By Adam Klasfeld, Courthouse News
20 October 2015
As the Amazon rainforest transitioned to its dry season, three international arbitrators investigating how Ecuadorean courts handled multibillion-dollar environmental litigation against Chevron sojourned into the oil-contaminated jungle.
The three-day journey took place between June 7 and 9, joined by lawyers and scientists retained by Chevron and the Ecuadorean government. Though organized in secret, a Courthouse News request led the arbitration panel to produce transcripts of its hearings.
Through torrential rain and tropical heat, representatives of Ecuador led the group to residential farmlands where villagers grow corn, papaya, cacao and other produce – sprouting up either from or near pools of petroleum – all documented in the transcripts.
The sessions were recorded on video, but no visual records of the proceedings have been publicly released. A scientific firm retained by Ecuador submitted a 136-page document to the tribunal, however, containing photographs of how the same sites looked years ago.
To say the least, these were unusual proceedings of the Permanent Court of Arbitration, which is based in the far more temperate city of The Hague, in the Netherlands.
A transcript of a June 9 presentation, at a well site in Lago Agrio, has the words "rooster crows" in parentheses to note an interruption during both the opening argument delivered by Chevron's attorney and the closing argument by Ecuador's.
The environs also forced the leader of the tribunal, V.V. Veeder, to improvise court procedures on occasion.
Responding to objections by the parties, Veeder quipped at one point that the panel "will go to our retiring room in the jungle and come back."
Veeder and his colleagues have convened to decide whether Ecuador's judiciary denied justice to Chevron by saddling the oil giant with $9.5 billion in liability.
Three levels of Ecuador's courts have upheld the decision, but a federal judge in New York found that the judgment was "procured by corrupt means." That U.S. ruling is under appeal at the Second Circuit.
Chevron initiated both the U.S. proceedings and the international arbitration proceedings, the latter of which seek to have the government of Ecuador cover the $9.5 billion verdict its judiciary is holding over Chevron.
While the New York court shut out all of the environmental evidence, the international tribunal is probing both Chevron's fraud allegations and the underlying pollution. Planning for the rainforest occurred during closed-door hearings for the evidence-collection phase that the panel conducted between April and May.
Veeder is quoted in the transcript as saying that the D.C. hearings concluded the evidence-collection phase of trial.
"The evidence is in, and we're here to understand that evidence," Veeder said.
On the first day of the rainforest hearing, at an oilfield called Shushufindi-34, Ecuador's attorney general Diego Garcia Carrion emphasized why his country pushed for the visit to happen, over Chevron's objections.
Carrion called the inspections "critical part of the arbitration and, for Ecuador, an essential element of our case."
"The republic of Ecuador considers this visit to be of great value to the tribunal, and for that, has insisted on it," he said. "Now you will be able to see firsthand the contamination and so conclude that the judgment is reasonable and juridically possible."
Chevron does not deny that drilling in the Amazon by its subsidiary Texaco left pools of petroleum dotting the rainforest that still lay there today. But the company maintains that its 1995 agreement known as the Remedial Action Plan left the responsibility for the cleanup with other parties, primarily the state-run company Petroecuador.
"The environmental issues that have been raised by Ecuador are no defense to the claim that we have presented before you under international law," Chevron's attorney Doak Bishop, of the Atlanta, Ga.-based arbitration firm King & Spalding, said in his June 7 opening remarks.
Bishop said that the primary question about the pollution is: "Whose responsibility is it?"
Chevron spokesman Morgan Crinklaw echoed these points in reaction to the release of the transcripts to Courthouse News.
"These transcripts, along with the extensive evidence submitted in Chevron's arbitration against the Republic of Ecuador, reinforce the fact that Texaco fully remediated its share of sites before exiting the country 23 years ago," Crinklaw said in an email. "Any remaining environmental remediation is the responsibility of the Ecuadoran government and the state-owned oil company, Petroecuador."
