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For years now, the European Union has been struggling to bring to legislative fruition its own Corporate Sustainability Due Diligence Directive (CSDDD), which together with a number of other directives (eg, the Corporate Sustainability Reporting Directive (CSRD), and the Taxonomy Regulation) was meant to produce a European version of a "smart mix of measures contemplated by the UN Guiding Principles for Business and Human Rights (UNGP Principle 3 Commentary). The object of all of this legislating was on its face quite straightforward--to develop an integrated system of managing the way on which at least the largest European companies were to develop systems for preventing and mitigating adverse human rights impacts from comic activities with which they were connected and to address such adverse impacts where prevention and mitigation failed. The operationalization of this system was built around what the UNGP named "human rights due diligence" (HRDD). Where the UNGP developed its framework for HRDD as an expectation of enterprises operating in markets across borders (and thus grounded in a so-called social license to operate, roughly evoking the disciplinary mechanisms of markets, the UNGP also made clear that such HRDD strictures could be adapted to suit the times and made mandatory as part of a State's determination that its own duty to protect human rights required the legalization of HRDD within its legal order. In addition, the UNGP also noted that such an effort might be undertaken at the international level where the collective of States determined that such transposition of HRDD from market expectation to mandatory requirement might best be undertaken as a binding international legal obligation.
Less straightforward were a number of underlying development trajectories that made this project appealing (especially in Europe and among international elites). The first was a movement toward a more comprehensive public oversight of national and transnational activity. This converged with an emerging appetite toward compliance based systems of administrative oversight, which itself was meant to transform the understanding of the relationship of private to public spheres. That understanding appeared to suggest a rethinking of the nature and purpose of economic activity from purely financial (the consensus element at least through the end of the first decade of the 21st century) to one that increasingly understood economic activity as an instrument for fulfilling public policy and objectives (within which financial objectives could also be realized). That shift moved especially European elites closer to MarxistLeninist approaches to both markets and economic activities as an instrument of politics (usually identified as public policy or public goals). All of thsi made sense in light of the increasing operation of States ads private actors in markets, and of the governmentalization of enterprises by delegating to them a host of public objectives, the internalization fo which produced a managerial architecture within the largest forms that began to mirror of those the public administrative organs. Both, in turn, appeared to converge around a set of similar sensibilities.
All of this served as grist for the regulatory mill--at least in Europe. The United States under both Democratic and Republic Party Presidents continued to privilege the markets driven HRDD framework. Socialist and Marxist-Leninist systems continued to privilege the alignment of core State objectives and ideologies of human rights (and sustainability) with national systems of incorporating both in corporate governance--usually centering in development as the core value. It was in Europe, with the active participation of States in Latin America and Africa, that the project of both national and transnational regulatory structures for mandatory HRDD took hold in ways that embedded the sensibilities and language of the UNGP and used it as a basis for expanding and refining its application. This produced the 2014 effort to concoct a binding international instrument for business and human rights (now including sustainability factors in one way or another), the roughly contemporaneous effort at national transposition (with local characteristics) in mostly European States of the UNGP HRDD framework as a mandatory legal requirement (with potentially significant extraterritorial effect), and lastly the efforts at regional convergence through the legislative work (well underway since the second decade of the 21st century) for an EU transposition of UNGP HRDD as a mandatory measure with substantial extraterritorial effect.
In a world generally committed to global convergence of norms and processes, extraterritorial effects could be understood as instruments of that convergence. It is in this sense that extraterritoriality, when driven by national application of international law or standards, for example, could be characterized as extra-national efforts rather than as national efforts to project national power or interests abroad. What is being projected, at least theoretically, are international standards and norms in which all States have a similar interests. All good. Except when it is not. And it is not when the spin that States give outwardly projected international standards and norms appear to all intents and purposes as a mask within which are national interests and sensibilities. The result can be national countermeasures from those States into which these legislative projects are projected. At least that may be the thinling of States that do not share the same perspectives of the State or international organs that seek to regulate in this way.
That, at its heart, appears to be the stance of at least one U.S. Senator, in the face of the "idea" of the CSDDD. In a Press Release, dated 12 March 2025,
United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, today introduced the Prevent Regulatory Overreach from Turning Essential Companies into Targets (PROTECT USA) Act of 2025, legislation to shield U.S. companies from the European Union’s (EU) harmful extraterritorial regulations.
