In June, TransCanada, the corporation behind the Keystone XL pipeline, filed a suit against the U.S. government under a provision of NAFTA called Investor-State Dispute Settlement. TransCanada alleges that the Obama administration's decision to block the pipeline was "symbolic and based merely on the desire to make the U.S. appear strong on climate change." 

If the Canadian corporation prevails, U.S. taxpayers will be on the hook for up to $15 billion.

"It doesn't sound like a very promising NAFTA claim," says John Echeverria, a professor of law at Vermont Law School. "But part of what makes it so unpredictable is the NAFTA arbitration system isn't governed by precedent."

Investor-State Dispute Settlement suits, which can only be brought by foreign corporations and investors, do not pass through U.S. courts; instead, they're decided by private trade tribunals. Ultimately, the fate of any suit is in the hands of three lawyers—one picked by the corporation, one picked by the government being sued, and one that both parties settle on together.

"It's not like a U.S. court where the highest appellate court establishes precedent with rules that allow you to predict how cases will come out in the future," Echeverria says. "The hallmark of the arbitration system is there is no appellate court, there are no precedents, and the arbitrators sit down with complex and confusing language in the investor-protection provision with each case and try to do rough justice. So the results of arbitration are inherently unpredictable."

The Obama administration's decision to block the Keystone deal was in part a response to the concerted efforts of groups across the nation struggling to avert catastrophic climate change before it's too late. From fossil-fuel-rich western states to the Gulf of Mexico, from Pennsylvania's Marcellus Shale formation to the coasts of Alaska, citizens have been mobilizing under the banner "Keep It in the Ground" and calling on the administration to take seriously the climate accords it helped broker in Paris in December 2015.

President Barack Obama has achieved some important wins in the struggle to protect the climate, including blocking the Keystone pipeline, saying no to new offshore drilling in the Arctic and Atlantic Oceans, and placing a moratorium on new coal mining on public lands.

However, while the administration was engaged in the UN process that yielded the Paris climate accords, it was simultaneously negotiating new trade deals that could dramatically inhibit the country's ability to act on climate change, according to a growing number of policy experts, politicians, and activists. Investor-State Dispute Settlement is the provision that worries them most.

At the moment, of the countries with which the United States has signed trade and investment agreements containing an ISDS provision, very few have fossil fuel companies operating on U.S. soil. Almost all of these companies are Canadian, including TransCanada, which is why it can sue using ISDS under the North American Free Trade Agreement. But the number of corporations able to sue the United States in private ISDS tribunals would increase dramatically if two proposed trade deals were to be approved by Congress: the Trans-Pacific Partnership (TPP), with 11 countries bordering the Pacific, and the Transatlantic Trade and Investment Partnership (TTIP), with European nations. 

The TPP, which has been finalized and is now awaiting a vote from Congress, was made public only after being negotiated in secret. Congressional leaders have decided to hold off on voting on the agreement until after November—mostly because it has become so controversial that it could be a liability for members of Congress up for reelection. The deal's backers believe that a lame-duck vote is their best, and perhaps last, chance to get the deal approved by Congress.

"TPP is a little bit like Dracula. The more exposure to sunshine, the less viable it is," says Lori Wallach, director of the watchdog group Public Citizen's Global Trade Watch. "They realize the lame duck is their last chance to give the TPP eternal life. Otherwise the sunshine will do it in."

Interest groups spanning the political spectrum have objected to various pro-corporate aspects of the TPP. But environmental groups single out the ISDS provision in particular. Experts warn that it would effectively give multinational corporations like TransCanada the power to sue the United States in private tribunals if they object to regulations the government puts in place. For example, under the TPP, Marubeni Corporation (a Japan-based company that is fracking in Colorado, Texas, and Wyoming) and BHP Billiton (an Australian company with leases in the Gulf of Mexico) would gain access to private ISDS tribunals. Under the TTIP, European energy giants like Royal Dutch Shell and BP, both with leases in many U.S. states and the Gulf, would gain those protections.

"I worked on the Keystone campaign, so it's something that's personally very close to my heart—this absolutely has a detrimental impact on our campaigns and what we need to do to win and have a climate-safe future," says the Center for Biological Diversity's Valerie Love, who now works on campaigns to end new fossil fuel leasing on public lands and waters. "We'll go after one piece of the puzzle, but then they'll be attacking at this meta level."

Recent events show that such lawsuits are more than theoretical, and that they move in both directions across borders. Bilcon of Delaware, a U.S.-based mining company, is seeking $300 million from the Canadian government after an ISDS panel decided that Nova Scotia unfairly denied the company's attempt in 2007 to expand a quarry in a sensitive ecological and cultural area.

"With the TPP, suddenly, overnight, our liability would double," Wallach says. "If we did the European agreement [the TTIP], suddenly, overnight, there would be another 30,000 companies operating here that would have these rights."

Environmentally minded policymakers and groups worry that should the TPP and TTIP deals go through, the sort of activist pressure that has forced the Obama administration to put climate first may be less effective. One might wonder whether the administration would have thought twice about blocking the Keystone pipeline if it had known that a $15 billion lawsuit, decided outside the U.S. court system, was in store.

