Fossil Free Finance Act
This bill requires large bank holding companies to develop and implement emission reduction plans. Such a plan must include strategies for a company to equitably reduce and eventually eliminate financed greenhouse gas emissions by January 1, 2050, and to discontinue specified fossil fuel projects and financing. The bill also prohibits the use of carbon offsets in such a plan, sets forth technological requirements for reductions, and requires the prioritization of specified social impacts.
Plans must be submitted to the Board of Governors of the Federal Reserve System for approval every two years.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5253 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5253
To amend the Bank Holding Company Act of 1956 and the Dodd-Frank Wall
Street Reform and Consumer Protection Act to require disclosure of
certain financed emissions, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 14, 2021
Mr. Jones (for himself, Ms. Pressley, Ms. Tlaib, Mr. Espaillat, Ms.
Newman, Mr. Torres of New York, Mr. Garcia of Illinois, Mr. Huffman,
Ms. Ocasio-Cortez, Mr. Cleaver, Mr. Bowman, Ms. Bush, Mr. Nadler, Mr.
Takano, Ms. Meng, and Ms. Jayapal) introduced the following bill; which
was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Bank Holding Company Act of 1956 and the Dodd-Frank Wall
Street Reform and Consumer Protection Act to require disclosure of
certain financed emissions, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fossil Free Finance Act''.
SEC. 2. ALIGNMENT OF FINANCED GREENHOUSE GAS EMISSIONS WITH SCIENCE-
BASED TARGETS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 15. ALIGNMENT OF FINANCED GREENHOUSE GAS EMISSIONS WITH SCIENCE-
BASED TARGETS.
``(a) Requirements.--Not later than July 1, 2022, and not less than
once every 2 years thereafter, a covered bank holding company shall--
``(1) submit to the Board an emission reduction plan for
reducing emissions in accordance with this section; and
``(2) if the plan is accepted under subsection (c),
implement such plan.
``(b) Elements of Plan.--Each plan required under subsection
(a)(1)--
``(1) shall include--
``(A) a plan for the covered bank holding company
to reach zero financed greenhouse gas emissions by
January 1, 2050;
``(B) a plan for the equitable transition to zero
financed greenhouse gas emissions;
``(C) a plan to reduce the financed greenhouse gas
emissions of the bank holding company by 50 percent by
January 1, 2030;
``(D) a plan to discontinue new or expanded fossil
fuel projects not later than January 1, 2023;
``(E) a plan for the covered bank holding company
to discontinue thermal coal financing by January 1,
2025;
``(F) a plan for the covered bank holding company
to discontinue fossil fuel financing by January 1,
2030;
``(G) a review of the emissions supply chains
financed by the covered bank holding company;
``(H) a plan for the covered bank holding company
to eliminate financing of deforestation risk
commodities; and
``(I) such other requirements as the Board
determines is necessary to protect the financial
stability of the United States;
``(2) may not include carbon offsets;
``(3) with respect to negative carbon emission
technologies--
``(A) may include such technologies to meet the
requirements under paragraph (1)(A) if such
technologies--
``(i) are proven to work at the required
scale;
``(ii) do not negatively impact low-income,
minority, or indigenous communities; and
``(iii) do not exceed 5 percent of the
projected 2030 financed greenhouse gas
emissions of the covered bank holding company;
and
``(B) may not include such technologies to meet the
requirements under paragraph (1)(C); and
``(4) shall prioritize--
``(A) the covered bank holding company withdrawing
funding from companies and projects that have a
disproportionately negative impact on health and well-
being of low-income and minority communities; and
``(B) lending to companies for purposes of carrying
out severance, retraining, and other benefits to
workers impacted by the transition to zero financed
greenhouse gas emissions.
``(c) Consideration of Plan.--Not later than 6 months after
receiving a plan under subsection (a)(1), the Board shall--
``(1) accept the plan; or
``(2) reject the plan if it does not align with science-
based targets without the use of offsets or unproven carbon
emission reduction technologies and require the covered bank
holding company to revise such plan in accordance with the
suggestions of the Board.
