For over a decade, debate has raged over the Keystone XL pipeline project, which aimed to transport Canadian tar sands to the Gulf of Mexico. After approving the project's initial stages, the Obama administration rejected a permit allowing the pipeline to cross the national border in 2015.
However, the energy company backing the project didn't take no for an answer: TransCanada soon sued the U.S. for $15 billion dollars — the future expected profits it claimed the pipeline would have earned, in addition to the $3.1 billion it had already invested in the project. The company was able to do so because the North American Free Trade Agreement, the treaty known as NAFTA that the U.S. signed with Canada and Mexico in 1994, included a clause about something called an investor-state dispute settlement, or ISDS — a closed-door legal process that's an often overlooked, but increasingly urgent, hurdle to addressing climate change. ISDS mechanisms are included in many other bilateral and international trade agreements, allowing a country to be sued by investors from other member countries if it takes any subsequent actions that adversely affect those investments.
