Improving Environmentally Conscious Procurement Through Broader Responsibility Determinations and the EPA's Suspension and Debarment Powers

Abstract

The use of broader responsibility determinations and suspension and debarment procedures may promote higher standards of environmentally conscious practices in government procurement. Suspension and debarment powers are available for the government to protect its interests and, when they are used, indirectly promote environmentally conscious behavior from contractors. The U.S. Environmental Protection Agency (EPA) has the ability to suspend or debar companies and individuals from government contracts, subcontracts, loans, grants, and other assistance programs. Statutory debarment by the EPA can occur following a criminal conviction under either the Clean Air Act or the Clean Water Act, while discretionary suspension and debarment may be warranted more broadly to address waste, fraud, abuse, poor performance, environmental noncompliance or other misconduct. The EPA has the ability to induce current and prospective contractors to enact environmentally conscious practices through the use of their discretionary suspension and debarment powers. Suspension and debarment are protective measures exercised to protect the government’s interests, and their use could further the federal government’s stated goal of minimizing the environmental impact of procurement practices.

Contractor responsibility determinations may also be used to promote accountability and environmentally conscious practices from contractors. As government contracts may be awarded only to responsible prospective contractors, the standards for determining responsibility are a crucial piece of procurement decision-making. The criteria for being deemed responsible, as stated in the Federal Acquisitions Regulation (FAR) 9.104, are geared more towards a prospective contractor’s performance capabilities under a particular contract rather than their past history of harm to the environment and the federal government. Through the use of holistic environmental considerations in responsibility determinations and the exercise of suspension and debarment powers, the federal government can mitigate damages created by government contractors and materially address the United States’ role in the ongoing climate crisis.

I. Introduction

With over three million pounds of dead marine life washing up in Tampa Bay, red tide, which is a bloom of toxic algae that ravages marine life annually off the coast of Florida, was abnormally devastating in the summer of 2021. The discharge of over 200 million tons of wastewater from the Piney Point phosphogypsum stack in nearby Manatee County was identified as one potential cause for the high death toll.

As rotting fish lined the waterfront and repelled potential customers, local business owners, such as seafood restauranteurs and charter boat captains, likely were affected by the red tide in connection with the phosphogypsum wastewater discharge at Piney Point. However, where industrial accidents harm marine life, Florida case law only grants standing for commercial fishermen. These fishermen may recover only for purely economic damages stemming from harm caused to the marine life. As phosphogypsum storage is governed by the Clean Air Act, phosphogypsum stack owners only have a liability to the federal government. As such, charter captains and local business owners were left without legal remedies to compensate for the damages that they incurred.

Management of the Piney Point facility was contracted to HRK Holdings by the Florida Department of Environmental Protection. The improper discharge of wastewater at Piney Point created awareness among many people in the greater Tampa Bay area regarding the harms that can follow poorly managed government procurement. The ways in which environmental considerations are accounted for in procurement decisions can be better understood by a comparison to other environmentally volatile industries, such as the oil and gas industry. The inspiration for this Note comes from the lack of emphasis placed on environmental considerations in such contractor evaluation decisions.

This Note will address the shortcomings of environmental considerations in government procurement decision-making, specifically looking at contractor evaluations. First, this Note will discuss past environmental harms caused by government contractors, the governmental responses to such harms, and the current state of environmental safeguards in government procurement decision-making. Then, this Note will analyze the benefits of more thorough contractor responsibility determinations and the use of suspension and debarment procedures to promote environmentally conscious practices.

II. Background

The need for environmentally friendly practices in government procurement is not a novel concept. The Biden administration has demonstrated that it will take action on this matter. In December 2021, President Biden issued Executive Order 14057, “Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability.” Through this Executive Order, the Executive Branch has committed to use the federal government’s size and procurement power to, among other goals, reach “[n]et-zero emissions from federal procurement, including a Buy Clean policy to promote use of construction materials with lower embodied emissions.” Executive Order 14057 also directs procurement efforts towards “[a]chieving climate resilient infrastructure and operations.” The Executive Order outlines the federal government’s acknowledgment of the need for improvement in federal procurement decision-making. In practice, however, adequate environmental considerations currently remain overlooked.

Globally, public procurement activities create—directly and indirectly—roughly 7.5 billion tons of greenhouse gas emissions. This figure represents about fifteen percent of the world’s total greenhouse gas emissions, factoring in that government contractors naturally produce further harmful emissions outside of their direct government contracts. The United States is the world’s largest purchaser of goods and services, with the federal government spending around $665 billion in the 2020 fiscal year. Achieving a net-zero emission level in American federal procurement, as targeted by Executive Order 14057, will require eliminating a substantial percentage of the pollution coming from the United States.

The Biden administration has not acted congruently with its messaging in regard to environmental efforts, specifically related to fossil fuel. The Biden administration is currently outpacing the Trump administration in terms of issuing oil and gas drilling permits on public lands. The administration has also, at times, demonstrated carelessness in evaluating environmental concerns in its procurement decisions. For example, on January 27, 2022, the D.C. District Court invalidated a decision by the Department of the Interior because the agency grossly underestimated the climate impacts of the decision. The Court held that the Biden administration relied on faulty environmental analysis in making its decision. The D.C. District Court’s decision halted the sale of the largest oil and gas lease in U.S. history, one that would have led to a more than tenfold increase in the acreage of public waters used for the fossil fuel industry. Changes to procurement procedures, starting with contractor responsibility evaluations, would be a material step towards achieving net-zero emissions in procurement.