``(d) Penalties.--In the case of a covered bank holding company
that does not submit a plan in accordance with this section or meet the
requirements set out in such a plan--
``(1) the Board shall--
``(A) apply the penalties under section 8, through
procedures prescribed by the Board by rule;
``(B) require divestiture of assets in order to
bring the financed greenhouse gas emissions of a
covered bank holding company into compliance with the
requirements set out in such a plan; and
``(C) notify the Board of Directors of the Federal
Deposit Insurance Corporation of the noncompliance of
such covered bank holding company;
``(2) the Board of Directors of the Federal Deposit
Insurance Corporation may, with respect to any covered bank
holding company described in paragraph (2)(B) or a subsidiary
of such bank holding company that contributes to the failure of
such covered bank holding company to comply with this section--
``(A) terminate insurance under section 8(a)(2) of
the Federal Deposit Insurance Act (12 U.S.C.
1818(a)(2)); and
``(B) carry out any other corrective action
available under section 38 of the Federal Deposit
Insurance Act (12 U.S.C. 1831o).
``(e) Regulations.--Not later than 210 days after the date of the
enactment of this section, the Board shall issue regulations
establishing the format and timing for submission of the plans required
under this section.
``(f) Definitions.--In this section:
``(1) Covered bank holding company.--The term `covered bank
holding company' means a bank holding company with total
consolidated assets equal to or greater than $50,000,000,000.
``(2) Deforestation risk commodities.--The term
`deforestation risk commodities' means globally-traded goods
and raw materials--
``(A) that originate from natural forest
ecosystems, either--
``(i) directly from within forest areas; or
``(ii) from areas previously under forest
cover; and
``(B) the extraction or production of which
contributes significantly to the conversion of natural
forest to agriculture, tree plantation, or other non-
forest land use.
``(3) Financed greenhouse gas emissions.--The term
`financed greenhouse gas emissions' means, with respect to a
covered bank holding company, the share of the emissions of
such company attributable to investment in, or the providing of
financial services to, a company or project of a company,
including--
``(A) investments in a debt or equity investment in
such another company or the assets of such another
company;
``(B) project finance investment;
``(C) underwriting;
``(D) syndication or securitization of loans or
asset-backed securities;
``(E) derivative transactions related to financing
or hedging; and
``(F) market making.
``(4) Fossil fuel financing.--The term `fossil fuel
financing' means, with respect to a covered bank holding
company, investment in--
``(A) a company that derives 15 percent or more of
revenue from exploration, extraction, processing,
exporting, transporting, and any other significant
action with respect to oil, natural gas, coal, or any
byproduct thereof; or
``(B) a fossil fuel project.
``(5) Fossil fuel project.--The term `fossil fuel project'
means a project intended to--
``(A) facilitate or expand exploration, extraction,
processing, exporting, transporting, or any other
significant action with respect to oil, natural gas,
coal; or
``(B) construct any infrastructure related to the
activities in subparagraph (A), such as wells,
pipelines, terminals or refineries.
``(6) New or expanded fossil fuel project.--The term `new
or expanded fossil fuel project' means a fossil fuel project
that would increase the--
``(A) level of proven or developable oil, natural
gas or coal reserves;
``(B) midstream throughput of pipelines, terminals
or refineries; or
``(C) generating capacity of oil, natural gas or
coal.
``(7) Natural forest.--The term `natural forest' means a
natural arboreal ecosystem that--
``(A) has a species composition a significant
percentage of which is native species; and
``(B) contains a tree canopy cover of more than 10
percent over an area of not less than 0.5 hectares.
``(8) Science-based emissions targets.--The term `science-
based emissions targets' means reduction in greenhouse gas
emissions consistent with preventing an increase in global
average temperature of greater than or equal to 1.5 degrees
Celsius compared to pre-industrial levels.''.
SEC. 3. CONTRIBUTION TO CLIMATE CHANGE INCLUDED IN FSOC DESIGNATION.
