its important goals.
    In its current form, this rule would offer an unprecedented 
level of transparency into the greenhouse gas emissions and 
mitigation strategies of Federal contractors who the government 
entrusts with hundreds of billions of taxpayer dollars. In the 
private sector, it is well-accepted that a company's exposure 
to climate risk and its contribution to climate change has a 
direct impact on its bottom line. Shareholders demand to know 
that they're investing in companies who understand this reality 
and are working to reduce these risks. Financial institutions 
increasingly consider their susceptibility to climate-related 
disasters when making business decisions. Agencies and the 
Americans who fund them deserve that same level of transparency 
and forethought.
    I applaud the Biden Administration for taking this step to 
modernize the Federal procurement process. This rulemaking, if 
finalized, would give agencies the opportunity to make 
contracting decisions that incorporate an understanding of 
vulnerability to climate-related risks. This would be a large 
improvement across the government, but it is especially 
critical when it comes to ensuring our defense preparedness. 
Our national security depends on a clear-eyed assessment of the 
risks posed to our country. The Department of Defense (DOD) has 
committed to incorporating climate risks into its strategies. 
If finalized, this rule will give them crucial information to 
deliver on that promise.
    I won't to exaggerate the impact of this rule. The FAR 
Council has chosen to limit its reach to a small subset of 
contractors. The full suite of requirements would apply only to 
companies with over $50 million in contract obligations. Just 
1.2 percent of prospective contractors would have any 
additional reporting requirements at all. And for small 
businesses and certain nonprofit entities, exemptions are 
provided to help alleviate the burden of compliance, and 
agencies can provide waivers for mission-essential purposes.
    Despite this relatively limited scope, it truly is a 
significant step forward in promoting contractor transparency 
for their greenhouse gas emissions. I believe this is also an 
excellent springboard for further action. I look forward to 
hearing from our panel about how this rulemaking can be 
improved before finalization and how we can further bolster our 
Federal infrastructure against the risk of catastrophic climate 
change.
    Thank you, Chairman Obernolte. I yield back.
    [The prepared statement of Mrs. Foushee follows:]

    Thank you, Chairman Obernolte. And thank you to our 
witnesses for joining us here today to discuss this proposed 
rulemaking. As we on the Science Committee know, science-based 
information is crucial in Federal decision making. The Federal 
government has the responsibility of ensuring that taxpayer 
money is properly stewarded and improves the lives of all 
Americans and the functioning of our government. Procurement 
policy is a significant part of this responsibility. The 
Federal government outlays enormous sums to contractors. 
Therefore, agencies should gather as much information as 
possible before selecting companies to receive massive 
contracts.
    When it comes to ensuring science-based decision-making in 
this space, I can think of no more important issue than 
combatting climate change. The proposed rule we're here to 
discuss has not yet been finalized. The Administration is 
working through public comments, and today, we have an 
opportunity for a productive conversation about how to ensure 
this rule can best achieve its important goals.
    In its current form, this rule would offer an unprecedented 
level of transparency into the greenhouse gas emissions and 
mitigation strategies of Federal contractors, who the 
government entrusts with hundreds of billions of taxpayer 
dollars. In the private sector, it is well accepted that a 
company's exposure to climate risk--and its contribution to 
climate change--has a direct impact on its bottom line. 
Shareholders demand to know that they're investing in companies 
who understand this reality and are working to reduce these 
risks.
    Financial institutions increasingly consider their 
susceptibility to climate-related disasters when making 
business decisions. Agencies, and the Americans who fund them, 
deserve that same level of transparency and forethought. I 
applaud the Biden Administration for taking this step to 
modernize the Federal procurement process. This rulemaking, if 
finalized, would give agencies the opportunity to make 
contracting decisions that incorporate an understanding of 
vulnerability to climate-related risk.
    This would be a large improvement across the government, 
but it is especially critical when it comes to ensuring our 
defense preparedness. Our national security depends on a clear-
eyed assessment of the risks posed to our country. The 
Department of Defense has committed to incorporating climate 
risk into its strategies. If finalized, this rule will give 
them crucial information to deliver on that promise. I won't 
exaggerate the impact of this rule. The FAR Council has chosen 
to limit its reach to a small subset of contractors.
    The full suite of requirements would apply only to 
companies with over $50 million in contract obligations. Just 
1.2 percent of prospective contractors would have any 
additional reporting requirements at all. For small businesses 
and certain nonprofit entities, exemptions are provided to help 
alleviate the burden of compliance, and agencies can provide 
waivers for mission-essential purposes.
    Despite this relatively limited scope, it truly is a 
significant step forward in promoting contractor transparency 
for their greenhouse gas emissions. I believe this is also an 
excellent springboard for further action. I look forward to 
hearing from our panel about how this rulemaking can be 
improved before finalization and how we can further bolster our 
Federal infrastructure against the risk of catastrophic climate 
change.
    Thank you, Chairman Obernolte, I yield back.

    Chairman Obernolte. The gentlewoman yields back.
    [The prepared statement of Ms. Lofgren follows:]

    The climate crisis is one of the most profound challenges 
facing humanity. We are witnessing the devastating consequences 
of climate change every day, in ways large and small, and we 
are only beginning to grasp the enormity of the impact that it 
will have on our society. If we want to avoid the worst-case 
scenarios that loom ahead of us, we have no choice but to 
deploy every tool in our arsenal to reduce greenhouse gas 
emissions as much as we can, as fast as we can. And as the 
world's largest economy, the United States has a unique 
responsibility--and opportunity--to lead this effort.
    Under the Biden Administration, the U.S. government has 
been leading by example in the fight against climate change. 
President Biden has overseen an unprecedented mobilization of 
federal resources to reduce the federal government's own 
emissions and strengthen the federal government's climate 
resilience. That effort has been wide-ranging--spanning from 
federal risk planning and infrastructure vulnerabilities to 
federal supply chains and emission sources. I wholeheartedly 
support the administration's emphasis on this issue, which is 
long overdue.
    Federal procurement is another critical way in which the 
federal government can use its authority and influence to be a 
force for good in the climate fight. The federal government is 
an enormous purchaser of goods and services--indeed, the 
largest single purchaser in the world. In 2021 alone, federal 
procurement stood at $630 billion. Federal procurement 
decisions can alter economic incentives across entire sectors 
and send unmistakable market signals that the private sector is 
hard-pressed to ignore. But until now, the federal government 
has overlooked the greenhouse gas emissions of its contracting 
sector and failed to consider how its contractors can work 
towards reducing those emissions. This neglect increases the 
potential costs of climate change across the federal supply 
chain and exposes taxpayers to unnecessary risks.
    The rulemaking at the center of today's hearing, Federal 
Acquisition Regulation: Disclosure of Greenhouse Gas Emissions 
and Climate-Related Financial Risk, is a first step to address 
greenhouse gas emissions from the federal procurement sector. 
Simply put, the rule seeks to shed light on the emissions of 
the largest federal contractors and prod them to set science-
based targets for reducing those emissions.
    I applaud the goals of this rulemaking. It operates by the 
simple principle that more information leads to better 
decisions and more effective oversight of taxpayer dollars. 
More data is always better. Greater transparency is always 
better. And the federal government, as the customer for its own 
goods and services, has the right to demand more of its 
contractors in order to properly safeguard public resources.
    There have been criticisms of the proposed rule, and I'm 
sure we'll hear more about those at today's hearing. I want to 
note that this proposed rule has not been finalized. The public 
comment period has closed, and I have no doubt that the 
administration will seriously consider all such comments to 
improve the rule before finalization.
    The existential threat posed by climate change demands that 
we do everything within our power to confront it. Federal 
procurement is no exception. The federal contracting sector 
must be prepared to step up, disclose its greenhouse gas 
emissions in a transparent fashion, and start to think about 
how to reduce those emissions in line with America's broader 
emission reduction goals. This rulemaking is a step in the 
right direction, and I hope that today's hearing allows for a 
productive conversation about how best to improve the 
transparency of federal procurement emissions.
    I yield back.