The Biden administration has not yet lived up to its expressed claims of environmental protection and consideration. However, the stated mission of achieving net-zero emissions from procurement decisions is cause for optimism and opens the door for improved procurement procedures. Revamping the government procurement policies in line with the analysis presented in this Note would allow for environmental considerations to play a prominent (and necessary) role in future procurement decisions. Such changes could play a substantial role in promoting greener procurement practices and, among other positive impacts, help achieve the goal of Executive Order 14057, achieving net-zero emissions from procurement activities.

III. Environmental Harm Is Not Suitably Factored into Procurement Decisions

The Biden administration has emphasized the need to account for environmental concerns in efforts to improve procurement policies. However due to the current regulatory framework, procurement decisions continue to focus on past performance as the only factor a contracting officer looks at beyond the foundational bidding questions of proposal and price. There is currently little focus on the environmental impact associated with these decisions and no consideration of a contractor’s full history of environmental harms.

Existing tools can be leveraged to fill this gap: responsibility determinations and suspension and debarment. The federal government should develop more thorough contractor responsibility determinations to engage in substantial consideration of environmental impacts. It should use statutory and discretionary suspension and debarment procedures more liberally. These changes would serve as methods of promoting environmentally conscious practices to combat the ongoing climate change crisis and move towards the Executive Branch’s stated goal of net-zero emissions from federal procurement. Expanding the scope of these measures to include considerations of repeated prior environmental wrongdoings and a holistic view of contractors’ environmental practices would create more accountability in procurement decisions.

IV. Case Studies Demonstrating the Need for Change

This Note will first analyze the current state of affairs within the oil, gas, and phosphate-mining industries and production activities, all of which have garnered public scrutiny for their environmental impacts. These case studies will highlight the need for heightened environmental considerations in procurement decisions.

A. Oil and Gas—Leaving Fossil Fuels in the Past

One industry worth highlighting is the fossil fuel industry, specifically oil and gas. The detrimental environmental effects of the fossil fuel industry is widely studied and publicized; however, federal practices have lagged behind calls for change. The United States provides an estimated $20 billion in direct subsidies to the fossil fuel industry, with eighty percent of those subsidies directed at natural gas and oil production. The fossil fuel industry has a negative impact on global environmental, climate, and public health that is estimated to cost over five trillion dollars each year.

Despite the magnitude of harm caused by the fossil fuel industry, the Deepwater Horizon spill at a BP oil rig in the Gulf of Mexico is the only example of a major gas and oil corporation facing suspension and debarment procedures in recent procurement history. Other notable spills—such as the Exxon Valdez spill of over eleven million gallons of crude oil off the coast of Alaska—have been met with government-imposed financial penalties but no suspension and debarment repercussions. U.S. government support of the fossil fuel industry is in stark contrast to the mission of Executive Order 14057, and looking at past procurement practices may highlight the need for change as the government aims to achieve a net-zero emission rate in federal procurement.

1. Oil and Gas in Government Procurement

The federal government not only provides subsidies to the fossil fuel industry, but also contracts with a number of large corporations operating in the oil and gas industry. In 2019, multiple oil and gas corporations were in the top hundred in terms of government contracts size, such as BP and Royal Dutch Shell, now Shell plc (Shell). Between these two corporations alone, the government spent over $1 billion in government contracts for the delivery of various gas and oil products. Other large oil and gas companies, such as Valero, Exxon Mobil, and Chevron, have been in the top hundred largest government contract recipients over the last decade as well. Altering contractor evaluation procedures may serve to deter practices that will be harmful to the government’s environmental interests.

2. Previous Contractor Disasters

The effects of the fossil fuel industry on the environment even absent any accidents or mistakes are problematic alone. The industry accounts for seventy-four percent of the annual U.S. greenhouse gas emissions, which is in total roughly 6.5 billion metric tons of carbon dioxide equivalent. Such an impact alone is alarming and needs to be mitigated, in part using government procurement procedures discussed later in this Note. In addition to the baseline environmental harm that the fossil fuel industry causes, oil spills have had a profound environmental and ecological effect. For example, Shell and BP alone are responsible for 148 oil spills and other instances of malfeasance, such as improper gas venting and Clean Air Act violations, across the globe from 1995 to 2021. Because of these harmful acts, they have been forced to pay a combined $35.6 billion in penalties. Despite this, they remain two of the largest recipients of U.S. government contract money among oil and gas corporations.

a. Shell

Since 1995, Shell has received sanctions for sixty-six instances of misconduct around the world, resulting in over $1.6 billion in penalties. Violations range from fraudulent behavior to violations of the Clean Air Act, which is the United States’ primary federal air quality law that is intended to protect public health and welfare by regulating the emission of hazardous air pollutants. U.S. federal contractor responsibility evaluations should include a corporation’s track record of environmental harm on a global and domestic scale as evidence of the corporation’s ability to perform contracts responsibly.

Most notably, Shell has caused tremendous harm in the Niger Delta region of Nigeria since Shell began exporting from oil fields in the late 1950s. Shell (and other gas and oil companies) have caused evident harm in the Niger Delta region for decades, so much so that in 1994, the head of environmental studies for Shell Nigeria, Bopp Van Dessel, retired rather than continue defending Shell for fear of “losing his personal integrity.” Mr. Van Dessel also stated that “[a]ny Shell site that [he] saw was polluted.” Despite pleas for justice, Nigerians did not receive a court ruling in their favor until January 2021, when a Dutch court found Shell responsible for several oil spills in the Delta region between 2006 and 2007. Such global harm should be factored in considerations of a contractor’s responsibility and included when assessing the contractor’s risk of causing reputational harm to the U.S. government.

