Girls do the family laundry in the river by their home in Shushufindi, Ecuador. Plaintiffs in a lawsuit say many local rivers have been contaminated by the oil industry. A court battle continues over who should pay to clean them up.
(Melanie Stetson Freeman/Staff)Chevron fights massive lawsuit in Ecuador
A case about responsibility for cleaning up a toxic drilling site could cost the company billions and send a chill through the industry.
By Sara Miller Llana | Staff Writer of The Christian Science Monitor/ May 29, 2009 edition
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Staff photographer Melanie Stetson Freeman visits an Ecuadorean village adversely affected by oil exploration and extraction.
San Carlos, Ecuador
For over a decade, Judid Angamarca lived in a wooden shack on stilts next to an old waste pit, where for years oil sludge from drilling was dumped.
The patch of land, the size of a tennis court, was cleaned and covered with earth in 1996. But it stubbornly refused to produce anything she tried to grow. Her three children played in the grass as babies; her animals roamed around, too. The residents living in and around San Carlos have long lived among the wells, pipes, and waste pits laid down for the oil bonanza in the Ecuadorean Amazon.
But two years ago, from a six-inch hole, oil waste emerged – and so did Ms. Angamarca’s doubts about her dead pigs and chickens and her children’s rashes and coughs. The government relocated her family to a new home recently.
“You get mad, you want to leave [the area], but you have nowhere to go,” says Angamarca.
San Carlos sits in the middle of more than 100 wells drilled in the Sacha field by Texaco, which pumped oil as the sole operator of a consortium here from 1972 until 1990. At the time, it was one of the highest concentrations of wells in the Amazonian region, and today this remote town finds itself in the middle of what could be the largest damage claim against the oil industry in its history.
The landmark lawsuit, which began in 1993 in New Yo rk and is now in an Ecuadorean court in this jungle region, alleges that Texaco, which was acquired by Chevron in 2001, knowingly unleashed toxins across an estimated 1,700 square miles – roughly the size of Rhode Island.
This allegedly occurred in one of the most biodiverse forests on the planet. Plaintiffs’ lawyers say Texaco’s dumping represents 30 times more than the crude spilled in the 1989 Exxon Valdez disaster in Alaska. According to a report by a court-appointed expert, Chevron could face $27 billion in damages to soil, groundwater, and drinking water – and even for cancer-related deaths. The decision is expected any day.
Chevron says Texaco cleaned up its share of damage after leaving the country and that the state oil company, which took over its operations entirely in 1992, has not fulfilled its environmental obligations. If Chevron loses the case, it will affect more than its finances: It could reverberate throughout the industry at a time when companies big and small are searching for oil in ever more remote areas, including the Amazon basin.
“This will definitely make it harder on oil companies working in these areas,” says Fernando Santos, a former Ecuadorean energy minister and oil analyst in Quito. “It brings them uncertainty. It sets a precedent that if you leave, it does not end the story. Anyone can open it up again.”
The lawsuit names 48 plaintiffs who represent approximately 30,000 residents. Plaintiffs’ lawyers claim that, contrary to standard US practice at the time, Texaco dumped more than 18 billion gallons of toxic waste; left more than 900 waste pits of toxic sludge, like the one in Angamarca’s front yard; and flared millions of cubic yards of poisonous gasses into the atmosphere. That, they say, has led to 1,000-plus deaths from cancer and to ecological damage beyond repair.
“There was almost no escape for people living [with] all of this,” says Steven Donziger, a New York-based attorney and legal adviser to the plaintiffs’ case. Texaco saved some $8 billion by using substandard practices, according to the report issued by the court-appointed expert.
Chevron denies liability
The science to assess damages is at best faulty, at worst fraudulent, Chevron says. Chevron claims the report’s author, selected by an Ecuadorean judge, sides with the plaintiffs. It also says that public statements by Ecuador’s president, Rafael Correa, in favor of the plaintiffs makes the trial a farce. The oil company’s defense centers on the fact that Texaco spent about $40 million in the mid-1990s cleaning up more than one-third of the waste pits, more than its share of the consortium at the time. State-owned Petroecuador owned the other two-thirds.
“Texaco did its job, now the state has to do its part,” says James Craig, Chevron’s lead spokesman for the case, standing in front of an open waste pit that is about 200 feet long and 75 feet wide, a dark brown pit with a layer of degraded petroleum five feet deep. It is an example Mr. Craig uses to show what Chevron says are Petroecuador’s unmet responsibilities.
