U.S. Senator and Senate Banking Committee member Bill Hagerty announced the introduction of the “PROTECT USA” Act, proposing new legislation aimed at shielding U.S. companies from having to comply with the EU’s Corporate Sustainability Due Diligence Directive (CSDDD).

The CSDDD sets out obligations for companies to identify, assess, prevent, mitigate, address and remedy impacts on people and planet – ranging from child labor and slavery to pollution and emissions, deforestation and damage to ecosystems – in their upstream supply chain and some downstream activities such as distribution and recycling.

The legislation was adopted in May 2024, but as part of the European Commission’s Omnibus process faces proposed changes, including a delay to its implementation, and a narrower scope to require companies to only perform sustainability due diligence at the level of direct business partners.

Under the new proposed U.S. legislation, U.S. companies in several sectors including agriculture, mining, energy, timber, and manufacturing would be prohibited from being forced to comply with the CSDDD or any foreign sustainability due diligence regulation, judgements by foreign courts in relation to such regulation would not be recognized. The proposal would also block any adverse actions taken against companies in relation to the regulations.

Senator Hagerty said:

“American companies should be governed by U.S. laws, not unaccountable lawmakers in foreign capitals. The European Union’s ideologically motivated regulatory overreach is an affront to U.S. sovereignty. I will use every tool at my disposal to block it.”

The introduction of the legislation follows the publication of a letter by the Senate Banking Committee Chairman to Trump administration officials in February expressing concerns about the potential impact of the EU’s CSDDD regulation on U.S. companies, and urging the administration to “engage with European counterparts to vocalize direct opposition and encourage an indefinite pause on its implementation.”