    Chairman Obernolte. We'll move next to our witness panel. 
Our first witness is Eric Fanning, President and CEO (Chief 
Executive Officer) of AIA (Aerospace Industries Association). 
Mr. Fanning, you are recognized for five minutes.

                 TESTIMONY OF MR. ERIC FANNING,

             PRESIDENT AND CHIEF EXECUTIVE OFFICER,

                AEROSPACE INDUSTRIES ASSOCIATION

    Mr. Fanning. Thank you, Chairman Obernolte and Ranking 
Member Foushee. Thank you for inviting me to discuss the 
serious challenges posed by this proposed rule.
    First, let me begin by emphasizing our industry's deep 
commitment to sustainability. U.S. aviation manufacturers 
pledge to achieve net zero carbon emissions by 2050. Today, 
manufacturers are building more efficient planes and more 
sustainable propulsion. They are also minimizing the impact of 
the manufacturing process and advancing the use of sustainable 
aviation fuels.
    Our companies are working daily to reduce their 
environmental footprint, not just because it's the right thing 
to do, but because the market and our customers demand it. We 
strive to work closely with the Federal Government to achieve 
these goals, including supporting appropriate disclosure of 
climate-related information, including GHG and climate-related 
financial risks, in accordance with the Executive order on 
climate-related financial risk.
    But the proposed FAR greenhouse gas emissions rule, while 
well-intended, is not executable for the American aerospace and 
defense (A&D) industry. Under this proposal, Federal 
contractors would be required to disclose emissions and set 
emission reduction targets based on the standards set by the 
Science Based Targets initiative, or SBTi, an international 
nongovernmental entity. This is applicable to direct and 
indirect emissions or scope 1 and scope 2 emissions, which can 
be challenging enough.
    However, the greatest challenge comes from disclosing scope 
3 emissions, the emissions created by suppliers and end users, 
including the emissions generated by aircraft when the airlines 
or the military fly them. For A&D companies, especially small 
businesses, accurately assessing scope 3 emissions is a 
complex, long-range problem that they do not have the capacity 
or capability to execute.
    Furthermore, SBTi does not have sector-based guidance for 
all industries, including the A&D industry. As such, SBTi may 
establish aggressive timelines and rigid standards that don't 
factor in our unique circumstances. For instance, the equipment 
we produce have much longer service lives than most consumer 
products. Any science-based target must take this into account, 
and it's not clear the rule or SBTi would do so.
    Congress should be particularly concerned about the 
national security implications of the rule. If the Pentagon 
provides a total estimate of emissions, will the military then 
be bound to operate within those parameters regardless of the 
threats we encounter? Will disclosing this information publicly 
provide sensitive information, including data about next-
generation platforms and use scenarios to our adversaries?
    What is even more concerning from a security perspective is 
that this rule opens the door for foreign influence over U.S. 
Government procurement. SBTi is led by foreign nationals and 
has no accountability to the U.S. Government. The proposed rule 
taps into other international NGOs (non-governmental 
organizations) to solicit information regarding companies' 
environmental impacts and targets. If a contractor does not 
provide this information, or if SBTi does not approve their 
targets, then the contractor would be ruled ineligible for 
Federal contracts. In other words, it gives a nongovernmental 
international body the authority to determine which American 
companies can and can't do business with the U.S. Government, 
including our military, all without regard to cost, schedule, 
and capability of what that company may offer.
    This rule also places unusually burdensome requirements on 
small- and mid-sized companies that are part of the supply 
chain at a time when the Pentagon and the defense community are 
concerned about the shrinking size of the defense industrial 
base. Companies, especially these small and mid-sized 
companies, increasingly cannot afford the costs of doing 
business with the U.S. Government. This rule would become yet 
another market barrier that could turn companies in the defense 
industrial base to commercial work instead. A diverse defense 
industrial base is critical to our military meeting its growing 
mission set, and this rule would jeopardize that, even as a 
land war continues in Europe and the threat of conflict in the 
Indo-Pacific grows.
    The American A&D industry shares our government's goal of 
reducing carbon emissions. The proposed rule would place 
enormous if even executable burdens on industry, set up a 
regulatory-like process without the normal transparency and 
oversight we have come to expect in the United States, and put 
our national security at risk by making public highly sensitive 
military data.
    Thank you again for having me, and I look forward to your 
questions.
    [The prepared statement of Mr. Fanning follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Obernolte. Thank you, Mr. Fanning.
    Our second witness is Chad Whiteman, Vice President of the 
U.S. Chamber of Commerce. Mr. Whiteman, you're recognized for 
five minutes.