The pit, surrounded by giant palms and Heliconia flowers that hang like racks of red bells, is outside the small town of Shushufindi. It illustrates the seemingly irreconcilable views on either side of the courtroom. The day before, plaintiffs’ supporters had accompanied visitors to the same site to present the opposite argument. This, they said, exemplified the damage wreaked by Texaco – the exclusive operator of this area – for one purpose: to cut costs.
Far-reaching implications for a decision against Chevron
The local community here is not completely united against Chevron. Some residents aren’t even aware of the case. Others dismiss the claims that the water is unsafe.
Johana Mantuano, who lives near the Victoria River, where children dive off oil pipelines into the water below, says she worries little. Some even quietly say that Petroecuador is far worse than Texaco ever was. Mr. Santos, the former energy minister, agrees.
Still, a decision against Chevron would reverberate across the oil industry, says Santos, especially at a time when oil companies from China to Argentina are voraciously exploring petroleum sources in the Amazon, one of the largest unexplored areas for hydrocarbons after Antarctica.
Locals hope it echoes in areas where foreign oil firms still operate. Luis Yanza, of the Amazon Defense Coalition, the group leading the fight against Chevron, says his community used to kowtow to oil companies.
When oil first started to flow from wells here, residents say they had little idea of its impact. Mr. Yanza says he would go to school with red blotches all over his body, and so would everyone else. “We looked like fish,” he says. “We would laugh at each other.”
It is the first time that indigenous people of the Amazon have made an American oil company submit to jurisdiction in their country’s court system, plaintiffs say. “The most important impact is giving people the confidence to demand that oil companies change their practices,” Yanza says.
The plaintiffs are supported by US-funded environmental groups, and celebrities such as Sting have spoken out on their behalf. Still, a strong current of David vs. Goliath runs through this stretch of the country.
The case’s lead lawyer, Ecuadorean Pablo Fajardo, worked as a laborer in the palm and oil industries, and says he became a lawyer because the local community did not have one. To put himself through school, he relied on donations from local priests and friends, who collected money for his studies. This is his first case. He closes his eyes when asked what it means to him: “Chevron is fighting for their reputation and for money,” says Mr. Fajardo. “We are fighting for life.”
Chevron on the defensive
Chevron has fought back mightily. The corporation has taken visitors to the sites they have cleaned up and point out rivers where fecal matter, not hydrocarbons, they say, has made the local population sick.
It has taken out quarter-page ads in local newspapers with headlines such as “the fraud of the century.” Chevron recently tucked 280,000 supplements into four Ecuadorean papers, highlighting the impact that relocation programs – instituted by a government desperate for the prosperity oil would bring – has had on this once pristine region.
“We expect the judgment here will be against us,” says Chevron spokesman Craig. “If we don’t find justice in Ecuador, we will go abroad.”
Residents here say it is neither revenge nor money that inspires their fight, but a desire for safe water for drinking, cooking, bathing, and washing their clothes. They blame the government just as much as big oil.
They say they have long been abandoned by both. “What do I want? I just want them to come here and clean up so we can all move on,” says Angamarca. “So that I know my children will be OK.”
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Comments
2. John Maynes | 05.29.09
I think that this is the third attempt at suing Texaco by Ecuadorian parties- the first went to the US Supreme Court but the Court ruled it had no jurisdiction, the second was by US parties on behalf, but the Court ruled they had no standing. The major issue I see here is the development of methods to hold transnational companies accountable. Whether or not Texaco did its share seems less important if this creates a legitimate method for reining in the electric herd.
3. Chevron_justinh | 05.29.09
This is Justin with Chevron. We appreciate the CSM taking the time to travel to Ecuador to report on this complex matter. Unfortunately, the story omits a number of facts and repeats many of the egregious falsehoods U.S. trial lawyers and their NGO cohorts have been making for years without a shred of evidence to substantiate them, i.e. that Texaco dumped 18 billion gallons of “toxic waste,” employed “substandard practices,” caused “cancer deaths,” etc.
In a major omission, the article doesn’t mention that Texaco received a full release from the Ecuadorian government in 1998 after spending $40 million to remediate its share of consortium sites.