(a) Authority To Require Supervision and Regulation of Certain
Nonbank Financial Companies.--Section 113 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5323) is amended--
(1) in subsection (a)(2)--
(A) in subparagraph (J), by striking ``and'' at the
end;
(B) by redesignating subparagraph (K) as
subparagraph (L); and
(C) by inserting after subparagraph (J) the
following:
``(K) the extent to which the company makes a non-
trivial contribution to the financed greenhouse gas
emissions (as defined in section 15(f) of the Bank
Holding Company Act of 1956) of the financial system of
the United States;''; and
(2) in subsection (b)(2)--
(A) in subparagraph (J), by striking ``and'' at the
end;
(B) by redesignating subparagraph (K) as
subparagraph (L); and
(C) by inserting after subparagraph (J) the
following:
``(K) the extent to which the company makes a non-
trivial contribution to the financed greenhouse gas
emissions (as defined in section 15(f) of the Bank
Holding Company Act of 1956) of the financial system of
the United States; and''.
(b) Enhanced Supervision and Prudential Standards for Nonbank
Financial Companies Supervised by the Board of Governors and Certain
Bank Holding Companies.--
(1) Development of prudential standards.--Section 115(b)(1)
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (12 U.S.C. 5325(b)(1)) is amended--
(A) in subparagraph (H), by striking ``and'';
(B) in subparagraph (I), by striking the period at
the end and inserting ``; and''; and
(C) by adding at the end the following:
``(J) divestiture of financed greenhouse gas
emissions (as defined in section 15 of the Bank Holding
Company Act of 1956).''.
(2) Required standards.--Section 165(b)(1)(A) of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (12 U.S.C.
5365(b)(1)(A)) is amended--
(A) in clause (iv), by striking ``and'';
(B) in clause (v), by striking the period and
inserting ``; and''; and
(C) by adding at the end the following:
``(vi) emissions reduction plans in
accordance with section 15 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et
seq.).''.
SEC. 4. REPORTS.
(a) Initial Report.--Not later than July 1, 2022, the Board of
Governors of the Federal Reserve System shall submit a report to
Congress that--
(1) identifies current level of financed greenhouse gas
emissions (as defined in section 15 of the Bank Holding Company
Act of 1956) in the financial system of the United States;
(2) includes an analysis of trends in financed greenhouse
gas emissions reductions;
(3) includes a summary of the commitments of covered bank
holding companies (as defined in section 15 of the Bank Holding
Company Act of 1956) to reduce financed greenhouse gas
emissions;
(4) includes projections of estimated temperature rise
through January 1, 2100, based on latest climate science--
(A) if current emission trends continue; or
(B) if bank holding companies meet voluntary
financed greenhouse gas emissions goals;
(5) estimates the financed greenhouse gas emissions in the
financial system of the United States needed to meet science-
based emissions targets (as defined in section 15 of the Bank
Holding Company Act of 1956);
(6) identifies regulatory gaps in reducing financed
greenhouse gas emissions that cannot be addressed with
authorities of the Board and recommendations for addressing
such gaps;
(7) identifies data quality challenges for assessing
financed greenhouse gas emissions and recommendations to
address those challenges;
(8) identifies the equitable transition needs for workers
and communities that will be impacted by a shift to a zero
financed greenhouse gas emissions economy;
(9) analyzes--
(A) the number and groups of people affected by a
transition to zero financed greenhouse gas emissions;
and
(B) the economic impact of such a transition with
respect to such groups; and
(10) identifies regulatory and legislative options for
mitigating the economic impacts described in paragraph (9)(B),
including--
(A) the use of existing authorities, including the
Community Reinvestment Act of 1977 (12 U.S.C. 2901 et
seq.) and emergency lending powers under section 13 of
the Federal Reserve Act (12 U.S.C. 342); and
(B) the establishment of a public investment bank
to finance investment in an equitable transition to a
zero financed greenhouse gas emissions economy.
(b) Periodic Report.--Not later than July 1, 2024, and not less
than once every 2 years thereafter, the Board of Governors of the
Federal Reserve System shall submit a report to Congress that
includes--
(1) an analysis of the progress against aligning with
financed greenhouse gas emissions targets;
(2) the projections described in subsection (a)(4); and
(3) an analysis of the progress made in the preceding 2
years towards an equitable transition to a zero financed
greenhouse gas emissions economy; and
(4) recommendations with respect to assistance Congress and
other Federal agencies may provide to--
(A) facilitate a reduction of financed greenhouse
gas emissions; and
(B) support an equitable transition to a zero
financed greenhouse gas emissions economy.
(c) Collection of Data.--The Board of Governors of the Federal
Reserve System shall collect such data as needed from bank holding
companies to carry out the reports under this section.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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