Shell also has been responsible for oil spills in the United States, most recently allowing over 88,000 gallons of oil to leak out of its underwater infrastructure off the coast of Louisiana in 2016. Shell has been at the center of several oil spills while being a major player in the oil and gas industry. The oil and gas industry adds devastating amounts of greenhouse gases to the atmosphere each year during extraction and processing even before their products are used for their intended purposes, which further harms the environment. Despite this, Shell continues to benefit from government subsidies and contracts, receiving almost $2 billion from government contracts between 2018 and 2020. Though Shell serves as but one example in the long list of government contractors, the government’s continued dealings with Shell, despite a long track record of oil spills, sheds light on the government’s inconsistencies related to environmental considerations. The U.S. government’s continued dealings with Shell present an opportunity for improved contractor evaluation methods to be implemented in order to meet current efforts to reduce the negative environmental impacts of federal procurement.

b. BP

BP is another example of the government’s lenient treatment of oil and gas companies, demonstrating a disconnect between publicized policy goals and past practices. Since 1995, BP has been charged with eighty-three instances of misconduct along with over $34 billion in penalties, most notably stemming from the Deepwater Horizon spill. Despite repeated sanctions, BP remains a popular vendor for government contracts, receiving around $2.3 billion in government contracts between 2018 and 2020. The U.S. government’s current dependence on fossil fuel necessitates contracting with fossil fuel vendors. Until the government phases out carbon-based energy sources, however, repeated environmental harms by fossil fuel vendors should be more heavily considered in procurement decisions. Unlike Shell, BP faced suspension and debarment actions stemming from the infamous Deepwater Horizon spill in 2010, but even the repercussions faced in response to the Deepwater Horizon spill are underwhelming when considered against the magnitude of harm caused.

The Deepwater Horizon disaster, which took place in April 2010, remains the largest spill of oil in the history of marine oil drilling. On April 20, 2010, the oil rig Deepwater Horizon, owned and operated by BP, exploded and sank in the Gulf of Mexico. The result of this was devastating. Eleven workers on the rig died, and over $130 million gallons of oil flowed into the Gulf of Mexico. Over a decade later, the marine life in the Gulf of Mexico continues to be impacted by the aftermath of the crude oil spilled into their habitat. Long-term effects are seen in marine life from dolphins, who have a severely reduced rate of successful pregnancy when compared to dolphins in uncontaminated areas, to deep-sea coral colonies, where half of the surveyed coral has been injured by oil contamination. The events of the Deepwater Horizon disaster brought significant attention to the dangers of oil drilling and the environmental harms caused by gas and oil contractors such as BP. However, repercussions for the harms caused were temporary and lacked sufficient magnitude.

BP faced heavy monetary punishment from United States federal and state governments. BP reached a $16 billion settlement with the federal government and numerous states as a result of the violations occurring from the Deepwater Horizon disaster. In November 2012, the United States Environmental Protection Agency (EPA) suspended all BP entities from performing new federal contract work, though existing agreements with the government were left uninterrupted. By March 2014, however, the suspension was lifted as BP and the EPA reached an agreement that immediately reinstated BP as an eligible government contractor in exchange for compliance with a number of specific requirements, such as ethics compliance, improved corporate governance, and process safety. This reinstatement by the EPA meant that BP was only suspended from government contract work for sixteen months following the largest oil spill in marine drilling history.

The government’s response to BP’s transgressions, though appropriately in line with the regulatory framework, did not adequately match the environmental harm caused by BP. Instead of being debarred, which carries a default length of three years but may be extended based on the severity of the wrongdoing, BP was suspended for less than half of the standard debarment period. The period of suspension or debarment under the FAR may be shortened if presented with evidence of mitigating factors or remedial measures taken by the violating contractor. The Government Accountability Office and Project on Government Oversight have found a trend that small contractors are more likely to be debarred than larger contractors, regardless of how egregious the behavior may be. This difference may be explained by the fact that a larger contractor has the resources to engage in remedial measures on a more visible scale while smaller contractors cannot afford such measures, leading to a disparity in suspension and debarment proceedings.

The leniency afforded to larger contractors thus enables repeated misconduct to occur. As seen in the BP case, this can represent a significant lack of accountability, especially when responding to one of the most devastating environmental events in modern history. The monetary penalty faced by BP of $16 billion (plus the sum of private action costs) represents a small portion of its annual revenue, which has averaged well over $200 billion annually over the last decade. To effectively promote environmentally friendly practices, procurement procedures should more broadly account for contractors’ environmental impact, both during the performance of government contracts and in their commercial dealings, and utilize suspension and debarment procedures proportionally with the environmental harm caused by the corporations in their performance of government contracts.

B. Phosphogypsum—A Byproduct of Phosphate Mining and Fertilizer Production

Phosphogypsum is a waste product formed during the process of transforming phosphate rock into fertilizer. Phosphate mining is the fifth largest mining industry in the United States, and the majority of the phosphate rock is used to create fertilizer. To extract phosphorous from the phosphate rock, the phosphate rock is dissolved in an acidic solution. Phosphogypsum is the primary waste byproduct from this process—about five tons of phosphogypsum is created for every ton of phosphoric acid solution. Each year, roughly thirty million new tons of phosphogypsum are generated each year as a byproduct of the phosphate mining and fertilizer industries.