Moreover, the article fails to point out that majority partner, state-run Petroecuador took over as exclusive operator of the oil fields in 1990 and has since failed to remediate its share of pits, continued to drill wells, has dug new waste pits and continues to release production water into the region’s rivers and streams. For example, the Shushufindi well site visited by the reporter has been run by Petroecuador for 19 years. In fact, the state oil company did a work-over on the site in 2003 and has since continued to use the pit as described in the story.
Furthermore, the story overlooks the fraud committed by the court’s supposed expert in fabricating his $27 billion damages claim. Video here: http://bit.ly/YJAYN
Most importantly, the CSM has ignored the collusion taking place between the Correa government and U.S. trial lawyers.
I urge you the reader to investigate this complex case closer. Take some time to investigate the other side of the story and you’ll uncover a web of lies, fabrications and deceitful tactics being perpetrated against Chevron.
To discover the truth behind this fraudulent attempt by U.S. trial lawyers to extort a huge sum of money from a U.S. company and its shareholders, visit Chevron’s blog at: http://theamazonpost.com/
4. kito | 05.29.09
justin, you fail to reveal to the readers the fact that this case was originally brought in federal court in the united states and CHEVRON fought to have it removed. of course at that time, one could surmise that CHEVRON assumed the banana republic government of ecuador would play its usual puppet role and bow to CHEVRONS pressures, as the government usually did with foreign companies. now that there is a president who stands up for his country and defends its interests, CHEVRON now claims the ecuadorian court system is not fair. hmmmmm…….
5. Pedro | 05.29.09
This is just another very sad case of American Modernism of the past hundred years that exploited lands and people for our greedy ***** here in America. Sure, Petroecuador is sure to blame for their fair share of bad practices, but that is a distraction from Texaco’s bad practices, which this case is about. Maybe Chevron could counter sue Petroecuador and follow through on their excuse that Petroecuador did the polluting? I blame myself and all americans for our blood thirsty drive for oil for our cars. I can’t help but feel sorrow for those nativos Ecudorans facing the wrath of someone’s blindness thousands of miles away.
6. BobbyMac | 05.30.09
In this article we see arguments by both sides. I would be nice to know the truth…as usual I’m sure it’s a bit of both, Texaco probably should have done better, but Petroecuador in it’s rush to show an economic return for the government probably made the problems much worst. Since there is little reward in pursuing Petroecuador they go after Texaco. The rule of deep pockets, taught in law school, find someone who can pay and go after them.
Bobby
7. Chevron_justinh | 05.30.09
Kito,
What you fail to mention is that this case was dismissed in the U.S. on four separate occasions (not transferred). The case was subsequently re-filed in Ecuador. What readers are led to believe is that the court system In Ecuador is similar to the U.S. system. The reality is that since this case was re-filed in Ecuador, there have been several examples of interference by the executive branch of the government, judicial misconduct and misconduct by the plaintiffs lawyers. The court has now abandoned the law of the case and the Ecuadorian Code of Civil Procedure and has denied Chevron due process by acquiescing (likely as a result of political pressure and nationalistic bias) to plaintiffs’ requests.
The fact is that the plaintiffs – led by U.S. trial lawyer Steven Donziger – have undertaken a well-orchestrated campaign to ally with Ecuadorian President Rafael Correa in an attempt to exert pressure on the court and on Chevron. As a matter of fact, Mr. Donziger was a guest at President Correa’s inauguration, and in an infamous scene from the film, “Crude,” Mr. Donziger is seen whispering in President Correa’s ear.
for more: http://www.theamazonpost.com
*I would very much appreciate it if the moderators would re post my earlier comment.
8. Bill McCusker | 05.30.09
How odd it seems that we send our young soldiers out to war zones and charge them with nation building yet our corporations are saddled with no such responsibility. Corporations with every possible resource our economy, our science and our government can provide. How long can we exploit the resources of other countries while shirking any responsibility for the continued corruption and incompetence of their governments and officials? Can we continue to simply respond “its not our job”? Yes, yes we provide funding via the IMF and World Bank loans while also educating their young elite but that doesn’t always work does it? Time and again we confront governments that decide the bulk of the oil or other exploited resourcs profits belong to them and not our corporations. When are we going to learn it’s not only what we do but also what we fail to do?