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The PROTECT USA Act extends Senator Hagerty’s record of opposing the CSDDD. In September 2024, Senator Hagerty and Representative Andy Barr (R-KY-06) sent a bicameral letter to the Biden-Harris Administration urging it to oppose the CSDDD. The following month, Senator Hagerty and Representative French Hill (R-AR-02) co-authored an op-ed in the Wall Street Journal that sounded the alarm on the EU’s regulatory encroachment. Most recently, Senator Hagerty joined a bicameral letter urging the Secretary of the Treasury and Director of the National Economic Council to address the CSDDD.
This follows a 26 February 2025 letter from Congressional leaders to President Trump urging the President to
1. Support European calls to indefinitely pause CSDDD.
2. Assert that CSDDD’s extraterritorial application is untenable and detrimental to global
productivity. European firms listing in the U.S. could also face similar regulatory exposure,
which may discourage transatlantic economic cooperation.
3. While Europe is free to create a hostile business climate for companies in their own
jurisdiction, to protect American companies, CSDDD’s Article 29 (civil liability) should be
removed from the Directive and not replicated in future EU regulations.
4. Clarify that U.S. companies are not bound by net zero transition plans akin to those imposed on EU firms. The U.S. has shifted its stance on climate commitments, and CSDDD’s Article 22 on mandatory transition plans should be abandoned. (Letter HERE)
None of this may matter, except as performative politics given the changing state of the European regulatory efforts and the potentially significant contestation of the European regulatory model, at least in the context of business and human rights. The effort to slow down or reduce the impact of the European measures (the Omnibus) has caused a substantial challenge to what had been seen before the end of 2024 as an inevitable trajectory of European normative policy and administrative cultures that were effectively unstoppable. That no longer seems to be the case (eg here).
WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, today introduced the Prevent Regulatory Overreach from Turning Essential Companies into Targets (PROTECT USA) Act of 2025, legislationto shield U.S. companies from the European Union’s (EU) harmful extraterritorial regulations.
In May 2024, the EU adopted the Corporate Sustainability Due
Diligence Directive (CSDDD), which converts a range of international
conventions into binding laws enforceable on American companies. New
regulations will force U.S. companies to adopt the EU’s “net zero”
carbon emissions target and other standards that exceed the requirements
of U.S. law. In addition to imposing severe financial penalties for
violations, the rule indirectly harms small and medium-sized businesses
by requiring large companies to police their suppliers for compliance
with ESG standards.
“American companies should be governed by U.S. laws, not unaccountable lawmakers in foreign capitals,” said Senator Hagerty.
“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 PROTECT USA Act defends U.S. companies from this harmful overreach. It prohibits certain U.S. entities from being forced to comply with any foreign sustainability due diligence regulation, prohibits the taking of any adverse action against such an entity for action or inaction related to the regulation, and establishes a private right of action for such entities to bring civil actions when aggrieved.
Background:
The PROTECT USA Act extends Senator Hagerty’s record of opposing the CSDDD. In September 2024, Senator Hagerty and Representative Andy Barr (R-KY-06) sent a bicameral letter to the Biden-Harris Administration urging it to oppose the CSDDD. The following month, Senator Hagerty and Representative French Hill (R-AR-02) co-authored an op-ed in the Wall Street Journal that sounded the alarm on the EU’s regulatory encroachment. Most recently, Senator Hagerty joined a bicameral letter urging the Secretary of the Treasury and Director of the National Economic Council to address the CSDDD.
Full text of the legislation can be found here.
HLA25119 DPY S.L.C.
119TH CONGRESS
1ST SESSION S. ll
To prohibit entities integral to the national interests of the United States
from participating in any foreign sustainability due diligence regulation,
including the Corporate Sustainability Due Diligence Directive of the
European Union, and for other purposes.
IN THE SENATE OF THE UNITED STATES
llllllllll
Mr. HAGERTY introduced the following bill; which was read twice and referred
to the Committee on llllllllll
A BILL
To prohibit entities integral to the national interests of the
United States from participating in any foreign sustain-
ability due diligence regulation, including the Corporate
Sustainability Due Diligence Directive of the European
Union, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled,2
SECTION 1. SHORT TITLE.3
This Act may be cited as the ‘‘Prevent Regulatory4
Overreach from Turning Essential Companies into Tar-5
gets Act of 2025’’ or the ‘‘PROTECT USA Act of 2025’’.6
2
HLA25119 DPY S.L.C.