                TESTIMONY OF MR. CHAD WHITEMAN,

            VICE PRESIDENT, U.S. CHAMBER OF COMMERCE

    Mr. Whiteman. Thank you. Chairman Obernolte, Ranking Member 
Foushee, and Members of the Committee--Subcommittee, I'm Chad 
Whiteman, Vice President of Environment and Regulatory Affairs 
for the Global Energy Institute at the U.S. Chamber of 
Commerce. Thank you for the opportunity to present the U.S. 
Chamber's views here to the Subcommittee on the FAR's climate 
disclosure rulemaking.
    Chamber members include Federal contractors large and small 
that provide products and services across diverse industries 
such as aerospace and defense, telecommunications, information 
technology, engineering services, food and hospitality, 
pharmaceuticals, healthcare, energy, and many more. American 
companies are already playing a crucial role in developing 
innovations and approaches to reduce greenhouse gas emissions 
while also spurring the evolution of climate disclosures. 
Companies are also increasingly reporting more information to 
the public about their efforts to reduce their greenhouse 
gases. Many have also made forward-looking statements and 
commitments to reduce their emissions over time.
    While the private sector is making significant progress, 
regulatory decisions must always be informed by a careful 
analysis of the available alternatives, outcomes, and cost-
benefit tradeoffs to ensure that optimal policies are 
implemented. Such regulatory decisions also must be made within 
the bounds of agencies' legal authorities.
    We're concerned that the proposed rule fails to strike the 
right balance and is an inappropriate and inefficient means of 
mitigating the potential effects of global climate change. The 
proposed rule would impose immense costs on government 
contractors of all sizes, costs that would be passed on to the 
government and ultimately to taxpayers. This would undermine 
rather than advance the goal of economic and efficient system 
of contracting that underpins the Federal Property and 
Administrative Services Act.
    Detailed disclosure of climate risk assessment processes 
and risks, inventorying and disclosing scope 1, 2, and 3 
greenhouse gas emissions, and developing and implementing 
science-based emissions reduction targets would require 
thousands of employee hours and saddle contractors with 
billions of dollars in compliance costs. The government's 
acquisition costs would rise as a consequence, and some 
contractors and companies in the supply chain would likely drop 
out of the market entirely, weakening the competitive forces 
that keep prices down.
    The council's pursuit of goals beyond economic and 
efficient contracting exceeds its legal authority. While the 
council can promulgate specific output-based related standards 
to help ensure that the government acquires the goods and 
services it needs at appropriate prices, the council lacks the 
statutory authority to use government contracts as a vehicle 
for furthering other policies like addressing climate change, 
even if well-intended.
    The proposal raises significant issues under the 
Constitution, as it would force contractors to associate with 
and likely follow the speech guidelines of certain private 
organizations whom the council would deputize to do most of the 
standard setting and verification. This unusual arrangement 
would violate contractors' First Amendment rights and would 
transgress longstanding legal limitations on delegating 
legislative and rulemaking authority to private entities.
    The proposed rule would violate the Administrative 
Procedures Act in several respects. Most significantly, the 
council's cost-benefit analysis is flawed and vastly 
underestimates the costs. For example, the council alludes to 
benefits from potential greenhouse gas emissions reductions but 
fails to acknowledge or quantify the costs required to achieve 
such reductions. The actual cost of the council's proposal 
would exceed their estimate of $1 billion for the first year 
and $3 billion over 10 years. The benefits side of the ledger 
fares no better. The council also fails to grapple with the 
duplicative and even conflicting requirements of the Securities 
and Exchange Commission (SEC) is simultaneously proposing to 
impose on public companies.
    Other aspects of the proposal are equally troubling. The 
council fails to account for the disproportionate burden that 
the proposal imposes on small businesses, both directly as 
Federal contractors and indirectly as suppliers of major 
contractors. The role would outsource most of the standard 
setting to private entities that the Federal Government does 
not control, regulate, or monitor. It would undermine national 
security interests. It would set compliance deadlines that are 
impossible to meet. It would require contractors to set 
science-based targets, even if they do not have a viable means 
of meeting the targets in the short timeframe allowed, and it 
would do all of this without the council having adequately 
considered numerous less-restrictive alternatives. These and 
other flaws counsel in favor of abandoning the proposal, as we 
explained further in our detailed written comments submitted to 
the council earlier this year.
    Thank you for the opportunity to testify, and I look 
forward to your questions.
    [The prepared statement of Mr. Whiteman follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Obernolte. Thank you very much, Mr. Whiteman.
    Our third witness is Steven Rothstein, Managing Director of 
the Ceres Accelerator for Sustainable Capital Markets. Mr. 
Rothstein, you're recognized for five minutes.

             TESTIMONY OF MR. STEVEN M. ROTHSTEIN,

              MANAGING DIRECTOR, CERES ACCELERATOR

                FOR SUSTAINABLE CAPITAL MARKETS

    Mr. Rothstein. Thank you, Mr. Chair, Madam Ranking Member, 
Members of the Committee. Again, Steven Rothstein, Managing 
Director of the Ceres Accelerator. Thank you for the invitation 
to be here.
    Ceres is a nonprofit organization, working with investors 
and companies to transform the economy and build a just and 
sustainable future. I'd like to briefly highlight five key 
points in the rule that we're talking about.
    No. 1, the rule will strengthen the ability of agencies to 
deliver on their mission while reducing burden to taxpayers. 
This rule will make the United States stronger. The Federal 
Government spends over $630 billion a year on ranging from food 
to cement to steel and so much more. It would allow the Federal 
Government for the first time to really understand the common 
business practice of measuring and managing climate risk 
associated with that. According to a recent Deloitte survey of 
2000 C-suite executives, 97 percent of those executives say the 
climate will cause business interruptions in the next few 
years. PwC did an annual survey of CEOs. Three quarters of 
those CEOs say that in the next year, the supply chain could be 
disrupted because of climate risk.
    No. 2, by focusing on the Federal supply chain, the rule 
addresses a major source of the climate risk. We've all known 
about the brutal climate events that are happening, but to put 
it in context, NOAA (National Oceanic and Atmospheric 
Administration) highlighted that in the 1980's, we had one 
major a billion dollars or more climate event every four 
months, every four months in the 1980's. In 2010 it was every 
three weeks. This year, it's every two weeks. That is costing 
State and Federal taxpayers today hundreds of billions of 
dollars to prepare and repair for those. So those costs are 
happening now. The--one of the fortunate things about the 
proposed rule is that they only focus on the largest suppliers 
to ease the burden. And as was said earlier, there is only 1.3 
percent of the Federal suppliers that represent 86 percent of 
the emission. So that's a way to ensure that. This is not just 
the United States. Eighteen countries have come together and 
say that they need to reduce emissions not just for emission 
but to reduce business risk. Eighteen countries plus the United 
States established the Net-Zero Government Alliance. Canada's 
done something similar and so many other countries.
    No. 3, climate risk disclosure is now mainstream among 
major companies, including many large Federal contractors. In 
fact, 71 percent, 71 percent of Fortune 500 companies are 
already disclosing their greenhouse gas emissions. They've done 
that even without requirements because it makes good business 
sense. Major Federal contractors like General Dynamics, 
Honeywell, IBM, Johnson Controls, and so many more are 
disclosing their emission reduction targets. Why are they doing 
this? Because they know it makes sense, and their investors 
want it. If you look at the rule, the comments that were 
submitted to the SEC, over 95 percent of investors representing 
over $50 trillion of assets have said they need this 
information because it is a business risk.
    No. 4, this proposed rule has received support broader 
than, to be honest, I would have thought. We did an analysis of 
the elements, and looking at the core elements of the rule, not 
every detail, but it got 19,000 individual supporters and 68 
organizational supporters who generally support, including the 
Council of Defense and Space Industries, BP America, Baker 
Hughes, Global Electronics, National Workforce and Technology 
Council, National Contract Management Association, and groups 
like Taxpayers for Common Sense and Sustainable Purchasing 
Council.
    No. 5, the proposed rule properly leverages standards that 
were developed by the private sector, but we do recommend 
changes from what the FAR Council proposed. Among the steps the 
proposed rule takes to minimize burdens is to leverage the 
private sector standards. Leveraging those standards is exactly 
what Congress sought when it enacted the National Technology 
Transfer and Advancement Act in 1996, but we think to clarify 
the rule and add flexibility Ceres recommends the FAR Council 
not delegate but set minimum Federal standards for science-
based targets and allow major contractors to achieve those 
standards with a widely market-accepted, market-based 
methodology. That can be SBTi, if there is another one, let 
them talk about that, too. We also recommend that there should 
be a third-party process to validate using the same process.
    In summary, this approach adheres to what we recommend as 
guiding principle, leveraging the important work that private 
sector leaders have already undertaken and adhering to best 
science.
    Thank you for the opportunity. I welcome your questions.
    [The prepared statement of Mr. Rothstein follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Obernolte. Thank you, Mr. Rothstein.
    Our final witness is Victoria Killion, Legislative Attorney 
for the Congressional Research Services (CRS). Ms. Killion, 
you're recognized for five minutes.

