Processing Magazine

Amazon pollution case could cost Chevron billions

December 22, 2008
A Rhode Island-sized expanse of what was once pristine Amazon rainforest is crisscrossed with oil wells and pipeline grids built by Texaco Inc. a generation ago. For the past 15 years, a class-action lawsuit has been winding its way through the courts on behalf of the more than 125,000 people who drink, bathe, fish and wash their clothes in tainted headwaters of the Amazon River. Now a single judge is expected to rule in the case in 2009 from a ramshackle courtroom in Lago Agrio, Ecuador, as reported by the Associated Press. Statements from a court-appointed expert suggest Chevron Corp. -- which bought Texaco in 2001 -- will be held responsible for the many oil spills and dumping of wastewater. If Chevron loses, it could be ordered to pay up to $27.3 billion in damages, though an appeal would be likely. The expert, geological engineer Richard Cabrera, largely accepts plaintiffs'' claims that Texaco left a mess when it left in the early 1990s. He is recommending damages based partly on his calculation of 1,401 pollution-caused cancer deaths. Chevron contends a 1998 agreement that Texaco signed with Ecuador, after spending $40 million on remediation, absolves it of any legal responsibility. It says, and few dispute, that its former partner, state oil company Petroecuador, kept polluting after Texaco departed. Ecuadorean governments reaped the wealth of Texaco''s jungle project, with gross domestic product more than tripling from 1972 to 1977. By the time Texaco departed, the consortium it headed had extracted nearly 1.5 billion barrels of oil from more than 350 wells. In the meantime, Ecuadorean oil field workers slathered the crude on their legs, believing it cured rheumatism. Some coated their scalps because American supervisors told them the crude warded off baldness, they said. The plaintiffs say Texaco saved $8-$10 a barrel by dumping some 18 billion gallons of the wastewater from drilling and extraction into waste pits instead of re-injecting it back deep into the ground. The more than 1,000 waste pits were not lined, so the toxins seeped into the groundwater, they say. The plaintiffs also allege the company poisoned the air by burning off natural gas and set fire to solid wastes during the 1990s remediation. Ironically, it was Texaco that first pushed to get the case heard in Ecuador. It argued that a federal court in New York -- where Texaco was based -- was not the appropriate venue, and that Ecuador''s judicial system was reliable and independent. The New York judge threw the case out and in 2003 it was refiled in Lago Agrio.