The United Nations–brokered climate agreement that countries approved last December asked that each government set a voluntary target for reducing its emissions. Many countries were vague about how they'd meet their goal. Given Congress's lack of agreement on climate change, America's own path to meeting its emissions-reduction target remained far from clear by the time negotiators left Paris.

In the United States, environmentalists are now pushing to keep the country moving toward—and hopefully passing—its target of a 26 to 28 percent reduction in climate-change-causing emissions by 2025.

"It's like talking out of both sides of our mouths to say, 'Yes, we're going to address climate change, but we're going to keep drilling our public lands for fossil fuels that are causing climate change,'" says Micah Parkin, executive director of 350 Colorado and one of the organizers of recent protests against fossil fuel leasing on public lands in the state.

But should the TPP or TTIP pass, many of the steps the United States might take to move its economy away from fossil fuels—banning oil and gas drilling on public lands, for example—would face potential suits from the multinational corporations that stand to profit less than they expected. This would, of course, be in addition to the inevitable challenges to new regulations that U.S. companies would file through the domestic court system, like the lawsuits that earlier this year resulted in a Supreme Court stay on Obama's Clean Power Plan. 

And it's not just the United States. Other, poorer countries that are less able to foot the bill of costly ISDS cases would face a growing number of similar suits. This scenario has already played out—both inside and outside the environmental space—as companies have become increasingly reliant on ISDS to challenge unwanted policies. Ecuador, for example, lost a suit and will have to pay over $31 million to the Canadian mining company Copper Mesa. The country had decided to shut down a project that local communities opposed because of its potential to cause ecological damage. Despite the fact that Copper Mesa had recruited armed security guards who threatened and in some cases attacked opponents of the mine, including firing live ammunition as "warning shots," the suit—filed under a Canada-Ecuador investment pact—was decided in favor of the company.

"Countries have acted in apparent good faith to defend their sovereign interest and been smacked with enormous financial penalties. They've been very costly to the country and the citizens," says Echeverria. "These claims pile up, countries become more and more reluctant to regulate, and it becomes easier for multinational corporations to bully the countries."

Somewhat unexpectedly, the politics around these confusing and acronym-laden trade deals have shifted in the United States. The TPP, in particular, has become a key issue this election year. Senator Bernie Sanders made his opposition to the deal a centerpiece of his presidential campaign from the beginning, decrying it as a corporate giveaway that would send jobs overseas and undermine America's ability to regulate.

"Do we really want to tell governments all around the world, including the U.S., that if they pass legislation protecting the well-being of their citizens, they could pay substantial fines to multinational corporations because of the loss of future profits?" the senator wrote in a May 2015 op-ed immediately before announcing his candidacy.

Both major-party presidential candidates oppose the deal, on the grounds that it would undermine America's economic interests, or that it does not meet the high standards for such a broad trade agreement. 

Ahead of the Democratic National Convention in July, the party drafted a platform that did take a tougher stance on trade, and that set out a series of criteria for trade agreements that the TPP clearly does not meet. But with President Obama continuing to support the deal, the party stopped short of opposing it outright; the final platform does not explicitly oppose the TPP. A sea of anti-TPP signs nonetheless dominated the convention proceedings, which were punctuated by shouts of "No more TPP!"

For the TPP to move forward, Congress would have to approve it during the lame-duck period of the Obama presidency. (The TTIP has not yet been finalized and offered to Congress for a vote.) 

In general, Republican members of Congress have been more supportive of the deal—one of the few areas where the GOP and the Obama administration agree—though their support has waned amid rising anti-TPP sentiment from voters. Meanwhile, a growing number of Democrats have turned against it as they've learned what it contains. The deal's complexity is one reason why members of both parties are confused about where, exactly, they should stand; another is that congressional staffers have relied on lobbyist talking points, and administration officials who helped craft them, to explain the deal's nuances. Many politicians have been trying to make up their minds for more than a year. 

Echeverria was surprised when such a wonky topic became a key issue for populists on both the right and the left. "In a sense, trade agreements are like Trojan horses because they appear to be about free trade, but buried inside are these destructive investor protections that threaten environmental and public health rules and regulations," he says. "There's a segment of the business community and a set of libertarian ideologues who favor the investor-protection regime and aggressively advocate for it, and I think most of the rest of the country is oblivious to what's going on."

The challenge for the environmental movement is to keep up the pressure on Congress even after the election, when legislators, either secure in their electoral wins or self-interested following an electoral loss, may decide to do the outgoing president—or the corporate lobbyists pushing the deal—a favor and cast a vote for the TPP. 

And if the deal does go through? Many legislators may regret their support when taxpayers end up shouldering a multibillion-dollar payment to a company like TransCanada.

"All the opponents of investor protection need is one major U.S. loss, and that will really change the conversation," says Echeverria, who remembers fighting a similar battle over ISDS when Congress was considering NAFTA. "And that's going to happen sooner or later."

This article was funded by the Sierra Club's Responsible Trade Program (sierraclub.org/trade).