               TESTIMONY OF MS. VICTORIA KILLION,

                     LEGISLATIVE ATTORNEY,

                 CONGRESSIONAL RESEARCH SERVICE

    Ms. Killion. Thank you. Chairman Obernolte, Ranking Member 
Foushee, and Members of the Subcommittee, my name is Victoria 
Killion, and I'm a Legislative Attorney at the Congressional 
Research Service, or as you know us, CRS. Thank you for the 
opportunity to testify before you today about legal 
considerations relevant to the proposed rule. My testimony 
today will focus mainly on two legal areas, the major questions 
doctrine and the private nondelegation doctrine. If these 
topics sound vaguely familiar but terribly academic, I 
completely understand. My objective today is to help explain 
what these doctrines are, how courts have applied them, and how 
they might affect the current rulemaking.
    Both doctrines stem from constitutional principles designed 
to safeguard Congress' legislative power and are starting to 
become more prevalent in judicial opinions. The major questions 
doctrine is about how courts decide whether Congress has 
authorized an agency to take a particular action. Typically, 
courts examine the statutory text to see if it provides 
explicit or implicit authority for a particular agency 
rulemaking. But there's another consideration as well. The 
Supreme Court has ruled that when a regulation presents a 
question of, quote, ``vast economic and political 
significance'' that exceeds the history and breadth of 
agencies' past assertions of authority, there must be, quote, 
``clear congressional authorization'' for that action. 
Essentially, the doctrine creates a higher bar for an agency to 
show that its regulation falls within the scope of its 
statutory authority.
    If the proposed rule were to be finalized as written and 
challenged in court, a reviewing court might examine the 
anticipated effects of the rule on various industries in the 
economy, the compliance costs for Federal contractors, and how 
the promulgating agencies have exercised their authority in the 
past. If, in the court's view, the rule raised a major 
question, then the court would likely ask whether a Federal 
statute clearly authorized its requirements. In the proposed 
rule, the agencies cited Federal procurement statutes and 
executive orders as authorities for the regulation. 
Accordingly, one question that a reviewing court might consider 
is whether Federal procurement laws clearly authorize the 
rule's requirements.
    Turning to the second legal question, private 
nondelegation, this doctrine provides that Congress may not 
delegate its legislative authority to unappointed private 
entities, and likewise, Federal agencies generally can't assign 
their regulatory authority, which comes from Congress, to 
private entities. Courts have ruled that private organizations 
can assist Federal agencies with implementing Federal law so 
long as they function subordinately to a Federal agency, and 
the government has authority and surveillance over their 
activities.
    One aspect of the rule that could implicate the private 
nondelegation doctrine is the requirement that major 
contractors bidding on a new contract have their emissions 
targets validated by SBTi. As we said, that is a private 
entity. If a prospective contractor subject to that requirement 
does not obtain validation, the proposed rule would create a 
presumption that the contractor is not responsible and thus 
ineligible for the contract. So in evaluating any private 
nondelegation argument, a reviewing court might consider the 
nature of SBTi's role. Is it regulatory or does--or would SBTi 
perform a ministerial or advisory function and whether a 
Federal agency adequately supervises its activities?
    The major questions doctrine and the private nondelegation 
doctrine are evolving legal areas, and CRS looks forward to 
helping the Subcommittee navigate these legal questions.
    Thank you for inviting me to testify. I'm honored to be 
here today, and I look forward to your questions.
    [The prepared statement of Ms. Killion follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Obernolte. Thank you very much, Ms. Killion.
    I will now recognize myself for five minutes for questions.
    And I want to just point out the fact that we can--
reasonable minds can disagree about the wisdom of implementing 
a rule like this, and I know a lot of the testimony that we 
heard this morning was arguments back and forth about whether 
or not this rule is a good thing. But in my opinion, that's not 
why we're here. We're here discussing whether or not the 
Administration has the legal authority to impose that rule, 
absent clear authorization from Congress. And I think everyone 
in this institution should be concerned about that. Because if 
it's not your Administration today, it might be your 
Administration tomorrow. We should all be worried about the 
legislative authority of Congress being usurped by the 
executive branch.
    I also am very concerned about the fact that this 
decisionmaking authority was delegated apparently to a foreign 
company with no competitive process involved in its selection. 
To me, that raises some serious legal and national security 
issues, and I think that, regardless of what your thoughts are 
on the wisdom of the rule, everyone ought to be concerned about 
that.
    Ms. Killion, I enjoyed your testimony about the legalities 
involved here. I wanted to ask you about the major questions 
doctrine. You had testified that some of the difficulties when 
an Administration takes actions that don't have clear 
authorization from Congress, but I'd like your opinion, in this 
case, does the DOD, the GSA (General Services Administration), 
or NASA (National Aeronautics and Space Administration) have a 
clear grant of authority to require businesses to disclose and 
reduce their greenhouse gas emissions?
    Ms. Killion. Thank you for that question, Chairman 
Obernolte. So under the major questions doctrine, the first 
consideration would be whether this presents a major question. 
So your question gets to the second part of the doctrine. If 
there is a major question, would there be clear congressional 
authorization? Now, unfortunately, the major questions doctrine 
is in a state of flux right now, and it is still evolving, so 
we don't know exactly the parameters of what constitutes clear 
congressional authorization. How specific does the law have to 
be? Can the court look at things other than the text of the 
statute?
    When it comes to the authorities cited here, the agencies 
cite three statutes, four Executive orders and an OMB 
memorandum as authority for the rule, so there's a lot to 
unpack, and I'm happy to take specific questions on those.
    Chairman Obernolte. All right. So is there specific 
authorization language for those agencies to require the 
disclosure of greenhouse gas emissions from companies who are 
involved in procurement?
    Ms. Killion. Unfortunately, Chairman, that is not something 
that CRS can answer because of the open questions with the 
major questions doctrine.
    Chairman Obernolte. OK, well, I mean, it seems to me like 
this is just a factual question about the regulations that have 
actually been passed--I'm sorry, the legislation that's 
actually been passed by Congress because in combing through 
them, we can't find any authorization for these agencies to 
take this action.
    Ms. Killion. So what I can say is the statutes that I've 
reviewed, which are the ones that the agency is relying on in 
the authority citations in this proposed rule, do not appear to 
specifically use the words in this regulation. That said, we 
don't know whether--how much specificity is required under the 
Supreme Court's major questions doctrine. So it is a question, 
I think, of an open legal issue about how to apply that 
doctrine.
    Chairman Obernolte. Sure. I know other agencies have been 
going through this as well in the courts, the EPA 
(Environmental Protection Agency) in particular.
    Ms. Killion. Yes.
    Chairman Obernolte. All right. Mr. Whiteman, I wanted to 
ask about scope 3 emissions because you brought that up in your 
testimony. And having been in business for 30 years myself, I 
was asking myself how on earth I would comply with the 
requirement to disclose scope 3 emissions, which, as you said, 
are not emissions that a procuring company would create but 
instead emissions that the suppliers to that company and the 
end users of that company's products would create. Can you talk 
a little bit more about that? I mean, for example, what would 
happen in the case where a supplier refused to disclose its own 
