In the fall of 2013, American oil and gas company Lone Pine Resources sued Canada over a moratorium on fracking under the St. Lawrence River in Quebec.
Lone Pine claimed that the moratorium violated its "right to mine for oil and gas" as well as its right to a "minimum standard of treatment"—a guarantee enshrined in the North American Free Trade Agreement. Now the company wants Canada to pay $250 million in damages.
The trade case has not been resolved. But green groups warn that the challenge could have a chilling effect on efforts to enact environmental safeguards across the globe.
Many environmentalists also fear that the case offers a glimpse of what's to come if a massive trade deal that President Obama is currently working to negotiate wins approval.
Green groups such as the Sierra Club, Friends of the Earth, and 350.org say that the deal known as the Trans-Pacific Partnership could chip away at environmental regulations, ramp up America's reliance on fossil fuels, and open the door for the oil and gas industry to exert unprecented influence over U.S. policy.
Worse still, environmentalists wary of the agreement consider it a betrayal by a president who claims to care deeply about global warming.
"This is foolish and self-defeating and a direct assault on environmental safeguards," said Friends of the Earth trade policy analyst Bill Waren.
Greens are working to shore up opposition to the deal among their allies on Capitol Hill, hoping to sink legislation that could be introduced this week allowing Congress to take an up-or-down vote on the trade agreement.
Sierra Club executive director Michael Brune criticized the deal Monday at the Good Jobs, Green Jobs conference, saying that "it will undermine the work that has been done to stimulate clean energy, to transition away from fossil fuels."
On Wednesday, environmentalists and labor activists held a rally at the Capitol to protest the legislation that they say would "fast track" approval of the deal.
Obama sees the agreement—currently under negotiation between the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—as a key element of his economic agenda. And U.S. negotiators have worked to set out environmental protections in the deal that would curb illegal fishing, logging, and wildlife trafficking.
The administration touts the deal's conservation provisions as historic and far-reaching and promises they will be fully enforceable. Brian Deese and Christy Goldfuss, top administration aides, described the agreement as "a once-in-a-generation chance to protect our oceans, wildlife, and the environment," in a blog post at the end of March.
The White House also said it has taken steps to increase transparency and participation during the negotiations, including inviting environmental groups to weigh in at every step of the way.
A slate of conservation and animal welfare groups, including the World Wildlife Fund, the Nature Conservancy, and the Humane Society, have praised the administration's pledge to create conservation safeguards.
"We see real potential for measures that could be very helpful in terms of addressing conservation challenges," said Vanessa Dick, World Wildlife Fund's deputy director of U.S. government relations.
But many environmentalists argue that the overarching terms of the trade policy will worsen global warming, and fear that the deal would promote natural gas exports, leading to an uptick in fracking and coal mining if the price of gas rises as a result of increased demand.
Some climate activists also say that the deal could pave the way for an onslaught of legal challenges where foreign investors attempt to extract money from nations that have signed the pact over environmental regulations that get in the way of their profits.
"These free trade agreements at their core are about giving power to multinational corporations and stripping power away from governments to put in place policies that we need to solve the climate crisis," said Ilana Solomon, director of the Sierra Club's responsible trade program.
Still, some proponents of Obama's trade deal say that dire predictions have been overblown.
Many other free trade agreements, including NAFTA, allow foreign investors to sue governments for alleged violations of trade policy. So far the U.S. has never lost a case, even though there have been 17 in the past 25 years.
"This has not brought public interest regulation to a halt in the past and I don't think we should assume that will happen now," said Mireya SolÃs, a trade expert and senior fellow at the Brookings Institution.
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