The bill targets the Corporate Sustainability Due Diligence Directive, a sweeping regulatory armada projected to saddle American companies with over $1 trillion in compliance costs. Enacted by the European Parliament in 2024, the CS3D’s staggering price tag rivals the total regulatory burden existing environmental and financial regulations impose on American businesses combined. 

The far-reaching climate code follows the same playbook that Europe has run on tech: regulations without borders. The CS3D applies to foreign firms with significant sales in Europe. An estimated 4,000 U.S. companies are subject to the CS3D, including 1,000 energy firms.

Worse, the climate rules conscript American and other non-EU businesses into the service of Europe’s climate czars. Companies must police their supply chains and submit detailed reports back to Brussels.

Agriculture Secretary Brooke Rollins warns that the long arm of Europe’s ESG mandates could reach all the way down to “individual dairy farms” in the American heartland.

Congress has seen this before. In 2012, it passed legislation blocking the EU’s unilateral carbon tax on American airline travel. The Senate approved the bill unanimously. President Barack Obama signed it into law. The same resolve is needed now. 

If Congress fails to act, American firms will be disadvantaged relative to global competitors. Beijing is already considering measures to stop the CS3D from slamming the brakes on its export machine. The Gulf states are pushing back. Even French and German leaders are calling for repeal. 

They have good reason. Europe’s economy has been falling behind for years. Just 15 years ago, the combined GDP of the European Union exceeded that of the United States. 

The American economy is now nearly 20% bigger than the EU, even when the United Kingdom is included. Minus the U.K., U.S. GDP exceeds that of the EU by more than 30%. 

Europe’s stagnation is largely self-inflicted. Decades of regulatory overkill have left its economy lagging behind America’s. Unless stopped, the CS3D will export that failed model to the rest of the world.

Energy affordability would be among the first casualties. Qatar has threatened to curtail gas exports if Europe doesn’t get its regulatory house in order. Exxon Mobil CEO Darren Woods has warned that the company could reduce its presence in Europe, calling the directive “the worst piece of legislation” he has seen since becoming chief executive in 2017.

At the time of America’s founding, Alexander Hamilton lamented in The Federalist that “Europe, by her arms and her negotiations,” dominated much of the world. He envisioned something different: “one great American system, superior to the control of all transatlantic force or influence, and able to dictate the terms of the connection between the old and the new world.”

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Two hundred and fifty years later, that vision has been realized. The U.S. is the world’s leading economic power, while Europe relies on foreign energy to keep the lights on and struggles to revive growth. 

The challenge has changed, but the principle has not. Europe is now attempting to recover through regulation what it can no longer command through economic or military strength. Congress should make it equally clear that the rules governing American businesses will be written by elected representatives in the U.S. — not by bureaucrats in Brussels.

Michael Toth is director of research at the Civitas Institute at the University of Texas.