Charleston Leader

Last week, U.S. Senator Shelley Moore Capito (R-W.Va.) and 63 bicameral Republican colleagues sent a letter to U.S. Department of Treasury Secretary Janet Yellen and senior Biden-Harris administration officials. The letter urges them to address regulatory encroachment from the European Union (EU) that they believe threatens U.S. economic interests.

In May 2024, the EU adopted its Corporate Sustainability Due Diligence Directive (CSDDD), which integrates social and climate policies into binding international law. This directive will require many U.S. businesses to comply with European policies or face penalties. Concerns have been raised about extraterritorial regulatory overreach, impacts on supply chains, litigation risks, and climate transition requirements.

“The CSDDD’s extraterritorial scope amounts to a serious breach of U.S. sovereignty and a direct threat to the global competitiveness of American companies,” the lawmakers wrote. “We are deeply concerned that the [Biden-Harris] Administration is surrendering its regulatory responsibilities to European officials, allowing them to dictate draconian social and climate policies to American companies.”

The lawmakers further stated, “The EU is attempting to mitigate the relative damage of its onerous regulatory framework by forcing Americans to bear the burden as well. Any policies impacting U.S. businesses should be debated and determined by the elected representatives of the American people, not overseas bureaucrats advancing their own agendas.”

The letter calls for Secretary Yellen and senior Biden-Harris administration officials to engage with their European counterparts to delay CSDDD’s implementation and either repeal or modify it substantially. The lawmakers argue that there has been little evidence that the administration has an effective strategy for addressing this issue.

The full text of the letter highlights concerns about EU regulations hindering business growth and raising consumer costs. It cites data showing limited economic growth in the Eurozone compared to the United States over a 15-year period ending in 2023.

The CSDDD will impose significant legal obligations on U.S. businesses by converting various international human rights conventions, environmental laws, and climate mitigation targets into binding laws with enforcement mechanisms, including monetary penalties.

According to the letter, "American companies will be required to comply with CSDDD even though the U.S. has not ratified many of the international conventions underlying the directive."

The lawmakers emphasize that if implemented in its current form, CSDDD could force companies to divest or reduce ties with European businesses, causing economic harm on both sides of the Atlantic.

They conclude by urging federal agencies to actively engage with EU counterparts in Brussels and member-state capitals for delaying implementation or modifying CSDDD substantially.

###