Phosphogypsum is a combination of numerous elements, including the radioactive elements uranium, thorium, and radium. The radium further decays into radon, a radioactive gas. This waste is up to sixty times more radioactive than the original phosphate rock and, left untreated in phosphogypsum stacks, creates a substantially greater environmental risk than the phosphate rock. The concentration of radon found in phosphogypsum stacks may exceed safe levels by up to 1500 percent.

1. Storage of Phosphogypsum

Phosphogypsum waste is especially troublesome due to the strict requirements placed on its storage and maintenance by the Clean Air Act. Phosphogypsum generally must be kept in stacks, where the phosphogypsum is mixed with process water and stored indefinitely. The Clean Air Act grants limited exceptions to this storage requirement, as phosphogypsum may be used for agricultural research and development or for other EPA-approved purposes. However, given the radioactive characteristics of phosphogypsum, the EPA is reluctant to approve substantial uses of phosphogypsum and recently denied a request to use phosphogypsum in road and building construction materials. Treated phosphogypsum is used in this capacity in Europe and Japan, but the United States has not kept pace with this innovation, opting for long-term storage over development and reuse.

With the EPA’s reluctance to approve undertested methods of phosphogypsum reuse and the massive quantity of phosphorous required for fertilizer production, phosphogypsum is stored at a staggering rate. The EPA estimates that, spread between roughly two dozen stacks in Florida, about one billion tons of phosphogypsum is stored. With multiple occasions of large-scale leaks stemming from misconduct by the stack operator and the ongoing threat of natural disasters (in Florida—sinkholes, hurricanes, and rising ocean levels), the passive system of phosphogypsum storage should be viewed as a failure.

2. Phosphogypsum Stack Failures

The Piney Point incident is the latest of a long line of failures in the Clean Air Act’s mandated system of long-term phosphogypsum storage in stacks. As a largely valueless resource, phosphogypsum is often overlooked and undermanaged, and the troubled history of the Piney Point stack demonstrates this concern. While under state control at the start of the twenty-first century, Piney Point officials discharged millions of gallons of wastewater following a tropical storm and dumped treated wastewater into the Gulf of Mexico a couple of years later. The most recent leak and discharge of wastewater at Piney Point comes after a long history of inaction that is not unique to the Piney Point location. The repeated environmental harms caused by the phosphate industry is a suitable place to continue analyzing the need for environmental considerations in procurement decisions.

Mosaic Fertilizer is a subsidiary of the Mosaic Company, one of the largest phosphate producers in the world. Mosaic owns multiple phosphogypsum stacks across Florida and the southern United States. Mosaic has come under scrutiny several times for the harm caused by its stacks. Its plant in New Wales, Florida, has leaked on multiple occasions due to sinkholes. In 2016, over 200 million gallons of contaminated water seeped into Florida’s primary aquifer, yet Mosaic did not report the sinkhole’s presence to the public, leaving it to be eventually uncovered by local journalists.

Mosaic has found itself at the forefront of numerous phosphogypsum stack spills over the last few decades. A second Mosaic-owned phosphogypsum stack near Riverview, Florida, was the subject of litigation brought by commercial fishermen in Curd v. Mosaic Fertilizer. Mosaic built a retention pond that did not comply with size requirements and ignored warnings of imminent stack failure from the state. In September 2004, the pond burst open and released sixty-five million gallons of wastewater into Hillsborough Bay, devastating local marine life.

In 2017, Mosaic received over two million dollars in tax credits from the United States government. Additionally, Mosaic leases land used for its phosphate mines from the federal government. These leases grant Mosaic the surface rights to the land as well as the right to mine the reserves under the surface in exchange for paying royalties to the government.

Mosaic’s interactions with the federal government would appropriately be governed by suspension and debarment procedures based on its status as a recipient of federal financial and nonfinancial assistance. Under Executive Order 12549, recipients of federal financial and nonfinancial assistance, such as grants or cooperative agreements, may be suspended or debarred from receiving such benefits in order to combat waste, fraud, and abuses in federal programs. Mosaic, in receiving tax credits and conducting mining operations through cooperative agreements with the federal government, would therefore be subject to suspension and debarment decisions. By analyzing the use of suspension and debarment to combat environmental harm in government programs, Mosaic may serve as a useful case study into how environmental considerations could effectively be applied to reduce the environmental harm caused by procurement (and tangentially related) decisions.

The above case studies serve to highlight the disconnect between past practices and the mission of Executive Order 14057 when looking at the treatment of large firms in industries such as oil and gas (and phosphate to a lesser degree). The federal government has not demonstrated a commitment to holding corporations such as Mosaic or Shell responsible for their environmental harm beyond monetary sanctions. The following section will address ways in which procurement procedures can be applied as a method of promoting environmental considerations in government decision-making.

V. Government Procurement Procedures as a Method of Promoting Change

This Note will present some potential applications of contractor responsibility screenings and suspension and debarment procedures. These options will demonstrate how evolving procurement policies would minimize the environmental harm caused by certain procurement efforts. This Note’s solutions seek to help the Executive Branch meet its goal of reaching net-zero emissions from all federal procurement decisions.

