Although the proposed Climate Corporate Data Accountability Act will still cost companies doing business in New Jersey more time and money, the impact would have been much worse had it not been for amendments that NJBIA secured in committee earlier this week.
The bill, S-679, which would require companies with $1 billion or more in annual revenue that do business in New Jersey to report data on their direct and indirect greenhouse gas emissions, was amended and released by the Senate Environment & Energy Committee on Thursday.
The amendments removed the onerous measuring and reporting originally required for “Scope 3” greenhouse gas emissions, which are created by activities that are outside of a company’s direct control, including actions by a vast ecosystem of suppliers providing raw materials, shippers transporting products, and consumers using and disposing of products.
“We are still opposed, but it’s a much more workable bill with the amendments removing Scope 3,” NJBIA Deputy Chief Government Affairs Officer Ray Cantor told the committee.
Overly Broad Provision Removed
Measuring the climate impact of an entire supply chain, as the bill had originally proposed, would have been extremely costly and challenging, Cantor said. Suppliers, vendors, logistics companies and customers are located all over the globe and not all track their own emissions data – and for those that do, the accuracy cannot always be verified.
“If the Scope 3 provision had been left in the bill, it could have forced companies to change suppliers, leaving out small businesses that are unable to track this type of data,” Cantor said.
Senator Bob Smith (D-17), the chairman of the committee and sponsor of the bill, said he and co-sponsor, Sen. John McKeon (D-27), advanced the amendments after reaching the conclusion the legislation was “not passable” with Scope 3 included.
The information gathered from Scope 1 reporting (direct emissions from a company’s own facilities and vehicles) and Scope 2 reporting (indirect emissions from the company’s purchase of power for electricity, steam, heating, or cooling) would still be required to be reported.
“At the end of the day, we are judged on whether we get something done or not,” Smith said.
NJBIA Seeks Further Amendments
Cantor told the committee that NJBIA would like further amendments that make it clearer which companies are subject to reporting requirements, such as specific economic tests related to New Jersey sales. As currently written, the bill affects any company “doing business” in this state with $1 billion in revenue in the aggregate, not necessarily from New Jersey operations.
“This legislation does not define what exactly it means to ‘do business in New Jersey,’” Cantor said. “You could have a business in the port with just one office, maybe it’s not even staffed, but that could be considered ‘doing business’ in the State of New Jersey,” Cantor said.
In California, where a similar Climate Corporate Data Accountability Act has been enacted (and still being challenged in the courts), state regulators have attempted to provide clarity by tying the law’s “doing business in the state” language to specific economic thresholds, such as payroll, property, and the amount of sales of products or services within California.
“We respectfully request that you use the California definition of what it means to be doing business in the state,” Cantor told the committee. “Doing that in New Jersey would take away the ambiguity that is now in the legislation and provide companies with more certainty about exactly who is and is not covered by this.”
Senator Smith said that the road to final legislative passage is a long one, and there would be further opportunity along the way to make the additional amendments.
“We will take a look at Mr. Cantor’s constructive criticism about defining which businesses are going to provide this information, but that'll be in a later stage,” Senator Smith said prior to the committee vote releasing the bill. “As everybody in this room knows, the legislative process is designed to be slow, so there'll be plenty of opportunities to look at that.”
