Chevron Could Pay Billions In Ecuador Suit

Published on
by
The San Francisco Chronicle

Chevron Could Pay Billions In Ecuador Suit

by
David R. Baker

A court-appointed expert in Ecuador has recommended that Chevron Corp. pay $7 billion to $16 billion if it loses a marathon lawsuit over oil-field contamination in the Amazon rain forest.0404 06 1

The estimate, contained in a report filed Tuesday in an Ecuadoran court, marks the latest twist in a bitterly fought case that has drawn international attention, with each side accusing the other of deception and dirty tricks.

The lawsuit's roots go back to the 1960s, when Texaco began pumping oil in a corner of the Ecuadoran Amazon. Area residents allege that Texaco dumped 18 billion gallons of tainted water and built roughly 1,000 open-air, unlined pits to hold oil and toxic waste.

Although Texaco pulled out of the area in 1992, turning over all operations to its partner Petroecuador, residents sued Texaco in 1993, claiming the company's practices had wrecked their environment and made them sick. Chevron bought Texaco in 2001, inheriting the lawsuit.

Lawyers representing the Ecuadorans hailed Tuesday's damage estimate, as well as the report that contained it. That report also summed up soil and water tests conducted by Chevron, the plaintiffs and the report's court-appointed author, Richard Cabrera.

"I think this is almost a complete validation of what the plaintiffs have been saying for 15 years," said Steven Donziger, an American attorney working on the Ecuadorans' legal team.

"The most important point I can see is that the court expert is relying on Chevron's own evidence to make the case that Chevron is responsible for this contamination."

Chevron, based in San Ramon, says its soil samples prove the exact opposite point - that Texaco sufficiently cleaned up the areas it was legally obliged to clean, under an agreement with the Ecuadoran government.

The company also said that Cabrera had not been authorized by the court to put forth a damage estimate because that responsibility rests with the judge.

"This is a defining moment for the Superior Court of Ecuador," said Ricardo Reis Veiga, managing counsel for Chevron's Latin American operations.

"The court's appointee has knowingly violated the judge's orders and delivered a report that is biased and scientifically indefensible. No legitimate court in the world would permit such a charade."

Such heated comments have become common in the case, in which the two sides disagree about everything from court procedure to soil sampling techniques.

Chevron argues that Texaco met all its cleanup obligations when it turned over the oilfield operations to Petroecuador. Any remaining contamination, Chevron says, is Petroecuador's responsibility. Chevron accuses the local company of shoddy work and frequent oil spills.

The Ecuadoran attorneys argue that because Texaco designed the oilfield operations, the company remains responsible for pollution on any site that used to be part of Texaco's operations, even if the contamination happened after Texaco left.

"Just because Petroecuador continues to operate a former Texaco site doesn't mean they (Chevron) aren't responsible," Donziger said.

Last year, Ecuadoran President Rafael Correa threw his support behind the plaintiffs, prompting Chevron to protest that the company wasn't receiving a fair trial.

© 2008 San Francisco Chronicle

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