A legal dispute over the Keystone XL oil pipeline is giving opponents of a Pacific trade agreement a fresh argument in their effort to get Congress to kill the pact. They say the case, in which TransCanada Corp. is seeking arbitration to recover $15 billion tied to the Obama administration’s rejection of Keystone, shows how companies could use provisions of the proposed Trans-Pacific Partnership trade agreement to challenge government decision making. TransCanada argues that by rejecting the pipeline, the Obama administration violated provisions of a different trade deal—the North American Free Trade agreement. The Calgary- based company said it intends to start a claim for costs and damages under Nafta against the U.S. The dispute would be decided by a three-member arbitration panel to be established under the terms of the trade agreement. A panel couldn’t force approval of the pipeline, proposed to carry Canadian crude into the U.S., but it could award damages for lost profits and costs incurred by the company. U.S. environmental and labor groups say that companies could seek compensation for government decisions under similar provisions found in the Trans-Pacific Partnership, a trade pact seven years in the making that would clear barriers to commerce among nations that produce 40 percent of global economic output. It’s a top priority for President Barack Obama that must be ratified by a skeptical U.S. Congress before it can take effect. Conservationists say the TPP arbitration process could be exploited by oil and gas companies seeking financial compensation whenever U.S. agencies block them from drilling or building pipelines. “I can’t think of many clearer signals that could have been offered at this moment to show how big a threat the TPP poses to our efforts to keep fossil fuels in the ground,” said Ben Beachy, a senior policy adviser for the Sierra Club, the San Francisco-based environmental group. “The TPP would empower many more fossil fuel companies to follow TransCanada’s lead to ask unaccountable tribunals of private lawyers to order the U.S. government to hand over our tax dollars for laws protecting our communities and the environment.” Communications Workers of America said TransCanada’s Nafta claim provides a case study in how the TPP would give thousands more companies a new mechanism to challenge U.S. laws and regulations. Obama’s Argument Frank Benenati, a White House spokesman, didn’t respond to a request for comment. Obama administration officials have said there are adequate protections in the TPP to prevent the arbitration process from being exploited, and the president has described the agreement as “the most pro-labor, pro-environment, progressive deal in history.” Martin O’Malley, seeking the Democratic nomination for president, tweeted that the Keystone challenge through Nafta was “outrageous” and “an example of why I oppose #TPP.” “Trade deals shouldn’t value corporate profits over national interests,” he wrote. If completed, the 12-nation Trans-Pacific Partnership would be the largest U.S. free-trade agreement, covering an area with a combined annual economic output of more than $28 trillion. The 12 nations seeking the accord reached a deal in October, though each government’s approval can take months or even years. Under current treaties and agreements with more than 50 countries, about 9,500 U.S. subsidiaries of foreign firms can pursue such suits against the U.S., according to data from Public Citizen, a Washington-based nonprofit group. Under the TPP, that would roughly double, with about 9,200 more subsidiaries getting rights to file trade claims. Lori Wallach, head of Public Citizen’s Global Trade Watch, said TransCanada’s claim “is exactly the attack on U.S. environmental policy that the president insisted could never happen” under the TPP. “This particular Nafta investor-state attack basically destroys all of the administration’s arguments in defense of the TPP expanding the regime to thousands more corporations who could attack the U.S.,” Wallach said. TransCanada said it is seeking compensation “as a result of the U.S. administration’s breach” of its obligations under NAFTA, a deal signed by the U.S. Canada and Mexico that took effect in 1994. “TransCanada had every reason to expect its application would be granted,” the company said in a statement. “TransCanada invested billions of dollars in the Keystone XL project and the denial of permit deprived TransCanada of the value of that investment.”