SEC. 2. FINDINGS.1
Congress makes the following findings:2
(1) The ability of citizens of the United States3
to engage in international commerce is a funda-4
mental concern of the policy of the United States.5
(2) Entities in the extractive and manufac-6
turing sectors contribute significantly to the pros-7
perity of the United States and the growth of the8
world economy.9
(3) Maintaining and, in some cases, increasing10
access to certain supplies and materials from the ex-11
tractive sector, including agriculture, energy, mining,12
and timber, and access to materials from the manu-13
facturing sector, are critically important for pro-14
moting economic development and human progress15
in the United States and around the world.16
(4) Restrictions, particularly restrictions adopt-17
ed unilaterally by foreign countries that are substan-18
tially different from restrictions applied by the19
United States, that unreasonably hinder the ability20
of entities integral to the national interests of the21
United States to pursue their commercial activities22
can have serious adverse effects on employment, eco-23
nomic stability, scientific progress, and international24
trade, with the potential to impede domestic and for-25
eign policy goals.26
3
HLA25119 DPY S.L.C.
SEC. 3. DEFINITIONS.1
In this Act:2
(1) ENTITY INTEGRAL TO THE NATIONAL IN-3
TERESTS OF THE UNITED STATES.—The term ‘‘enti-4
ty integral to the national interests of the United5
States’’ means any partnership, corporation, limited6
liability company, or other business entity that—7
(A) does business with any part of the8
Federal Government, including Federal contract9
awards or leases;10
(B) is organized under the laws of any11
State or territory within the United States, or12
of the District of Columbia, or under any Act13
of Congress or a foreign subsidiary of any such14
entity that—15
(i) derives not less than 25 percent of16
its revenue from activities related to the17
extraction or production of raw materials18
from the earth, including—19
(I) cultivating biomass (whether20
or not for human consumption);21
(II) exploring or producing fossil22
fuels;23
(III) mining; and24
(IV) processing any material de-25
rived from an activity described in26
4
HLA25119 DPY S.L.C.
subclause (I), (II), or (III) for human1
use or benefit;2
(ii) has a primary North American In-3
dustry Classification System code or for-4
eign equivalent associated with the manu-5
facturing sector; or6
(iii) derives not less than 25 percent7
of its revenue from activities related to the8
mechanical, physical, or chemical trans-9
formation of materials, substances, or com-10
ponents into new products;11
(iv) is engaged in—12
(I) the production of arms or13
other products integral to the national14
defense of the United States; or15
(II) the production, mining, or16
processing of any critical mineral; or17
(C) the President otherwise identifies as18
integral to the national interests of the United19
States.20
(2) CRITICAL MINERAL.—The term ‘‘critical21
mineral’’ includes—22
(A) any mineral identified as a critical23
mineral in section 7002(a) of the Energy Act of24
2020 (30 U.S.C. 1606(a)); or25
5
HLA25119 DPY S.L.C.
(B) any fuel mineral, including fossil fuels1
and any fraction, distillate, or other by-product2
of a fuel mineral.3
(3) FOREIGN SUSTAINABILITY DUE DILIGENCE4
REGULATION.—5
(A) IN GENERAL.—Except as provided in6
subparagraph (B), the term ‘‘foreign sustain-7
ability due diligence regulation’’ means any law,8
regulation, or other legal instrument adopted by9
a foreign government that requires any person10
to undertake—11
(i) an assessment of the environ-12
mental or social impacts of its operations13
or value chain;14
(ii) action to address any impacts15
identified in the assessment described in16
clause (i); and17
(iii) reporting of the impacts and ac-18
tions described in clauses (i) and (ii).19
(B) EXCEPTION.—The term ‘‘foreign sus-20
tainability due diligence regulation’’ does not21
apply to any law, regulation, or other legal in-22
strument that is substantively similar to a law,23
regulation, or other legal instrument that has24
6
HLA25119 DPY S.L.C.
been adopted or approved by an Act of Con-1
gress.2
(C) INCLUSION OF CORPORATE SUSTAIN-3
ABILITY DUE DILIGENCE DIRECTIVE.—The4
term ‘‘foreign sustainability due diligence regu-5
lation’’ includes—6
(i) the entirety of the Corporate Sus-7
tainability Due Diligence Directive adopted8
by the European Union;9
(ii) any successor directive adopted by10
the European Union or any member coun-11
try of the European Union; and12
(iii) any precursor directive adopted13
by any member country of the European14
Union.
SEC. 4. PROHIBITION ON COMPLIANCE WITH FOREIGN SUS-16
TAINABILITY DUE DILIGENCE REGULATIONS.17
(a) IN GENERAL.—Except as provided in subsection18
(b), no entity integral to the national interests of the19
United States may comply with any foreign sustainability20
due diligence regulation.21
(b) EXCEPTION FOR ORDINARY BUSINESS ACTIVI-22
TIES.—Subsection (a) does not prohibit an entity from un-23
dertaking actions that it may lawfully take—24
7
HLA25119 DPY S.L.C.