emissions to someone who was bidding on a Federal procurement 
contract?
    Mr. Whiteman. It's a really good question, and it's an 
important point to bring up. Scope 3 emissions are quite 
challenging to estimate, and I think in this rulemaking what is 
even more concerning is if you're able to identify the scope 3 
emissions, then you have to go out and actually reduce your 
emissions. You set the targets, and then you have to actually 
reduce them. So you have to not only reduce them at your 
company level, but you have to get your suppliers all through 
the supply chain to make commitments to do the same. And I 
think that's one of the unaccounted-for impacts of the 
rulemaking. It doesn't just affect the 6,000 or so estimated 
contractors. It affects a much broader number, all the way down 
through the supply chain. And the council didn't adequately 
analyze that.
    Chairman Obernolte. All right. Thank you very much. I can 
see I'm out of time. Maybe--hopefully, we'll have time for 
another round of questions.
    I now yield to the Ranking Member, Mrs. Foushee, for five 
minutes for questions.
    Mrs. Foushee. Thank you, Mr. Chairman.
    Mr. Rothstein, this rule will provide unprecedented insight 
into the climate risks contained without the Federal 
procurement sector. As you said in your testimony, the Federal 
Government is the world's largest purchaser of products and 
services. Therefore, the government has a weight of 
responsibility to ensure American taxpayer money is stewarded 
responsibly. How will the proposed rule, if finalized, help the 
government make informed decisions to protect taxpayer dollars 
from climate-related risks? And further, are agencies required 
to take any action based on the information disclosed to them 
pursuant to this rule if finalized?
    I would like to ask unanimous consent to enter Ceres' 
public comment into the record.
    Chairman Obernolte. Without objection.
    Mrs. Foushee. In those comments and in your testimony, you 
mentioned the enormous amount of money the Federal Government 
spends as the world's largest purchaser of goods and services. 
That's an incredible opportunity to move the ball forward on 
crucial priorities like climate change. Can you please 
elaborate on how this rule and thoughtful procurement policy in 
general can move the market at large?
    Mr. Rothstein. Thank you very much. I'm going to date 
myself, but I--in the 1980's, I worked on a project looking at 
the Federal Government exploring the idea of recycled paper, 
and that moved the marketplace at the time. Clearly, climate 
change is an enormous risk right now, but it's really a 
financial risk. If you look at it, as I say, we are spending 
hundreds of billions of dollars. NOAA projected that last year, 
our country--just looking at the storms--a billion dollars and 
above is $160 billion in direct costs. That doesn't count 
healthcare costs and other costs for our country.
    So the first question is, what are the costs today? The 
costs are enormous, and they're growing exponentially. The one 
thing that the scientists have taught us over the last decade 
is, if anything, their estimates have been underreported in 
terms of what those costs have been. So--and there isn't any 
other issue that we wouldn't want a business leader or 
government official to have good information about, so we think 
this is critical.
    The second question you asked about in terms of what would 
be requirements, it's--that's really up to the senior people. 
There is no requirement for a procurement officer to take 
certain action except for just kind of filling out the box, and 
it's up to the senior people in the agency to make a 
determination, as it should be. And we would want someone--for 
example, if the Department of Defense is relying on contractors 
that are using, let's say, the Panama Canal or Mississippi 
River and there's droughts and those ships are delayed, that 
can affect national defense. In fact, the Defense Department 
has stated that one of the national issues from a security 
perspective is climate. So we think this would help taxpayers 
reduce climate risk, reduce healthcare costs, as well as 
improve national security without putting burdens. And just to 
highlight, this is only for the largest, largest of suppliers. 
One-point-three percent have to disclose, but in terms of their 
emission reductions, that's less than one percent. So it's a 
small handful of the Federal suppliers.
    Mrs. Foushee. Some criticism of this rule has alleged that 
requiring information on climate risks from prospective 
contractors will undermine the government's ability to make 
national defense the priority. What is your response to that?
    Mr. Rothstein. First, just the opposite. Again, if you look 
back at what the Department of Defense has said, that having 
more information is important. It's also that there are 
thousands of companies that will have to release this anyway 
under European rules. There's a new law that was just passed in 
California that includes scope 1, scope 2, scope 3. That's not 
just California companies, but it's companies operating across 
the country, both public and private so that this information 
is out there. And again, 92 percent of Fortune 500 companies 
today publicly release some climate information. They do that 
because they understand that they want it, their investors want 
it, their employees want it. It makes companies more secure and 
our government more secure.
    Mrs. Foushee. Thank you, Mr. Chairman. I yield back the 
balance of my time.
    Chairman Obernolte. The gentlewoman yields back.
    We'll go down to Congressman McCormick. Sir, you're 
recognized for five minutes for your questions.
    Mr. McCormick. Thank you, Mr. Chair. By the way, Mr. Chair, 
I appreciate you talking about the legal authority between the 
executive and the legislative branches and who gets to delegate 
what authority there is to begin with. That's what's really 
concerning with me. As a matter of fact, in the last couple of 
years what we've seen is the legislative branch being overrun 
by the executive branch, being able to tell us where we invest 
our IRA (individual retirement account) savings, where the DOD 
gets to advertise, whether we have some modifications on our 
weapons. I think it's interesting when we talk about this, I 
realized that there's an alarming overreach by the executive 
branch that's unchecked and unconstitutional. Matter of fact, I 
would--I'd say that maybe the new moniker should be King Joe 
based on the way he's acting without any authorization from the 
balanced government system that we designed by our 
Constitution.
    For those of you who want to talk science, I heard what you 
guys had to say. Somebody was talking about global warming. 
Let's talk the science for a second. I'm a scientist, M.D., 
MBA. I've done some classes, probably just like you guys. One 
of the things that I don't understand when it comes to carbon 
emissions--because that's what we're talking about, right? 
We're not producing methane. Now, animals are other--and land 
waste and stuff like that.
    We're going to talk about carbon emissions. What is the 
atmosphere made of primarily? Overwhelmingly, nitrogen, right? 
Then oxygen. And what's the percentage of carbon dioxide in the 
atmosphere? Anybody want to answer that? Nobody wants to answer 
that? Scientifically, we--it's an easy question, five minutes 
on Google, 78 percent nitrogen, 21 percent oxygen. Carbon 
dioxide is .04 percent. Of that, what percentage comes from 
manmade of that .04? Anybody want to answer that? Google will 
tell you it's around 11 percent. So 11 percent of .04 percent 
is produced by manmade, but that's what we're focused all of 
our attention on. That's what's caused global warming, that 
retention by that .04 percent of the carbon emissions that we 
are 11 percent of is what we're debating here, the hundreds of 
billions of dollars we want to put in to prevent that, and 
that's going to prevent global warming and cooling? Because 
we're talking about environmental change, which can be either. 
And over the millennium--I just recently watched them say that 
it's the hottest month in 100,000 years. Based on what 
scientific evidence? What reporting did we have around the 
world 100,000 years ago? I didn't see that Egyptian 
hieroglyphic. Did you? No answers? When I ask scientists all 
the time, no answers on how we are producing this climate 
change.
    I'm not saying there's not climate change. I'm not saying 
there's not scientific things we can do to keep a clean 
environment. I'm the son of a forest ranger. I believe in a 
clean environment. I will be the first one to pick up trash in 
