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Judge rules against Chevron but Ecuador suit not over

Sarah Terry-Cobo/California WatchDonald Moncayo, an activist with an Ecuadorean nonprofit that is suing Chevron, inspects waste from an oil pit in Ecuador in 2007.

More than 3,000 miles from its San Ramon, Calif. headquarters, the lawsuit drags on against the oil company Chevron, which could face damages of more than $18 billion, the second-largest award in an environmental case.

In Ecuador, Judge Nicolas Zambrano ruled in favor of the plaintiffs on Feb. 14, who allege in the suit that Texaco polluted portions of that country’s Amazon rain forest, causing cancer and contamination of local waterways for 30,000 residents. Chevron, which purchased Texaco in 2001, is appealing the case.

"The judgment we believe is illegitimate," said Kent Robertson, spokesman for Chevron, in a telephone interview. "It is the product of fraud and will prove to be unenforceable."

But for environmentalists, the case is the ultimate David vs. Goliath: indigenous communities and poor farmers fighting oil pollution they say was caused by a large, multinational oil company. Han Shan, a spokesperson for the nonprofit organization Amazon Watch says the verdict "sends a message to corporate boardrooms around the world they will be held accountable."

The legal battle began in 1993 when a group of Ecuadoreans filed a lawsuit against Texaco in the southern district of New York. The company fought back, and "has always maintained that the appropriate place to hear these cases is Ecuador." In 2001, Judge Jed Rakoff dismissed the suit against the company, noting, "the record establishes overwhelmingly that these cases have everything to do with Ecuador and nothing to do with the United States."

In 2003, the plaintiffs filed a similar lawsuit against Chevron in an Ecuadorean provincial court, seeking remediation of polluted areas and damages related to health problems from oil pollution.

Among other charges, the plaintiffs allege that Texaco built oil infrastructure that was inadequate, dumping wastewater and other residues that are by-products of oil production.

"Texaco built a system that devastated the region. They used outdated infrastructure and outdated methods," said Shan, of Amazon Watch, a San Francisco-based nongovernmental organization that advocates for indigenous groups’ rights and protection of the rainforest.

Ecuador, 2007: Donald Moncayo pushes a stick into an oil pit that is part of the lawsuit against Chevron in EcuadorSarah Terry-Cobo/California WatchMoncayo pushes a stick into an oil pit in Ecuador in 2007.

Surprisingly enough, the pollution is not in dispute. Chevron agrees that there is oil pollution in these areas. But the company states that the responsibility belongs to Petroecuador, the state-owned oil company. In 1974, Texaco* sold a portion of its shares back to Petroecuador, but continued to operate in the country until 1992. In 1994, Texaco completed a clean up. The plaintiffs allege that the multi-million-dollar clean up was fraudulent.

In 1964, Texaco and Gulf Oil created a joint venture with Ecuador’s state-owned oil company to drill for the vast crude reserves beneath the Amazon rain forest. Over the course of several decades, the companies drilled more than 330 wells and dug nearly 1,000 open pools, depositing oil residues.

At the time, it was common practice to separate crude oil from other by-products of production in these large pools. However, the companies re-inject the wastewater underground after the separation is complete. Rather than injecting the wastewater, which can be extremely salty and can contain toxic and cancer-causing chemicals, the suit alleges the company left the pits to fester, covering some with soil.

Michael Watts, professor of geography at UC Berkeley, has been following cases of environmental pollution in indigenous communities for decades. "The Texaco-Chevron case is in no sense unusual," he said in a phone interview. Up until the 1970s, developing countries dependent on oil revenues often didn’t have strict regulatory oversight, and governments would often focus on "maximizing returns to the oil industry."

"Texaco is saying it’s the national company, they’re the problem," Watts continued. "This is obviously true, that is part of why cases are complicated."

Another problem, he said, was understanding the ecological impacts, so "really in the 1970s and especially in the 1980s, we were discovering impact of oil operations, and it becomes a political issue."

Shan agreed the case is complicated. "It’s true, it’s hard to put a company’s logo on pollution, but when you know a bit about it and know the infrastructure, I do place the blame on Petroecuador and the government of Ecuador, but mostly on Chevron."

Chevron’s Robertson notes that Chevron does not and has never operated in Ecuador.

Shan concedes that the oil company is not the only one to blame for the pollution in the area. "Does the government of Ecuador need to do more, I think so. Does Petroecuador have to do better in it operations, I think so. But for Chevron, it’s time to pay up and clean up and do the right thing."

It’s unclear how the court would enforce the damages, particularly since the company has no significant assets in Ecuador. UC Berkeley’s Professor Watts said despite the ruling, it’s unclear whether there is a legal mechanism that will secure the billions in damages, noting it’s "unlikely" the Ecuadoreans will see the money.

*Clarification: This post previously stated that Texaco sold its portion back to Petroecuador in 1974. Texaco continued to operate in Ecuador as a minority partner until its contract expired in 1992.


Filed under: Environment, Daily Report


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