New 'PROTECT USA Act' Shields Manufacturers and Energy Companies from Foreign Environmental Supply Chain Checks

This bill, the “Prevent Regulatory Overreach from Turning Essential Companies into Targets Act of 2025” (or the PROTECT USA Act), is essentially a legal shield designed to protect major U.S. companies from having to comply with certain foreign environmental and social rules. It’s a direct response to international efforts—like those coming out of the European Union—that require large corporations to audit their supply chains for things like environmental damage or labor abuses, what the bill calls “foreign sustainability due diligence regulations.”

Who Gets the Protection?

First, you need to know who this bill covers. It defines an “Entity Integral to the National Interests of the United States” very broadly (SEC. 3). This isn’t just defense contractors; it’s any company where at least 25% of its revenue comes from digging up or producing raw materials (think mining, fossil fuels, or farming) or any company primarily in the manufacturing sector. Crucially, the President can also simply declare any other entity to be “integral.” If you’re a mid-sized factory or a large energy producer, this bill is talking about you.

The Ban on Foreign Homework

If your company falls under that “integral” definition, Section 4 lays down the law: you are generally prohibited from complying with those foreign sustainability due diligence rules. Think of it like this: if the EU says you need to audit your entire supply chain, down to the mine where your raw materials come from, to prove you aren’t using child labor or polluting a river, this bill says, “Nope, you can’t do that.”

The goal is clear: remove the compliance costs and legal risks associated with these international standards. For a busy manufacturer, this means one less massive, expensive audit to worry about. However, it also means that the U.S. government is actively preventing its largest companies from participating in international efforts aimed at cleaning up global supply chains. If you’re an investor or a consumer who cares about where products come from, this bill makes those supply chains less transparent.

The Presidential Escape Hatch

There are a couple of ways around the ban. First, if a U.S. law requires the same action, you can comply. Second, if complying is just part of your “ordinary course of business” and not specifically driven by the foreign rule, you’re fine (SEC. 4). But the most significant exception is the presidential hardship exemption. If following this ban causes your company “particular trouble or hardship,” you can petition the President directly, who must issue a written decision within 30 days. This gives the Executive Branch significant, fast-acting power to decide which companies get to sidestep the ban and which don't.

Shielding Against Foreign Lawsuits

Section 5 provides the muscle behind this ban. It states that U.S. courts (federal and state) cannot recognize or enforce a foreign court judgment against one of these key U.S. entities if that judgment is based on non-compliance with those foreign sustainability rules. If a European court fines a U.S. energy company for failing to audit its supply chain, that judgment is essentially dead on arrival in the U.S.

Even more importantly, the bill allows the protected U.S. entity to sue anyone who takes an “adverse action” against them for following this Act. If a business partner or a shareholder tries to penalize the company for refusing to comply with the foreign rule, the protected company can take them to federal court. If they win, they can be awarded compensatory damages (including money they had to pay out because of the foreign rule), punitive damages, and attorney fees. Furthermore, anyone found to violate this protection can be hit with a civil penalty of up to $1,000,000 and potentially be barred from federal contracts for up to three years.

The Real-World Trade-Off

This legislation is a high-stakes move in global trade. On one hand, it protects major U.S. industries from potentially costly and complex foreign regulations that might put them at a disadvantage. If you work for one of these manufacturers, the short-term benefit is reduced regulatory red tape and compliance costs. On the other hand, it actively undermines international efforts to standardize corporate responsibility. For U.S. consumers and investors, this bill creates a legal blind spot, making it harder to track the environmental and social impacts of the products and raw materials supplied by these key American companies. The bill effectively creates an immunity shield for large U.S. corporations against accountability mechanisms related to global environmental and labor standards.