Scott Joins Hagerty, Barr, Colleagues in Sounding Alarm on Europe’s Regulatory Encroachment

September 27, 2024

Scott Joins Hagerty, Barr, Colleagues in Sounding Alarm on Europe's Regulatory Encroachment

Washington, D.C. - Continuing his efforts to push back on the European Union's (E.U.) attempt to force a progressive climate agenda on U.S. businesses, Ranking Member Tim Scott (R-S.C.) joined fellow Senate Banking Committee member, Senator Bill Hagerty (R-Tenn.), Representative Andy Barr (R-Ky.-06), and their colleagues in urging Treasury Secretary Janet Yellen and senior Biden-Harris administration officials to stand up for U.S. economic interests by addressing regulatory encroachment from the E.U.

In May, the E.U. formally adopted its Corporate Sustainability Due Diligence Directive (CSDDD), which enshrines progressive social and climate policies into binding international law. Under this directive, many U.S. businesses will be forced to comply with European policies or face severe penalties. CSDDD's implementation raises serious concerns about extraterritorial regulatory overreach, adverse impacts on supply chains, litigation risks, and unfeasible climate transition requirements.

The letter urges Secretary Yellen and senior Biden-Harris administration officials to engage with their European counterparts to delay CSDDD's implementation and repeal or substantially modify the directive. To date, there has been little evidence that the administration has an effective strategy to address the issue.

"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 members of Congress 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 EU is attempting to mitigate the relative damage of its onerous regulatory framework by forcing Americans to bear the burden as well," the members of Congress continued. "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."

To read the full letter, click here.

BACKGROUND:

The letter builds on Ranking Member Scott's oversight efforts to prevent the application of burdensome European climate-related disclosure policies, as well as labor and social justice initiatives, on U.S. businesses.

In June of 2023, Ranking Member Scott and Rep. James Comer (R-Ky.-01) sent letters to both the Department of the Treasury and the Securities and Exchange Commission (SEC) requesting information on the Biden administration's activities taken in coordination with the European Union (E.U.) on environmental, social, and governance ("ESG") and climate-related measures that significantly impact U.S businesses, including E.U. climate-related disclosure mandates. Ranking Member Scott outlined potential harm the E.U.'s Corporate Sustainability Due Diligence Directive (CSDDD) would have on American industry and expressed his concern with Treausry and other federal agencies empowering European governments to impose onerous extra-territorial climate mandates on American businesses.

In the June 2023 letter, Ranking Member Scott asserted, "any such efforts to advance the E.U.'s ESG agenda over the interests of the U.S. and American companies would be contrary to Treasury's role to promote and protect the economic success and well-being of U.S. firms and a significant deviation from historical practices. Furthermore, shifting to an E.U.-style climate regulatory regime in the U.S. would materially and unnecessarily harm our nation's oil and gas sector, agriculture sector, and our preeminent capital markets."

After receiving a lackluster response from the SEC, Ranking Member Scott and Rep. Comer requested transcribed interviews of SEC officials to understand the SEC's role and activities in the development of E.U. climate related corporate disclosure directives.

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