Federal contractor mandates carried out by executive agencies can be leveraged as a tool to promote social and economic change, even absent congressional intervention. One historical example is Executive Order 11246, Equal Employment Opportunity. Executive Order 11246 was issued in line with the civil rights movement and prohibits discrimination by federal contractors in employment decisions based on the “race, color, religion, sex, sexual orientation, gender identity, or national origin” of the prospective employee. Additionally, government contractors are required “to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment.” Executive Order 11246 was able to further the civil rights movement in a way that Congress could not (based on the Commerce Clause’s restriction of its legislative power) and provides a noteworthy example of how federal contractor mandates may be used to promote social and economic improvements.

Executive power should similarly be used to require that federal contractors comply with heightened environmental requirements. To reach the goal of net-zero emissions from federal procurement activities, the federal government should implement a set of procedures that enables them to contract only with firms committed to achieving this goal. FAR Part 9 outlines two possible approaches that could assist with this goal: (1) contractor responsibility determinations and (2) suspension and debarment procedures.

A. Responsibility Determinations

All prospective contractors must be determined responsible in order to be eligible for government contracts. FAR 9.104-1 outlines the criteria for a prospective contractor to receive a responsible designation. FAR 9.104-1(d) is the closest applicable standard to addressing environmentally conscious practices, stating that a prospective contractor must “[h]ave a satisfactory record of integrity and business ethics.” The criteria of FAR 9.104-1 present “responsibility,” in the sense of contractor qualifications, as more to do with capability than responsibility in the traditional sense of being accountable for one’s actions. In so doing, responsibility determinations currently focus only on a prospective contractor’s current status and do not explicitly require the government to consider the contractor’s history of environmental harms. In addition to environmental harms, environmentally conscious practices should be considered in an effort to balance a prospective contractor’s environmental impact and appropriately account positives and negatives.

A 2013 report from the Congressional Research Service sheds light on the appropriateness of environmental considerations in responsibility determinations. When broadly considering whether a prospective contractor is sufficiently responsible, the report states that agencies ought to consider, among other things, whether the contractors “are organized in such a way that doing business with them promotes socioeconomic goals.” Given the current administration’s emphasis on reducing the environmental impact of procurement decisions, this statement should be read in congruence with Executive Order 14057. Doing so would demarcate the Executive Branch’s ability to consider environmental impact in an effort to achieve net-zero emissions in federal procurement decisions.

Executive agencies are prohibited from contracting with companies for environmental reasons in certain circumstances, such as where the vendors have been suspended or debarred by the EPA or where the contractor has not remedied an existing environmental harm that the contractor created or contributed to. In both of these instances, remedying the previous environmental problem is held to be sufficient for a contractor to regain their status as “responsible.” Such an approach currently enables prior wrongdoings to be quickly forgotten when it comes to responsibility determinations, as the focus is on a contractor’s present responsibility. Instead, either the FAR and/or contracting officers should alter the approach to responsibility determinations such that a more holistic evaluation of a contractor’s responsibility, including prior environmental harms, is considered.

For this reason, responsibility should be viewed from a more holistic perspective that does not allow for a contractor’s current status alone to overly influence a responsibility determination, against or in favor of a prospective contractor. Instead, a prospective contractor’s entire history of environmental harm should be balanced with past and present efforts at establishing greener practices. Considering past and present environmental harms and efforts ensures that a company is not blacklisted for prior wrongdoings so long as it has taken sufficiently proportional measures to fix any problems.

The current standard of responsibility determinations as it relates to environmental considerations is too narrow, with such determinations made only “on the basis of the most recent information available.” Past behavior should no longer be ignored, as this practice grants potential contractors a clean slate after each infraction and ignores the tendencies of repeat offenders. Allowing a prospective contractor to regain responsible status simply by remedying past environmental harms enables repeat offenders to continue benefiting from federal procurement policies. Given the increased severity of the ongoing climate crisis and President Biden’s Executive Order 14057, responsibility determinations with respect to environmental problems should account for the prospective contractor’s entire history of environmental harm and balance the magnitude of the harm with their previous and ongoing green practices to make a more informed decision.

Looking at the phosphate and oil and gas industries, putting this holistic approach into practice makes sense. The three highlighted companies above, Mosaic, Shell, and BP, all have a history of causing environmental disasters, both related to, and independent of, their work as government contractors. The current system of responsibility determinations favors large corporations that have the resources to compensate injured parties and pay fines because they may again be considered responsible after remedying the problem. To truly gauge the responsibility of a prospective contractor, the entire history of their environmental failures (and successes) should be considered.

Shell leaked a significant amount of oil into the Gulf of Mexico in 2016, facing only relatively minor sanctions for this malfeasance. Though Shell’s behavior has repeatedly caused irresponsible amounts of environmental damage, the current responsibility determination procedure does not adequately factor in environmental responsibility. As a result, Shell continues to be on the list of the top hundred largest recipients of government contract dollars. At some point, allowing a corporation to retain its status as a responsible prospective contractor despite repeated and well-documented environmental harms strains the definition of a responsible contractor. When determining whether a bidder is a responsible contractor, their history of, and response to, environmental harms they created ought to be a significant factor in making a responsibility determination. Continuous malpractice and environmental harm should not be ignored. A holistic approach by procurement officials, which factors in environmental harm and risk mitigation efforts, should be applied to reduce recency bias and incentivize responsible contractors to focus on long-term environmental responsibility over the life of the company.