9. Megan | 05.31.09
It seems to me, that Chevron is blaming the government’s relocation programs for disrupting the pristineness of the environment. However, if the oil companies did not drill in the communities in the first place, then relocation would not be necessary.
10. Anna | 05.31.09
We need to do anything we can to make sure those big companies are forced to take responsibility for their actions and clean up their messes and we should start with Chevron.
If Chevron wasn’t guilty, wouldn’t their side of the story be easier to be told?
This cannot go unpunished! People are dying!
To find out more, read this: http://www.thechevronpit.blogspot.com
11. Settlement Loans | 05.31.09
Great, another reason for the oil companies to raise the price of gas; that’s all these lawsuits really do at the end of the day.
12. editorial | 06.01.09
Editor’s response to (3) Chevron_justinh:
In fact, our story did say that at the heart of the matter is the fact that Texaco did its part with a $40 million remediation in the mid-90s. We included that many say Petroecuador has acted more egregiously than Texaco did while it was the sole operator. We bring the reader to the Shushufindi site and specifically include Chevron’s view that this pit represents the fact that Petroecuador has not done its job. We include Chevron’s point that it considers the $27 billion damages claim fraudulent. We also mention Chevron’s concerns that Correa sides with the plaintiffs, thus making a fair trial impossible.
13. Daniel | 06.04.09
Thanks for this article on such an important story. As a reader I especially appreciate that the author really took the time to interview local people in the affected area, and poignantly captured the human dimension of this tragedy.
Unfortunately, the editors seem to have been cowed by our friend Justin into accepting several of Chevron’s bogus arguments as fact. Ironically, the list of points in the Editor’s response to Justin reads like a list of precisely the things that reporters manage to get wrong about this case again and again, I suspect because they don’t thoroughly investigate the truth of Chevron’s claims.
Texaco’s $40 million remediation in the 1990s was largely a fraud; they often shoveled dirt over open waste pits without removing the crude. Other sites they didn’t even touch, for reasons such as that they were “in use” by the local community. Two Chevron (formerly Texaco) lawyers have been indicted in Ecuador on fraud charges over this so-called “clean up” - which scientific evidence clearly demonstrates was ineffective.
What Petroecuador has or hasn’t done is in some ways irrelevant to the case, which is about what TEXACO did PRIOR to 1990 - designed and operated a system which it knew would cause horrific pollution.
Rafael Correa expressed sympathy with the plaintiffs’ suffering. This kind of thing happens all the time and doesn’t constitute executive interference in the case - for example, President Bush expressed sympathy with the cause of some Hurricane Katrina victims while they were in litigation with insurance companies, and nobody blinked an eye. This is really just about Chevron exploiting Americans’ stereotypes about a left wing Latin American government in order to increase sympathy for its case. Nothing to see here, folks, move along.
Finally, as for the $27 billion damages claim, readers can view the damages assessment report for themselves at http://www.chevrontoxico.com/ and form their own opinions on its validity.
14. James | 06.05.09
The oil spills came from oil drilling, and thus regardless, Chevron should pay some amount now for its proper clean up. Justin posting here saying they did their part is ridiculous: how can we honestly validate such a subjective statement? We’ve seen what a “cleaned” up dump looks like - it’s just a sod covered oil slick! Shame on them for dumping oil waste everywhere and not keeping an accurate record of the number and location of all the dumps. That type of action is simply an indication that they didn’t care about dumping waste is a PRISTINE RAIN FOREST. Christ! Why is this even a debate? They played, now it’s time to pay!
15. Val | 06.13.09
I think the real issue is not whether Chevron or Ecadour gov. is at fault. They probably both are. The real issue is that the rights of common people to clean land, air and water have been overlooked in pursuit of profits by a few. If corporations cannot afford to/ or won’t clean up the mess that they make, then, one must ask, is this industry really feasible?. And yes, it also means everyone who relies on a gas guzzling lifestyle is also partly guilty, we are not paying the proper price for our oil depenent lifestyles, which surely also mean making sure that the costs of pollution, and cleaning up this pollution, is reflected in the price we pay for oil.
16. anna | 10.25.09
Chevon has enough money to fix the problem. It’s no knock on there wallets. Why then do they keep fighting back???
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1. Bob Dobbs | 05.29.09
I understand that it is wrong, but how can Chevron be kept liable when they did their part? Maybe instead of trying to figure out what Chevron didn’t do, why not look at what Petroecuador HAS done?