the street when I walk by it. But let's not get carried away 
and limit our ability to get things done, to keep our global 
leadership instead of globalism.
    Mr. Fanning, you made a great point. A foreign entity who 
gets to tell the United States what's going on based on an 
Executive order, would you consider that globalism?
    Mr. Fanning. I don't know that I would try to label it 
globalism or something else. I'm just concerned that it puts 
other nations in the decision process in what our Pentagon 
should buy to defend the country.
    Mr. McCormick. I couldn't agree with you more. As matter of 
fact, if you're going to be King Joe, I don't know why you'd 
put the power back in somebody else's opinion.
    Now you talk about, Mr. Rothstein, other people in the 
world having the same criteria. When we put ourselves on par 
with everybody else, are we putting ourselves in jeopardy of 
actually being reined in by other countries?
    Mr. Rothstein. Congressman, first, thank you for your 
public service and for your question. We're not on par. We're 
the greatest country in the world.
    Mr. McCormick. Amen. We agree on that.
    Mr. Rothstein. And I believe it's actually patriotic to 
think about our taxpayers, to think about our national defense, 
to think about our climate, which scientists agree across the 
board that----
    Mr. McCormick. OK. Let me interrupt you there, please. 
Scientists agree across the board. I debate that science 
because I read scientists from both sides, just like I do on 
economic policy. Not everybody believes in modern monetary 
theory. Not all scientists believe that we are the cause of 
global warming. Now we like to pretend like that's the case, 
and the President--sorry, King Joe likes to say that we have 
scientists and universal agreement. That's simply not true.
    I'm out of time, but I want to make a point that we have 
silenced people who dissent from King Joe, and I think that's a 
big problem today, and we need to address that first. Thank 
you. With that, I yield.
    Chairman Obernolte. The gentleman yields back.
    We'll hear next from Mr. Casten. Congressman, you are 
recognized for five minutes.
    Mr. Casten. Thank you. And I am really troubled that we are 
debating science on the Science Committee. I was a molecular 
biology major. I would no more claim to be a doctor than a 
doctor should claim to be a climate scientist. Do better. Fifty 
percent of all the CO2 we have ever emitted as a 
species is since I graduated from college in 1993, and we're 
going to sit here denying? My God.
    Let's move on to some more serious conversations. Mr. 
Rothstein, if I understand right that a lot of companies are 
voluntarily reporting their climate disclosures, and there is 
no consistent standard that they currently use to do that, 
correct?
    Mr. Rothstein. Correct.
    Mr. Casten. Yes. OK. Mr. Whiteman, a number of my 
Republican colleagues are talking about putting a carbon border 
adjustment tax in order to protect U.S. steel manufacturing 
because U.S. steel has less carbon impact than Chinese steel. 
Do you agree that U.S. steel is cleaner than Chinese steel?
    Mr. Whiteman. I'm not sure I know enough to opine on that, 
but----
    Mr. Casten. Well, let me give another question. The U.S. 
gas industry often says that we should increase U.S. gas 
exports because it's cleaner than the fuels we displace around 
the world. Do you agree with those--that statement?
    Mr. Whiteman. Industry has been--is some of the cleanest 
industry in the world here in the United States----
    Mr. Casten. OK. How do you possibly know that if we don't 
have consistent climate reporting? That's my point, right? Like 
we can talk a good game, but everybody's reporting wildly 
different things because we don't have consistent standards.
    Mr. Rothstein, is a U.S. multinational that does business 
in Europe subject to European climate disclosure rules?
    Mr. Rothstein. Yes, thousands of them.
    Mr. Casten. OK. Does anybody on the panel think that it is 
in the interest of the United States not to lead? Now, I ask 
that question because I was in Madrid at the climate conference 
after the prior President pulled us out of the Paris Climate 
Accord. We were the only country in the world that had decided 
not to be a part of that treaty. And I got pulled aside by some 
of our European colleagues who said can you please take this 
back to your country and let them know that we have direct 
experience here in Europe that really bad things happen when 
the United States chooses not to lead?
    The question sitting before us here is not some completely 
fabricated major questions doctrine. And let's be really clear. 
This is not something with any robust legal precedent. This is 
a question of do we think that we in the legislative branch are 
going to completely cede our authority to the judicial branch 
to decide what we meant? If anybody on the other side of the 
street has a question about what Congress meant, they should 
give us a call and we can tell them, but all of us know it is 
insane for us to specify every little detail we want in a 
proposal. We give the executive branch legal authority to 
expand on these things, and if we're not going to push back, we 
are basically saying that this article 1 branch is less worthy 
of our coequal powers than the judicial branch is, the 
unelected judicial branch, I might add.
    So to sit here and say do we think that the U.S. Government 
has the legal authority to lead? Do we think that the U.S. 
Government has the legal authority to collect data necessary to 
make decisions? Do we believe that the U.S. Government has the 
legal authority to actually follow the laws of physics and 
assume that they are immutable, even if you couldn't get a vote 
on the floor today, that agrees that the laws of thermodynamics 
are entirely nonnegotiable? And we're going to argue that 
that's because of a major questions doctrine? That is insanity.
    With due respect to my friends on the other side of the 
aisle, what the hell are we talking about here? Get the data. 
Disclose the data. There's $8.4 trillion of investors who want 
to invest in ESG (environmental, social, and governance) funds, 
who want clear disclosure rules. There's massive amounts of 
capital that are flowing into cleaner energy, giving us access 
to cheaper energy. If we want to win the future, if we want to 
own the technologies, my God, get the hell out of the way.
    I yield back.
    Chairman Obernolte. OK. The gentleman yields back.
    We'll hear next from Congresswoman Tenney. Congresswoman, 
you are recognized for five minutes for your questions.
    Ms. Tenney. Thank you, Chairman and Ranking Member Foushee, 
for holding this hearing. And thank you to the witnesses for 
being here.
    Mr. Chairman, I ask for unanimous consent to insert into 
the record Science Based Targets--SBTi's articles of 
incorporation, a document from ``We Mean Business'' in quotes 
stating that we are--they are a project of the New Venture Fund 
and the ``who we are'' page from New Venture Fund, which states 
that they're managed by Arabella Advisors.
    Chairman Obernolte. Without objection, so ordered.
    Ms. Tenney. Thank you, Mr. Chairman.
    While my colleagues have focused on many highly concerning 
aspects of the Biden Administration's proposed rulemaking 
requiring companies to contract with SBTi, I want to focus on 
the motivation for this decision. Why is the Biden 
Administration forcing companies to use only SBTi as opposed to 
any other climate group? The answer is surprisingly simple. 
This is a left-wing dark money patronage scheme. Let's put 
aside the fact that SBTi is registered in the United Kingdom 
and was only formed on June 26th, 2023, eight months after this 
proposed rule was issued.
    SBTi's certificate of incorporation as a private limited 
company states that their largest owner is the We Mean Business 
Coalition, Inc., which is under the Arabella Advisors umbrella. 
Who is the We Mean Business Coalition? According to documents 
from We Mean Business, they are simply a project of the New 
Venture Fund, again, going back to Arabella Advisors. And 
according to the website, it is solely wholly owned by Arabella 
Advisors.
    And for those unfamiliar with who Arabella Advisors is, 
InfluenceWatch describes them as--and I quote--``a 
philanthropic consulting company that guides the strategy, 
advocacy, impact investing, and management for high-dollar, 
left-leaning nonprofits and individuals,'' close quote. The 
financial supporters and donors of Arabella Advisors and its 
subsidiaries include George Soros, the Bill and Melinda Gates 