The holistic approach proposed does not have to focus solely on the negative actions of prospective contractors. Contractors should be encouraged to engage in “greener” practices to be found responsible. Just as a contractor’s history of environmental harms should factor into responsibility determinations, efforts to develop and improve upon environmentally conscious practices should also factor favorably into responsibility determinations. If this Note’s recommendations are put into practice, factoring in positive environmental responsibility factors would enable contractors with a history of causing environmental harm to not be overly prejudiced by their past, so long as they make an effort to improve their processes.

Such a practice may encourage development of more environmentally friendly or reparative processes in industries in which such development has been stagnant in recent years. The phosphate industry serves as a prime example for this. As seen in the phosphogypsum stacks in Florida, where over 1 billion tons of phosphogypsum is currently stored, the current approach to handling the problem is passive storage, with no mechanism to reduce the supply over time. Such an approach is not sustainable long-term and environmental responsibility determinations can help spur innovation to convert the phosphogypsum into a useful product. These corporations, such as Mosaic, regularly benefit from federal assistance, and their inaction should not be rewarded.

As seen in the Clean Air Act, phosphogypsum must be stored in the stacks unless the EPA approves an alternative method. One such approach is being explored by a phosphogypsum stack owner in Louisiana. The company has sought EPA approval to develop a water treatment method that would allow the phosphogypsum stack wastewater to be treated to drinking-water standards so that it may be released into the Mississippi river. This method, though unclear if it will be approved, should be commended for its efforts to proactively develop greener practices rather than wait for the phosphogypsum to discharge untreated, highly acidic wastewater. If Piney Point had the capabilities that the Louisiana stack owner is trying to get approved, Tampa Bay would not have been contaminated by over 200 million gallons of waste water.

As time continues, the increasing environmental risks presented by mounting phosphogypsum stacks and wastewater storage will continue to lead companies to seek alternative measures of storage and reuse, and federal grant and procurement decisions should assist with these endeavors. Executive Order 14057, in aiming to promote greener practices by the federal government, mentioned the need for construction materials with lower embodied emissions. Embodied energy is the energy consumed by all of the processes associated with the production of a building, beginning with the mining and processing of the resources to the final product delivery.

Gypsum plaster, due to its already processed nature, has an extremely low embodied energy rating, even lower than common building materials such as cement, and several kinds of wood, granite, and aluminum. Though the EPA recently reversed a decision that would have allowed the use of phosphogypsum in construction projects due to concerns over the radioactivity of phosphogypsum, this issue remains an area that should be explored by the EPA and contractors in the phosphate industry alike. The Clean Air Act allows for the use of phosphogypsum under a specified level of radioactivity in commercial farming and research and development efforts, so developing the use of similar, mildly radioactive phosphogypsum in construction projects (as it is used internationally) should not be ignored. Further research should be encouraged by corporations contributing to phosphogypsum waste, as studies have shown that phosphogyspum may successfully be used as a raw material in construction.

Further good-faith attempts at research and development in the reuse of phosphogypsum could positively factor into a prospective contractor’s responsibility determination. Such innovation goes beyond the proposed inclusion of a potential contractor’s use of “greener” practices, but innovation aimed at reducing a company’s environmental footprint should be rewarded. Continued efforts in this regard would ideally lead to sustainable practices that can have a positive environmental effect. As this discussion shows, including a prospective contractor’s history of environmental harms and benefits in responsibility determinations can lead the government to engage only with companies that will assist them in reaching the goals of Executive Order 14057.

B. Suspension and Debarment Procedures

Suspension and debarment are additional procurement procedures that have the potential to effectively incorporate environmental considerations into procurement decisions. A suspension and debarment official may act, in the public interest, to exclude a contractor governmentwide from soliciting for or being awarded contracts during the duration of the exclusion. Additionally, Executive Order 12689 provides that exclusion of a participant in a nonprocurement activity, such as a recipient of financial and nonfinancial assistance covered in Executive Order 12549, shall be treated similarly governmentwide. Suspension is warranted as a temporary measure (generally for twelve months) that addresses an immediate need. Suspension is based on adequate evidence that is usually sufficient for an indictment and is issued while the completion of an investigation or legal proceeding is pending.

The duration of debarment is usually three years, though it may exceed three years based on the magnitude of the contractor’s wrongdoing, and is based upon a preponderance of the evidence, usually requiring a conviction. Congress has turned its attention towards the applicability of suspension and debarment procedures, recently considering whether suspension and debarment procedures adequately protect the government’s interest from contracting entities whose conduct poses a business integrity risk to the government. Such considerations make this Note relevant and timely; with the Executive Branch’s stated goal of operating federal procurement endeavors with net-zero emissions, the use of debarment procedures to restrict entities who would otherwise endanger this goal is a worthy goal.

The EPA has authority to suspend and/or debar contractors “to address waste, fraud, abuse, poor performance, environmental noncompliance or other misconduct.” Under the EPA’s current system of suspension and debarment, there are two forms of debarment: statutory debarment and discretionary debarment. Absent changes in the language of the Clean Water Act and/or Clean Air Act, the EPA cannot alter its statutory debarment practices, as such decisions are reserved to Congress. However, the EPA could utilize discretionary suspension and debarment in furtherance of the policy outlined in Executive Order 14057.

