American Petroleum Institute’s (API) Dustin Meyer sounded the alarm on a European Union (EU) directive that would impose “massive, mandatory, extraterritorial” regulations on American companies.
“The EU’s Corporate Sustainability Due Diligence Directive imposes massive, mandatory, extra territorial environmental requirements on US companies that represents an unprecedented reach of European regulations into American industry,” Dustin Meyer, API’s senior vice president of policy, economics, and regulatory affairs, told Breitbart News in an interview.
Meyer explained that the EU Corporate Sustainability Due Diligence Directive (CSDDD) regulation serves as a way to trap American companies that do business with European companies into the EU’s onerous regulatory state.
Lawmakers have argued that it would force American companies to adopt the EU’s “net zero” carbon emissions target.
The Due Diligence directive serves as a way to additional reporting requirements for companies as well as legal liability for companies outside of the EU.
However, it would force many American companies that do not directly do business Europe. For instance, if Exxon Mobil had a supplier that did business with the EU, then Exxon Mobil would have to comply with the requirements.
Penalties for failing to comply with the due diligence regulations could be as high as five percent of a company’s turnover or revenue.
Reuters reported:
Since November last year, however, legislators have sought to unpick it, amid heavy lobbying from industry groupings, which argued that the rules meant European companies could not compete with rivals in China and the U.S., where President Donald Trump is rolling back regulation and imposing tariffs on foreign goods.
In February, the European Commission introduced the first in what would be a series of Omnibus packages, focused on sustainability and investment and billed as a recalibration of rules “in a growth-friendly manner”.
Sen. Bill Hagerty (R-TN) even introduced the PROTECT USA Act to shield American companies from the EU’s extraterritorial regulations.
“American companies should be governed by U.S. laws, not unaccountable lawmakers in foreign capitals,” Hagerty said in a statement in March. “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.”
Hagerty joined House Financial Services Committee Chairman French Hill (R-AR) and Senate Banking Committee Chairman Tim Scott (R-SC) in February urging Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett to address the EU regulations.
They wrote in the letter to the Trump administration:
Beyond economic risks, CSDDD undermines U.S. jurisdictional sovereignty. U.S. corporate governance law distinguishes between publicly and privately held companies, with regulatory obligations calibrated accordingly. However, CSDDD disregards this distinction, requiring all companies meeting the €450 million turnover threshold to disclose information beyond what is relevant to U.S. investors. The U.S. Securities and Exchange Commission (SEC) recently indicated its intent to unwind similar disclosure requirements, further highlighting the misalignment of CSDDD with U.S. legal principles.
The implications of CSDDD on U.S. corporate governance are also profound. A recent analysis from corporate law academics suggests that U.S. firms will face disproportionately higher legal risks under CSDDD than their European counterparts. This concern is further underscored by the United Auto Workers lawsuit against Mercedes Benz, in which an American labor union sought to circumvent established U.S. labor law for a factory in America by appealing to foreign legal frameworks to influence U.S. labor and corporate practices.
VCI, the trade group for the German chemicals industry, has said that the due diligence rule would also set “huge legal uncertainty and incalculable risk” thanks to the civil liability provision and would have companies withdraw from higher-risk regions and markets.
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