Foundation, Michael Bloomberg, and the American Federation of 
Teachers just to name a few, although we don't know who the 
rest are because it's a dark money fund.
    Simply put, Arabella Advisors uses the New Venture Fund, 
along with the Windward Fund, the Sixteen Thirty Fund, the 
Hopewell Fund, and the North Fund to funnel money to Democrats 
and left-wing causes. Through these funds, Arabella Advisors 
finances other ventures such as the Demand Justice Initiative, 
the Demand Progress Education Fund, Fix the Court, 
Redistricting Reform Project, and the Climate and Clean Energy 
Equity Fund. These radical groups advocate for everything from 
expanding the Supreme Court, partisan gerrymandering, defunding 
our military, abortion on demand, and much more. How does 
this--deep this web of dark money go? Ceres, which Mr. Steven 
Rothstein, one of the witnesses here represents, received $3.3 
million from the New Venture Fund and is an original founder 
and part of the We Mean Business Coalition, which owns SBTi.
    This hearing is not about the existence of dark money. It's 
about the Biden Administration's new, unconstitutional proposed 
rule forcing companies to contract with a subsidiary of Biden's 
donors left-wing money group. The forced contracting will 
undoubtedly provide substantial profits for SBTi, creating new 
capital which can be moved through this dark money web to fund 
left-wing priorities and other left-wing politicians.
    This is a network of corruption which undermines the trust 
that the taxpayers put in us, and while I appreciate the 
witnesses for being here, the only one who can ultimately give 
us answers we need is the Council on Environmental Quality 
Chair Brenda Mallory. While I understand that this Committee 
invited Chair Mallory to testify, she unfortunately declined, 
which is simply unacceptable. The American people deserve the 
answers, and I urge this Committee to subpoena Chair Mallory 
for another hearing on this matter. We must get to the bottom 
of this.
    I do have one question with the little bit of time that I 
have left. I'd like to direct this to Ms. Killion. As I laid 
out the direct link between SBTi and Arabella Advisors, which 
means SBTi can be used to line the pockets of Democratic donors 
and left-wing dark money groups, under this precedent, if this 
rule were to become finalized, under the precedent established 
by this Administration with this rule, you wouldn't object to a 
Republican Administration amending a proposed rule to mandate 
that validation services be provided by companies primarily 
tied to the GOP donors, would you?
    Ms. Killion. Thank you so much, Congresswoman, for that 
question. I want to make sure I understood your question and 
what--it is as to the issue of delegating authority to SBTi?
    Ms. Tenney. Well, let me ask, would you--if this were the 
Republicans asking for a proposed rule to use a dark money 
donor to the Republican side, would you approve of that rule?
    Ms. Killion. Well, I think as an attorney for the 
Congressional Research----
    Ms. Tenney. Yes--was that a yes, you would approve of it?
    Ms. Killion. Oh, I didn't say yes or no. I think that's the 
information that I can't verify.
    Ms. Tenney. Well, if you're an attorney----
    Ms. Killion. It's outside of my----
    Ms. Tenney [continuing]. I'm an attorney as well. Can you 
just give me your opinion on it as an attorney? Would this be 
something that would be good for the taxpayers to use a dark 
money----
    Ms. Killion. Well, here's the----
    Ms. Tenney [continuing]. Subgroup to fund----
    Ms. Killion. Here's what I can say----
    Ms. Tenney [continuing]. Organizations----
    Ms. Killion [continuing]. Because I want to be careful----
    Ms. Tenney. Yes.
    Ms. Killion [continuing]. Because I don't have any of the 
information that you're talking about. I wasn't prepared on 
that for this testimony. But here's what I can say about the 
legal aspect of that. One of the considerations in the private 
nondelegation doctrine is a question of whether the government 
is delegating regulatory authority to a competitor in industry. 
There have been----
    Ms. Tenney. Well, let me stop you on that because I'm going 
to reclaim my time. I'm out of time. Do you think it's fair 
that we allow that to happen, that we only have one entity that 
the government goes to, to confirm these contracts and not a 
choice?
    Ms. Killion. That is a policy question that I can't opine 
on as an attorney for CRS.
    Ms. Tenney. I'm afraid my time has expired. Thank you very 
much. Appreciate it.
    Chairman Obernolte. The gentlewoman yields back.
    We'll hear next from Congressman Babin. Sir, you're 
recognized for five minutes.
    Mr. Babin. Thank you very much, and thank you, witnesses 
for being here, appreciate it. Ranking Member Foushee and Mr. 
Chairman, thank you.
    I have a series of questions for you, Mr. Whiteman, if you 
don't mind, on this rule. I want to ask, how is this rule 
different from the SEC's climate disclosure rule?
    Mr. Whiteman. Well, the SEC's climate disclosure rule was 
set up to protect investors, whereas this rulemaking is set up 
to disclose emissions and ultimately to try to reduce those 
emissions. So it's a much different scheme. One is about public 
disclosure, and this one is--the FAR rule is about public 
disclosure by going further and actually requiring emissions 
reductions.
    Mr. Babin. OK. Is there any concern in the business 
community of having to comply with several different greenhouse 
gas reporting standards and, as an example, SEC, FAR, and EPA?
    Mr. Whiteman. That's a really good question, and I think 
there are a lot of concerns with that. One, there's concern of 
the cost of redundant conflicting reporting requirements. I 
think there are issues with the public trying to understand 
which are the actual valid real emissions or emissions 
reductions. And this eventually flows into issues of litigation 
where companies could be sued under false claims acts for 
actually saying they're going to reduce their emissions, but a 
third party is accusing them of not actually doing what they 
said. If you have three different standards, it makes it much 
more difficult for companies to show, OK, here's actually what 
my emissions are, and what I said I've done is actually true.
    Mr. Babin. Got you. Are the compliance deadlines that are 
set within this rule in your opinion reasonable and achievable?
    Mr. Whiteman. I don't think they are. For the first part--
do you want me to elaborate? The first part----
    Mr. Babin. Yes, sir.
    Mr. Whiteman [continuing]. Of the disclosure part is 
disclosing scope 1 and scope 2 emissions. They're required to 
be done within one year of finalizing the rulemaking. The 
problem is you have to account for 12 continuous months of 
emissions reporting to actually be able to report that. So 
literally day one that the rulemaking is finalized, you would 
actually have to start recording your emissions and--or 
registering them, which is an impossible task, not knowing what 
is actually in the final rulemaking.
    Mr. Babin. OK. Thank you. And then a question for Mr. 
Fanning if you don't mind. Certain businesses such as those in 
space and aviation require extensive use of fossil fuels. What 
are some of the challenges that those businesses will face in 
setting emission reduction targets and then having to comply 
with them?
    Mr. Fanning. I think the issue for aerospace and defense, 
sort of riffing on what my seatmate here had to say, is not 
knowing what the requirements are going to be, not 
understanding what this organization SBTi is thinking in terms 
of aerospace and defense, is thinking in terms of sector 
guidance, is thinking in terms of how they're going to define 
what it is they want you to report and how to set these goals 
and then how to achieve these goals. Most of the companies in 
aerospace and defense are already trying to do that right now 
because of market demand. And in fact, all of the major 
companies in aerospace and defense is defined by the rule $50 
million or more in government contracts are disclosing some 
financial climate risk already.
    For us, the bigger issue with this rule is scope 3. It does 
sweep up the industrial base, the supply chain. The big defense 
companies have thousands of companies in their supply chain, 
and so it would go far beyond the number of companies defined 
in the analysis of the rule and require us to understand how 
the end user is going to use the product, which is most of what 
falls into scope 3 when you're in an industry that's building 
things that are meant to last for 30 years.
