Skip to content

menu

Reed Smith LLP logo
HomeAboutOur ServicesSubscribeTopicsContact
Search
Close

EHS Law Insights

Comment and analysis by Reed Smith lawyers on the latest developments in Environmental Health & Safety

Environmental, Social and Governance Legislation in the Biden Era: The Climate Risk Disclosure Act of 2021 PART II: Oil and Gas Sector

By Megan Haines, Todd O. Maiden & Jennifer A. Smokelin on 14 July 2021
Print:
Email this postLike this postShare this post on LinkedIn

In a previous post, we reported on the Climate Risk Disclosure Act of 2021 (the “Act’) being placed on list of all bills reported from committee and eligible for House floor action,  some sweeping changes required by that Act, and the Act’s uncertain future in the Senate.

This Part II focuses on the effect of the Act on companies engaged “in the commercial development of fossil fuels,” that is, oil and gas companies.

It is important to note that the requirements on oil and gas companies under the Act apply to any “covered issuer” that is commercially develops fossil fuels.   The term ‘covered issuer’ means an issuer that is required to file an annual report under subsection (a) or section 15(d) of the SEC Act.

There are significant disclosure obligations under the Act that are proposed to specifically apply to oil and gas companies.  Under the Act, all oil and gas companies would be required to report: (1) an estimate of total and disaggregated amounts of direct and indirect GHG emissions attributable to combustion, flaring, process emissions, directly vented emissions, fugitive emission/leaks and land use changes; (2) the sensitivity of reserve levels to future price scenarios; (3) the percentage of companies’ reserves developed under several different “potential future state of the market” scenarios; (4) a forecast for development prospects under these  different scenarios; (5) potential GHG emissions embedded in proved and probable reserves; and (6) methodologies used for detecting and mitigating fugitive methane emissions.

This final category deserves special attention.  The final category requires a number of very specific disclosures of particular relevance to the oil and gas sector, such as data or information concerning the frequency of leak checks, processes and technology to detect leaks, the percentage of assets covered by disclosed methodologies, reduction goals for methane leaks, the amount of water withdrawn from freshwater sources to support operations and the percentage of water from regions of waste stress or wastewater management challenges.  Many oil and gas companies have fought regulation of this type on a state level and should be aware that the regulation is creeping in on a federal level though the “back door” of corporate disclosure.

Undoubtedly controversial, the Act may not survive the Senate. However, oil and gas companies should be cognizant of the far reaching proposals contained therein.

Posted in Emerging Legislation and Regulation, Environmental, Social & Governance, Regulatory Compliance
Tags: Biden administration, climate change, ESG, Oil and Gas
Photo of Megan Haines Megan Haines
Read more about Megan Haines
Photo of Todd O. Maiden Todd O. Maiden
Read more about Todd O. Maiden
Photo of Jennifer A. Smokelin Jennifer A. Smokelin
Read more about Jennifer A. Smokelin
Related Posts
The Biden Administration and U.S. Agencies Publish a Joint Policy Statement and Principles on Voluntary Carbon Markets
June 10, 2024
SEC Approves Long Awaited Climate Disclosure Rules
March 11, 2024
Coming Soon: California Climate Disclosure Bills
September 21, 2023

Subscribe to EHS Law Insights

Updates direct to your inbox
Subscribe by Email

EHS Law Insights

View Our Network of Blogs
Published by
Reed Smith LLP logo
RSS Facebook LinkedIn YouTube
Privacy PolicyDisclaimer

About Our Firm

At Reed Smith, everything we do is to apply our global experience in law to drive progress for our clients, for ourselves and for our communities. We are focused on outcomes, are highly collaborative and have deep industry insight. When combined with our local market knowledge and innovative mindset, this allows us to anticipate and address the needs of our clients and help them achieve their goals.

Our team of 3,000 people (including more than 1,700 lawyers) operate across 31 offices in the United States, Europe, the Middle East and Asia.

Read More...

Topics

Archives

Copyright © 2025, Reed Smith LLP. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo