To protect our communities and avoid disastrous levels of climate change, the U.S. must boldly act to keep fossil fuels in the ground.
Decisions like protecting the Atlantic coast from offshore drilling, enacting a moratorium on new coal leasing on U.S. public lands, banning fracking in New York, and rejecting the Keystone XL tar sands pipeline – have made progress toward this critical end. Such fossil fuel restrictions must be expanded to adequately safeguard our communities and climate.
However, two pending trade deals pose major barriers to this climate imperative. The Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), as proposed, would empower an unprecedented number of fossil fuel corporations, including some of the world’s largest polluters, to challenge U.S. policies in tribunals not accountable to any domestic legal system. There, the firms could use the trade pacts’ broad foreign investor rights to demand compensation for U.S. fossil fuel restrictions. These “investor-state dispute settlement” (ISDS) cases would be decided not by judges, but by lawyers who typically represent corporations.
In January, TransCanada – the company behind the Keystone XL pipeline – illustrated that the climate threats posed by such trade deals are real. The company announced it would use the North American Free Trade Agreement (NAFTA) to ask a private tribunal of three lawyers to order the U.S. government to pay more than $15 billion – more than $100 from every individual U.S. tax return – as “compensation” because President Obama rejected a pipeline that threatened oil spills and increased climate disruption.
But the TPP and TTIP would more than double the number of fossil fuel corporations that could follow TransCanada’s example and challenge U.S. policies in private tribunals. Indeed, the pacts would be the first to allow the world’s largest polluters – including all of the eight largest private greenhouse gas emitters outside of the U.S. – to wield this tool against U.S. climate policies. The fossil fuel firms that would gain this right are currently fracking on our public lands, drilling for oil off our shores, building liquefied natural gas (LNG) terminals on our coasts, running refineries in our cities, and operating fossil fuel pipelines and trains in nearly every region of the country. No previous trade deal has given such broad rights to corporations with such broad interests in maintaining U.S. fossil fuel dependency.
Fossil fuel corporations are increasingly using ISDS under existing trade and investment pacts, contributing to a recent surge in cases. In fact, half of the new ISDS cases launched in 2014 targeted policies affecting oil or gas extraction, mining, or power generation. Law firms specializing in ISDS are now explicitly advising corporations, including fossil fuel firms, to see ISDS as a “tool to assist lobbying efforts to prevent” unwanted policies, as threats of costly ISDS cases can chill policy proposals.
By empowering many more firms to launch ISDS cases against the U.S., the TPP and TTIP would pose a major threat to efforts across the country to restrict fossil fuel activities, including these:
Fracking: The TPP and TTIP would undermine efforts in various states to restrict the dangerous practice of fracking by granting ISDS rights to more foreign fracking firms than all 56 existing U.S. trade and investment pacts combined. The threat is real – a gas corporation named Lone Pine Resources is currently using NAFTA’s nearly identical foreign investor rights to ask an ISDS tribunal to order compensation from Canada for a fracking moratorium in Quebec.
Offshore drilling: The TPP and TTIP would empower oil and gas corporations with more than 10 million acres’ worth of U.S. offshore drilling leases – one out of every three leased acres – to use ISDS threats to resist offshore drilling restrictions, posing a threat to coastal communities and the climate. That is 24 times more area than that leased to firms with existing ISDS rights.
Oil and gas extraction on public lands: The TPP and TTIP would allow corporations with leases for oil and gas drilling on over 720,000 acres of U.S. public lands to launch ISDS cases against U.S. federal leasing restrictions, undercutting our ability to limit greenhouse gas emissions.
Fossil fuel pipelines: The TPP and TTIP would enable corporations that own tens of thousands of miles’ worth of fossil fuel pipelines in at least 29 states to go to private tribunals and, like TransCanada, demand billions of dollars for delays or denials of dangerous pipelines.
The TPP and TTIP’s unprecedented expansion of U.S. ISDS liability would similarly threaten efforts to protect communities from fossil fuel trains, LNG terminals, refineries, and other fossil fuel hazards.
Much of the world's remaining fossil fuel reserves are on or adjacent to Indigenous lands and territories. Unfortunately, the nation-states engaged in the TPP and TTIP agreements have not strongly defended Indigenous land rights and Indigenous peoples’ right to free, prior, and informed consent. Ultimately, such trade deals grant more rights to transnational corporations, often at the expense of Indigenous rights, undermining special protections of Indigenous lands and cultural resources. For Indigenous peoples wanting a just economic transition away from oil and gas development, these deals pose severe risks to their sovereignty and ability to self-determine their futures as nations and tribal citizens concerned about the climate, health, and environmental impacts from fossil fuels.