    Mr. Babin. OK. One more I would ask Mr. Whiteman again. 
What is the business community's perspective on the use of 
these private entities to develop, revise, and enforce the 
provisions of the rule? I mean, I know where you're going with 
it, but just for the record.
    Mr. Whiteman. There's a lot of concerns. I think one of the 
main concerns is that these third parties could change the 
standards at any time. They could do it outside of the notice 
and comment process, which is established under the 
Administrative Procedures Act, which allows the opportunity for 
the public to take a look at the proposal, evaluate it, and 
provide comment and requires the regulatory agency to then 
respond to those comments. So there's accountability. There's 
transparency issues that are built in there. And that's not 
built into this regulation if you're relying upon third 
parties.
    Mr. Babin. Absolutely. Thank you very much, and I'm out of 
time so I yield back.
    Chairman Obernolte. The gentleman yields back.
    We'll hear next from Congressman Miller. Sir, you are 
recognized for five minutes for your questions.
    Mr. Miller. Thank you to the Chair, and thank you to the 
Ranking Member and all the witnesses who are with us here 
today. Thank you for your time and patience.
    Mr. Whiteman, my first question is for you. Do you think 
this rule will reduce the participation of small businesses and 
diversity in Federal contracting and inhibit innovation?
    Mr. Whiteman. I think it will. I think because of the 
costs, I think because of the complexity of the rulemaking, the 
timing of compliance, I think it's just going to put downward 
pressure on the participation of small businesses, who 
proportionally are going to have much higher costs than bigger 
businesses to comply with something like this rulemaking.
    Mr. Miller. And--thank you for that answer.
    And second question for you, Mr. Whiteman. Are there any 
outside factors that you believe may make it more difficult for 
companies to comply with these standards?
    Mr. Whiteman. Yes, certainly outside factors, I think there 
are many factors that make it difficult for folks to comply. 
Certainly, the third-party standards make it challenging. 
Again, getting back to what I said to Representative Babin, if 
you're looking at third parties changing the standards 
constantly, how are you going to know what your standards are 
going to be in the future? I think there's a lot of litigation 
potential under the False Claims Act and not knowing where 
these public policies are going to go. Some of the changes 
recently at the SBTi have been significant, reducing the period 
of time to set targets just due to outside global policy 
reports that are driving their target setting.
    Mr. Miller. Thank you for that answer.
    Mr. Rothstein, my next question is for you. Do you see any 
conflict of interest with SBTi being incorporated in a foreign 
country and being able to set costly regulatory standards that 
may favor foreign investors or nations, some of whom may not be 
friendly? And I believe we've seen some of that.
    Mr. Rothstein. First, thank you again for your public 
service, Congressman, appreciate it.
    Ceres believes that the FAR Council should adopt their own 
rule. They should look at what's in the private sector, 
including SBTi, but not delegated specifically to SBTi, but 
it's important to use market-based and science-based approach, 
and if there's something else out there, look at that, too.
    Mr. Miller. Thank you. How can companies--and this is for 
you as well, sir. How can companies meaningfully engage in the 
standard-setting process if third parties can set or revise 
standards without going through a public notice and comment 
process that is normally required for Federal regulations?
    Mr. Rothstein. Again, we believe that the FAR Council 
should set regulations, utilize the best practices, as the act 
I talked about earlier from 1996 is looked for, and just to 
highlight that this would only be covering for the largest 
companies, and then for them, their largest on the supply 
chain. So we talked about scope 3 earlier. It is not every 
company in the supply chain. It's really the largest ones that 
have the most material impact. The others can be used for 
averages, that there are thousands of companies around the 
world using this now, and so it's--they found that it is a 
practical way to work.
    Mr. Miller. OK. Mr. Chairman, this is all the questions 
that I have, and I yield back. Thank you.
    Chairman Obernolte. The gentleman yields back.
    We'll hear next from Congressman Kean. Sir, you're 
recognized for five minutes.
    Mr. Kean. Thank you, Mr. Chairman.
    Either Mr. Fanning or Mr. Whiteman, there is clear evidence 
that Russia has in the past funneled millions of dollars 
through nongovernmental organizations to influence U.S. energy 
markets. Are there concerns among your membership that SBTi is 
susceptible to such influence from Russia or other countries or 
other entities?
    Mr. Whiteman. I can take that question. Thank you. I think 
there is some concern there in that SBTi does take funding from 
outside parties. And certainly, with the United States 
exporting larger volumes of LNG (liquefied natural gas) to 
Europe to support our allies, you could see that certain 
countries, Russia, may have an incentive to influence that 
process to impose higher costs on the oil and gas industry here 
in the United States to create a competitive advantage.
    Mr. Kean. Ms. Killion, given this requirement--the 
requirement of a clear grant of statutory authority and vast 
economic and political significance under the major questions 
doctrine, does the collaboration with CEQ change the authority 
of DOD, GSA, and NASA are required to maintain in order to 
promulgate this regulation?
    Ms. Killion. Thank you for that question, Congressman Kean. 
My understanding of CEQ's role here is that--and this is just 
based on the Executive orders detailing CEQ's involvement here. 
So Executive Order 14030, for example, requires consultation 
with the Chair of the Council on Environmental Quality. So in a 
consultative role, I don't think that CEQ's involvement would 
affect the authority for the rule which is not promulgated by 
CEQ. The rule is promulgated by the FAR Council, the DOD, GSA, 
and NASA.
    Mr. Kean. Mr. Fanning, do your members have concerns as it 
pertains both meeting the scope 3 requirements outlined in the 
proposal, as well as safeguarding sensitive information against 
foreign actors?
    Mr. Fanning. Thank you. Yes, we do. The difference in this 
rule from what's taken place already is the addition of the 
scope 3 reporting requirements. For an industry like aerospace 
and defense, again, that builds platforms that last decades and 
has a global supply chain and a global market, being able to 
get accurate information to aggregate to roll into that report 
seems unexecutable. But when you add in the national security 
component because if you're talking about Federal contractors 
in aerospace and defense, the Department of Defense is the 
biggest customer, we're not even sure they would offer that 
information, nor would we want them to for national security 
reasons because part of the rule, if you read through all of it 
and carry it out, is that this information is meant then to be 
transparent and shared publicly, so all of our adversaries 
would have access to it as well.
    Mr. Kean. Thank you. Thank you, Mr. Chairman. I yield back.
    Chairman Obernolte. The gentleman yields back. That 
concludes our questioning.
    I want to thank all of our witnesses for being here and for 
your valuable testimony today and all of our Members for their 
questions. It's been an interesting and very emotional topic, 
and I hope we have a further discussion on this. The record 
will remain open for 10 days for additional comments and 
written questions from our Members.
    This hearing is adjourned.
    [Whereupon, at 11:06 a.m., the Subcommittee was adjourned.]

                               Appendix I

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                   Answers to Post-Hearing Questions
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                              Appendix II

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                   Additional Material for the Record


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           Report submitted by Representative Valerie Foushee
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          Documents submitted by Representative Claudia Tenney
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