Suspension and debarment focus on protecting the government’s interest. The government should have a strong interest in maintaining the public’s trust; however, only about one-quarter of Americans trust the federal government to do what is right. The government’s oft-repeated commitment to protecting the environment thus provide suspension and debarment officials with the necessary discretion to more thoroughly include environmental considerations. As discussed earlier, suspension and debarment proceedings are sparingly used against large contractors, despite their history of repeated environmental harms. To protect the government’s interest in gaining public trust, suspension and debarment officials should act in a way that furthers the government’s commitment to protect the environment, especially related to procurement decisions.

Suspension and debarment procedures can be used in a proactive manner by forcing contractors to sufficiently perform under their current government contracts. The FAR states that “[t]he serious nature of debarment and suspension requires that these sanctions be imposed only in the public interest for the Government’s protection and not for purposes of punishment.” With insufficient performance and environmental noncompliance resulting in exclusion from procurement considerations, contractors should be incentivized to engage in practices that promote the government’s interests in reducing the environmental impact of federal procurement.

1. Statutory Debarment

Statutory debarments occur following a criminal conviction under the Clean Water Act or the Clean Air Act. Contractors who have been debarred as a result of a statutory violation are ineligible “until the Debarring Official certifies that the condition giving rise to conviction has been corrected.” Regarding the Clean Air Act, there is mandatory debarment for anyone who violates 42 U.S.C. § 7413(c), which outlines criminal penalties under the Clean Air Act. The violations listed in 42 U.S.C. § 7413(c), with the exception of 42 U.S.C. § 7413(c)(4), carry a requirement of “knowing” behavior. 42 U.S.C. § 7413(c)(4) outlines a criminal penalty for negligently releasing a hazardous pollutant or substance, as a result putting someone in imminent danger of death or serious harm. However, many environmental harms not rising to the level of causing imminent death or serious harm, such as the harms caused by the ongoing storage of phosphogypsum, are not considered violations of the Clean Air Act and require a more nuanced approach than statutory debarment may provide.

The approach to statutory debarment under the Clean Water Act is more inclusive of potential wrongdoings than the Clean Air Act. Under 33 U.S.C. § 1319(c), the criminal penalties that result in mandatory debarment are listed. These penalties include a much broader list of knowing and negligent violations that more appropriately covers the harms traditionally caused by higher risk activities such as phosphogypsum storage and oil and gas drilling.

Statutory debarment does not sufficiently protect the government’s interests due to its limited scope. Statutory debarment, as mentioned above, requires a conviction based on these statutes, and irresponsible actions under the criminal threshold or minimally compliant behavior may escape statutory repercussions. The limited scope of statutory debarment, absent congressional intervention, may be accounted for by a broader approach to discretionary debarment detailed under the next section.

Lastly, the application of statutory debarment has the potential for problematic results in the form of insufficient repercussions. BP was criminally convicted in the Deepwater Horizon case; however, statutory suspension and debarment allows for a contractor’s eligibility to be restored after taking corrective action deemed appropriate. As such, an EPA determination of BP’s compliance with safety regulations allowed BP to be restored as an eligible prospective contractor after sixteen months, despite causing generational environmental harm. The environmental impact of the BP spill is still seen in the diminished population of marine life in the Gulf of Mexico, demonstrating a disconnect between the EPA’s ruling on BP’s improved behavior and the true effects of its action. The current framework of statutory debarment promotes leniency over accountability and fails to hold major violators sufficiently responsible so as to appropriately protect the government’s interests. When deciding whether or not to restore a prospective contractor’s eligibility, suspension and debarment officials should balance the corrective measures taken by the contractor with the potential harm to the government’s trust that could occur by continuing to contract with prior wrongdoers.

As seen in the responsibility discussion, statutory debarment allows for a contractor’s eligibility to be restored after taking the appropriate corrective action. When discussing contractor responsibility, this can be problematic because it allows for repeat wrongdoers to retain their eligibility as contractors by continuing to remedy any harmful situations. By striking a balance between a contractor’s good-faith efforts to remedy their past environmental harms with the reputational harm suffered by the government by continuing to contract with evident wrongdoers, contractors may be rewarded for their “greener” practices and development while being adequately held accountable for their environmental harms. The current narrow breadth of statutory debarment, along with the leniency granted for violations, insufficiently protects the government’s interests.

2. Discretionary Debarment

Suspension and debarment procedures, in this context exercised by the EPA, may also be implemented at the government’s discretion. The government may use suspension and debarment as tools to avoid reputation risks stemming from a continued relationship with a contractor convicted or indicted for serious wrongdoings. The potential grounds for discretionary suspension and debarment exceed the scope of permitted uses of statutory debarment. With the focus of suspension and debarment procedures on the protection of public interest, there are benefits to interpreting the scope of suspension and debarment more broadly to account for environmental concerns. Under FAR 9.406-2(a)(5), the causes for discretionary suspension and debarment may arise from, among other things, the “[c]ommission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor.” The primary question of the scope of discretionary debarment procedures, with regards to environmental considerations, hinges on what the government views as a business integrity risk and (potentially) what the government should consider a business integrity risk.

Presently, discretionary suspension and debarment procedures are warranted when there is a violation of regulatory requirements or statutes, which can be interpreted as constituting a per se lack of business integrity, or where the contractor violated the contract so seriously as to justify suspension or debarment. However, in doing so, the FAR restricts discretionary debarment, limiting the scope of the debarring official’s discretion on these matters by removing their true discretion. Regulations and statutes cannot (and do not) cover every possible risk to the government’s interests, and confining the debarring official’s discretion to regulations and statutes leaves other wrongdoings, such as environmental malfeasance not subject to a specific statute or regulations, not adequately considered. Expanding upon the discretion of debarring officials could serve to require contractors to act in compliance with the government’s best interests rather than meeting the bare minimum required under the current regulations.

