Amazon Residents Pursue Case Against Texaco

Oil Daily
14 March 2002

An appeal being heard by a US District Court in New York, filed by thousands of residents of Ecuador's Amazon region against Texaco, may result in the first time that an US corporation is held accountable in this country for environmental damages caused in another country.

Thousands of residents of Ecuador's oil-producing Oriente region -- including several Indian communities -- appealed Judge Jed Rakoff's second dismissal of the $1 billion dollar class-action lawsuit against Texaco. They accuse the oil giant of using defective drilling technology that caused the spillage of toxic wastewater during its almost 20-year operation in Ecuador's Amazon region.

In his May 2001 dismissal, Rakoff argued that the case should be tried in Ecuador rather than in the US, since most of the evidence and witnesses are there (OD Jun.1,p1). The suit against Texaco for environmental and health damages is now centered on which country has the jurisdiction.

The plaintiffs' defense counters that the trial should be heard in the US. "The decision to put in defective drilling machinery was made in the US, so we need to call witnesses and look at documents that are in the US," defense lawyer Steven Donzinger tells Oil Daily.

Texaco -- now merged into ChevronTexaco -- argues otherwise. "The plaintiffs are there [in Ecuador]; the evidence is there; the subsidiary company [that was Texaco's majority partner] is there," Chevron spokesman Chris Gidez told Oil Daily.

The plaintiffs hope a US court will hear the case, since Ecuador does not recognize class-action suits. Individual cases for each of the 30,000 plaintiffs would be too costly, and would be too taxing for Ecuador's ill-equipped and underfinanced court system.

The case dates back to 1993 and 1994, when residents of the Oriente oil-producing region and Peruvians living downstream from the operations filed suit. They accused Texaco of dumping toxic waste into hundreds of unlined pits dug out of the ground. From the pits, the wastewater, contaminated with oil and heavy metals, slowly decanted into rivers and wetlands of the region. Texaco had been a minority partner in the area with state-owned Petroecuador between 1972-1990.

Rakoff dismissed the original suit in 1996, but a federal appeals court reversed his decision in 1997 because Texaco had refused to submit to the authority of Ecuador's courts, a stance since reversed. Rakoff's decision to dismiss the suit again in 2001 came after he delayed his ruling until he received a review to determine whether an Ecuadorian court could be impartial after a brief military coup in which President Jamil Mahuad was replaced by Vice President Gustavo Noboa (OD Feb.1,'00,p6).

Since Texaco pulled out of the area in 1990, Petroecuador has been operating the 350 wells left behind. The plaintiffs decided to sue Texaco and not Petroecuador in an effort to bring the case to a US court.

Texaco has maintained that its drilling practices in the Andean country complied with Ecuadorian laws. However, Ecuador had no regulatory apparatus at the time to judge the company's environmental performance. The plaintiffs argue that regardless of the lack of environmental regulation in Ecuador, Texaco engaged in reckless activity by installing technology that was below the environmental standards of the US and other parts of the world where it operates.

© 2002 Energy Intelligence Group, Inc.

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