The European Commission’s (EC) recent announcement of the Omnibus Simplification Proposals signals that it has heard the challenges and objections raised by companies affected by the new requirements of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). But in the US, Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, has introduced legislation that could impose substantial challenges to CSDDD compliance for US companies.

As a reminder, the EC proposed amendments for the implementation and transposition deadlines of the CSRD and CSDDD, as well as amending the scope and requirements of the CSRD and CSDDD. But the Prevent Regulatory Overreach from Turning Essential Companies into Targets Act of 2025 (PROTECT USA Act)[1] proposed by Senator Hagerty targets “foreign sustainability due diligence regulation” such as the CSDDD, and would prohibit US companies from being forced to comply with the CSDDD. If enacted as currently drafted, US companies will be faced with a significant conflict in complying with the PROTECT USA Act and the CSDDD.

Further, the PROTECT USA Act intends to protect US companies from any enforcement action by the EU or its member states for non-compliance with the CSDDD. Section 5(a) of the PROTECT USA Act states: “No person may take any adverse action towards an entity integral to the national interests of the United States for action or inaction related to a foreign sustainability due diligence regulation.”[2] And § 5(b) prevents U.S. federal or state courts from enforcing any judgment by a foreign court relating to any foreign sustainability due diligence regulation “unless otherwise provided by an Act of Congress.”[3]

The PROTECT USA Act could apply to a significant number of US companies, defining “an entity integral to the national interest of the United States” as “any partnership, corporation, limited liability company, or other business entity that does business with any part of the Federal Government, including Federal contract awards or leases.”[4] It also includes entities: 

[O]rganized under the laws of any State or territory within the United States, or of the District of Columbia, or under any Act of Congress or a foreign subsidiary of any such entity that—

(i) derives not less than 25 percent of its revenue from activities related to the extraction or production of raw materials from the earth, including—

(I) cultivating biomass (whether or not for human consumption);

(II) exploring or producing fossil fuels;

(III) mining; and

(IV) processing any material de-rived from an activity described in subclause (I), (II), or (III) for human use or benefit;

(ii) has a primary North American Industry Classification System code or foreign equivalent associated with the manufacturing sector; or

(iii) derives not less than 25 percent of its revenue from activities related to the mechanical, physical, or chemical transformation of materials, substances, or components into new products;

(iv) is engaged in—

(I) the production of arms or other products integral to the national defense of the United States; or

(II) the production, mining, or processing of any critical mineral.[4] 

And the PROTECT USA Act has a catch-all that will apply to any entity “the President otherwise identifies as integral to the national interests of the United States.”[5]

The PROTECT USA Act builds on opposition to the CSDDD raised during the Biden Administration and, given the Republican majorities in both the US House and Senate, advances the argument that the CSDDD challenges US sovereignty. In a February 26, 2025 bicameral letter to Scott Bessent, the Secretary of the US Department of the Treasury and Kevin Hassett, the Director of the White House National Economic Council, legislators described the CSDDD as “a serious and unwarranted regulatory overreach, imposing significant economic and legal burdens on U.S. companies.”[6] Thus, the PROTECT USA Act may serve as an incentive to further limit the scope of the CSDDD.

We recently reviewed how companies should address CSRD requirements while the EC works through the Omnibus Simplification Proposals.[7] The PROTECT USA Act adds an additional layer of complexity for US companies in navigating the uncertainty of the EC’s legislative process along with the significant limits the PROTECT USA Act might present. SPB’s policy experts in the US and EU can support companies in making prudent business decisions in a rapidly changing legislative environment.

[1] https://www.hagerty.senate.gov/wp-content/uploads/2025/03/HLA25119.pdf

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] https://www.banking.senate.gov/imo/media/doc/csddd_letter_to_treasury-nec_draft_22525_zg.pdf.pdf

[7] https://natlawreview.com/article/what-should-companies-do-csrd-while-they-wait-eu-make-its-mind