(1) to comply with a statute of the United1
States; or2
(2) in the ordinary course of business.3
(c) HARDSHIP RELIEF PROCESS.—4
(1) PETITION FOR RELIEF.—Any entity inte-5
gral to the national interests of the United States6
that believes it will experience particular hardship in7
connection with the prohibition described in sub-8
section (a) may petition the President for an exemp-9
tion from such prohibition.10
(2) DECISION.—Not later than 30 days after11
the date on which the President receives a petition12
from an entity submitted under paragraph (1), the13
President shall provide a written decision to the en-14
tity that—15
(A) grants or denies the requested exemp-16
tion;17
(B) contains a statement setting forth the18
basis for the decision; and19
(C) in the case of a granted exemption, de-20
scribes any condition that the exemption is sub-21
ject to, as determined by the President.22
(3) FACTORS TO BE CONSIDERED.—In making23
the decision required by paragraph (2), the Presi-24
dent shall consider—25
8
HLA25119 DPY S.L.C.
(A) the extent to which the denial of a pe-1
tition submitted under paragraph (1) by an en-2
tity would result in the inability of the entity to3
participate in value chains associated with prod-4
ucts essential for domestic use in the United5
States;6
(B) possible adverse effects on the econ-7
omy in any locality or region of the United8
States, including adverse effects on employ-9
ment;10
(C) the degree to which granting the peti-11
tion would impact, directly or indirectly, the12
United States; and13
(D) the extent to which denial of the peti-14
tion would prevent the entity from divesting in15
a business formed under the laws of a jurisdic-16
tion subject to a foreign sustainability due dili-17
gence regulation.18
SEC. 5. PROHIBITION AGAINST ADVERSE ACTION FOR COM-19
PLIANCE WITH THIS ACT.20
(a) IN GENERAL.—No person may take any adverse21
action towards an entity integral to the national interests22
of the United States for action or inaction related to a23
foreign sustainability due diligence regulation.24
9
HLA25119 DPY S.L.C.
(b) JUDGMENTS FOR FOREIGN SUSTAINABILITY DUE1
DILIGENCE REGULATIONS.—No judgment by a foreign2
court brought against an entity integral to the national3
interests of the United States in relation to any foreign4
sustainability due diligence regulation shall be recognized5
in the courts of the United States or of the States, unless6
otherwise provided by an Act of Congress.7
(c) ENFORCEMENT.—8
(1) ACTIONS BY THE PRESIDENT.—9
(A) IN GENERAL.—The President shall10
take any action the President determines is in11
the public interest to protect an entity integral12
to the national interests of the United States13
from an adverse action related to a foreign sus-14
tainability due diligence regulation.15
(B) DETERMINATION OF PUBLIC INTER-16
EST.—In determining under subparagraph (A)17
whether an action by the President is in the18
public interest, the President shall take into ac-19
count the impact of the adverse action de-20
scribed in that subparagraph on—21
(i) consumers and businesses in the22
United States;23
(ii) the economic, energy, and environ-24
mental security of the United States; and25
10
HLA25119 DPY S.L.C.
(iii) foreign relations of the United1
States, including existing international2
commitments.3
(2) PRIVATE RIGHT OF ACTION.—4
(A) IN GENERAL.—Any entity integral to5
the national interests of the United States ag-6
grieved by a violation of subsection (a) may7
bring a civil action against the person that vio-8
lated subsection (a) in an appropriate district9
court of the United States.10
(B) RELIEF.—In a civil action brought11
under subparagraph (A) in which the plaintiff12
prevails, the court may award—13
(i) a writ of mandamus or other equi-14
table or declaratory relief;15
(ii) punitive damages not to exceed16
the maximum penalty described in para-17
graph (3)(A);18
(iii) reasonable attorney fees and liti-19
gation costs;20
(iv) compensatory damages, including21
any amount paid by the entity pursuant to22
the applicable foreign sustainability due23
diligence regulation; and24
(v) all other appropriate relief.25
11
HLA25119 DPY S.L.C.
(3) PENALTIES.—A person that violates sub-1
section (a) or a regulation issued pursuant to this2
Act—3
(A) shall be subject to a civil penalty of4
not more than $1,000,000; and5
(B) may, at the discretion of the Presi-6
dent, for a period of not longer than 3 years7
from the date on which the person is found in8
violation, be deemed ineligible to submit a bid9
for any Federal award or contract.
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