Chevron, Plaintiffs Dispute Findings of Court Experts Report

Business News Americas
7 February 2006

US oil company Chevron (NYSE: CVX) and plaintiffs against the company in a lawsuit over environmental remediation by Chevron's former subsidiary Texpet in Ecuador's Amazon region are disputing the interpretation of a technical report by a group of court-appointed experts in the case.

Attorneys representing some 30,000 residents in a US$1bn lawsuit against Chevron (formerly ChevronTexaco) claim Texpet dumped wastewater into estuaries, rivers and unlined pits from 1964-1992, destroying sources of drinking water, killing farm animals and causing health problems.

Chevron said in a statement that the court-appointed experts evaluating the Sacha-53 site in Ecuador's Amazonian province of Nueva Loja found "no significant oil-related public health risks" and that remediation was "effective and in accordance with legal standards at the time."

According to Chevron, the experts' findings validate the conclusions made by the company's technical experts and were based on field observations and lab data taken from the inspection of the site on September 1, 2004, as well as evidence presented by both parties.

The five experts that authored the report were all independent experts chosen by the judge in the case Germán Yanez, Chevron spokesperson Rodrigo Pérez told BNamericas.

"In essence what it means is that we did comply [with Ecuadorian regulations]," Chevron's Ecuador representative Jaime Varela told BNamericas.

However, environmental NGO Amazon Watch and one of the plaintiffs' lawyers in the case, Steve Donziger, said that Chevron is distorting the facts by claiming the court report essentially exonerates the company.

"The company is again providing further evidence that it is misleading the public markets and its shareholders by covering up its massive potential liability in Ecuador," Amazon Watch said in a statement.

"This is basically Chevron's lawyers reading the report and spinning a conclusion. The report never says they complied with the remediation. [The experts] explicitly decided not to make this judgment in terms of the overall site because it is a judicial judgment. These are technical people looking at lab reports," Donziger told BNamericas.

Chevron's interpretation of the report "crosses the line from something that is aggressive advocacy to something that is just plain inaccurate," Donziger added.

Toxic Chemicals
Oil engineer Bill Powers, hired by the plaintiffs to study the case, told BNamericas in an email that the "the samples collected by Texaco show compliance [with the remediation plan] while the samples collected by plaintiffs at the same site show contamination. The report does not address the obvious issue that Texaco was not sampling at the points of highest contamination and the plaintiffs were."

Chevron claimed that although there was contamination of the drinking water, it stemmed from bacterial causes related to poor sanitation rather than oil sources.

However, the court report found 28 water and soil samples with harmful chemicals, including toxic contaminants barium and cadmium, the latter of which is carcinogenic, Amazon Watch spokesperson Leila Salazar-Lopez told BNamericas.

"Barium comes from the chemicals used to drill the well. Barium and cadmium are components in the crude oil and water mixed with the crude that is brought to the surface," Powers explained.

Varela, however, said that the levels of barium and cadmium were both below international standards. He also said the company left the field 16 years ago and that it has since been operated by Ecuador's state oil firm Petroecuador.

Environmental Liability
Chevron's position is that it adhered to its contractual terms at the time, completed the necessary remediation and that the government acknowledged there was no further work required or additional responsibility on Chevron's part, Varela said.

"This is not the end of the story, but it is a very significant step," Varela said, referring to the report's findings.

However, Donziger says that civil cases involving environmental law should apply current standards regardless of past contractual agreements.

"Even if they met those contractual standards, it does not protect them from liability because the contractual standards have nothing to do with Ecuadorian law today, which is what's being applied. Texaco's contract with the government is absolutely irrelevant to this inquiry. The court has never accepted their view that the contract is the relevant standard," Donziger said.

The Sacha-53 court expert report is the first of 122 such reports to be issued in the ongoing environmental suit against Chevron, according to Chevron's statement.

Donziger stressed that the report covers only one of 350 well sites, each of which has 2-5 toxic waste pits.

The case was first filed more than 10 years ago in New York, but was eventually sent back to Ecuador with the provision the ruling would be binding in the US.

[ Back to top ]