The EPA publicly describes its suspension and debarment powers as “an effective administrative tool to address waste, fraud, abuse, poor performance, environmental noncompliance or other misconduct.” The EPA is meant to use suspension and debarment as tools to “protect the government from doing business with individuals/companies/recipients who pose a business risk to the government.” As environmental projections and discussions regarding climate change have grown bleaker over the last decade, it is fair to wonder when companies with poor environmental track records will be considered a business risk to the government.

Many corporations pose a risk to the government’s interests due to the environmental harm that they cause by operating in a way contrary to the government’s stated mission of reducing emissions related to government procurement decisions. Continued business with environmental wrongdoers harms the public’s trust in the government’s stated mission, and suspension and debarment officials should thus act to ensure serial wrongdoers are rightfully excluded. The U.S. government’s continued association with major contributors to pollution and greenhouse gases ought to be considered a business risk that causes the government reputational harm with the public. To promote the government’s stated mission of reducing the environmental impact of procurement efforts, suspension and debarment officials should be free to act with true discretion in protecting the government’s reputation and enforcing the government’s commitment to “greener” procurement practices.

Discretionary suspension and debarment decisions and guidelines ought to actively promote solving an issue, rather than allowing environmental harm to continue. Environmental damage alone should be considered sufficient reason for discretionary suspension and debarment actions, but the approach itself, requiring substantial financial commitments to remedy leaks, constitutes waste, a ground for discretionary suspension and debarment on its own according to the EPA.

The government continues to cooperate with and subsidize entities overseeing and contributing in bulk to such stacks, such as Mosaic. This continued relationship poses a definite risk to the government’s business and reputational interests, especially considering past leaks at Mosaic facilities, because the government has continued to provide financial assistance to Mosaic despite repeated environmental harm caused that is in conflict with the government’s interest in reducing the environmental impact of federal activities. Discretionary suspension and debarment procedures were not used during those prior instances. These tools, if used in future incidents, will incentivize corporations to develop greener practices and minimize the waste associated with their operations. In holding contractors accountable for their environmental harms, suspension and debarment officials can bolster the government’s reputation by acting in line with the stated mission of reducing the environmental impact of procurement.

The current practice of contracting with large oil and gas companies has put the government at risk of suffering business and reputational harm. Shell and BP, two of the most notorious contributors to greenhouse gas emissions and oil spills, annually receive hundreds of millions in subsidies and contract dollars from the U.S. federal government Discretionary suspension and debarment for reasons such as waste, environmental noncompliance, or other misconduct, as detailed by the EPA, should be used as tools for protecting the government’s interests in the case of any future malfeasance from the oil and gas industry. To achieve President Biden’s stated goal of net-zero emissions from federal procurement activities, a hard line must be taken with major contributors to pollution. The federal government should use discretionary suspension and debarment to respond to environmental damage on a much broader scale.

VI. Next Steps

Though this Note focuses on how responsibility determinations and suspension and debarment procedures may be used to promote environmental considerations, there are numerous other ways to bring environmental considerations to the forefront of federal procurement activities. Such options could assist in moving towards achieving the stated mission of Executive Order 14057—net-zero emissions from federal procurement. From a purely executive perspective, alternative methods may incentivize environmentally conscious developments, such as grant contests and discontinuing federal subsidies for companies in the fossil fuel industry. Additionally, the FAR should be adjusted to expressly include environmental considerations, a move which would ensure a more consistent approach to procurement rather than relying on the current administration to make a concerted effort to make procurement greener.

Outside of the Executive Branch, alternatives that could bring about similar results also exist. The Executive Branch is limited to enacting change in this area that is at least tangentially related to federal contractors. Congress, on the other hand, can pass or amend legislation that would apply equally to public and private sector work. Such legislative action could, for example, expand upon the limited protections offered by the Clean Water Act and Clean Air Act. Industrial giants such as BP and Shell receive only a small portion of their revenue from procurement activities, so congressional expansion of protections into the private sector could more broadly promote environmentally conscious practices.

VII. Conclusion

The use of a holistic responsibility determination approach that includes environmental considerations and an environmentally focused approach to suspension and debarment could significantly mitigate the environmental harm currently caused by government contractors by ensuring that the government engages with environmentally conscious companies rather than with perpetual and habitual wrongdoers. In promoting greener practices on the way to achieving net-zero emissions in federal procurement, private sector pollution would logically decrease as well as companies develop more sustainable habits. These two methods of contractor qualification can create a policy that simultaneously incentivizes development in environmentally friendly practices while holding chronic wrongdoers accountable for their environmental harm. In adopting this approach, federal procurement practices may become sustainable and reverse the current trend. President Biden’s issuance of Executive Order 14057 has brought this issue to the forefront, and follow-up action must be taken to ensure that the administrations to come will continue this mission.

The use of federal procurement policies can be a powerful mechanism to enact environmental change on the path to achieving a net-zero emission rate from federal procurement efforts. Federal procurement as a vehicle for broader change is not a novel concept, and its use here would promote significant improvement in environmental considerations, even when not directly related to contracted work. A holistic evaluation of a prospective contractor’s qualifications would more appropriately incorporate environmental factors into procurement decisions. The threat of a non-responsibility determination or debarment would encourage a more proactive approach to addressing a topic that can no longer go unaddressed.