To address this argument, Ecuador's lawyers and scientists said that three of the four sites that they selected for the arbitration panel's visit were areas where Texaco exclusively operated, and that these were not a part of this agreement.
Shushufindi-34 is the first of these, named after the region's northeastern canton bordering Colombia.
The Louis Berger Group, a top U.S. AID-recipient environmental firm retained by Ecuador, said that the foliage and outgrowth of the jungle covered one of the pits on this site for decades until the firm discovered it in 2014, well after the Ecuadorean litigation concluded.
The firm's environmental scientist, Dr. Edward Garvey, said that a photoionization detector calibrated the hydrocarbon concentrations there between 130 to 200 parts per million, giving the area the smell of gas.
"It's present to contaminate any plants that might be grown around here, livestock or birds, chickens and the like that might come through here; and, if a farmer walks through here, he's going to get this on his boots, track it home, bring it home to his family," Garvey said, according to the transcript.
Chevron's team addressed these points through what its lawyer's regularly called "reality checks," arguing that the pollution levels met Ecuadorean regulatory standards, did not seep into the groundwater and posed no threat to human health.
Disputing each of these points, Ecuador's team referred to the people living on or near the area at every turn.
The tour headed on June 8 to Aguarico-6, in a canton in the Orellana province where the parties saw a subsistance farmer planting corn by hand.
Ecuador's lead scientist Garvey noted that the farmer "may also graze his livestock in here or chickens or the like where they can also be exposed, so we have clear and current human exposure here."
Though the tribunal arrived at the start of Ecuador's dry season, rain arrived on June 8 and 9.
The parties huddled under a tent after first arriving at Shushufindi-55, where Texaco's subsidiary TexPet drilled between 1975 and 1983.
Residents live there today in "series of barns and connected houses and buildings" that dot the area, according to the June 8 transcript.
"Louis Berger found samples here between 1,800 to 53,000 parts per million," Garvey told the arbitrators, citing a number that Chevron says has been inflated by a factor of five.
The tribunal spent its final day of the tour visiting a site in Lago Agrio, named after one of the rainforest's most populous cities, which in turn is named after Texaco's former headquarters of Sour Lake, Texas.
Ecuador selected Lago Agrio-1 in part because of the "people who live potentially on top of the pits," Ecuador's attorney Gregory Ewing from the Washington-based firm Winston & Strawn told the tribunal.
"There are numerous animals running around here," Ewing said. "We can hear them. There are a lot of dogs. The risk to human health is easy to see."
Ecuador's expert Garvey pointed out that the pit the arbitrators were looking at lay "not but 25 to 30 yards from a residence here."
"This is obviously somebody's active farm, and so these people are exposed to this material on a regular basis," he said.
The nearby stream posed a "significant cancer risk, one times ten to the minus three requiring cleanup," and there was "clear evidence that the stream is still being used by the residents on occasion," Garvey added.
"A tube of toothpaste was found," he said. "Toys were also found along the stream's edge. Chickens, ducks and other animals that live in this residence also drink from the stream."
As with previous sites, Chevron's expert John Connor noted that the people living at this site had access to a rainwater-catchment system as an alternative source to the nearby streams. Connor also pointed the tribunal to a blue storage barrel on one of the house's roofs to show how the residents safely gather water.
Ecuador's attorney Ewing argued that the residents' rainwater system is no defense for Chevron.
"The issue here is whether the people on their private land are able to use their own natural water sources," he said.
Chevron noted that the company did not have responsibility for these pits under the RAP agreement.
Ecuador's attorney countered that this was "not surprising" because the pit was "never disclosed, and it was hidden."
The locations that the arbitrators visited represent a fraction of the known oil pits in the region. By Ecuador's estimates, more than 300 concession areas in the Oriente have oil platforms that require remediation.
Garvey told the tribunal that, if the Ecuadoreans manage to collect the judgment against Chevron, this would mark the fifth multibillion-dollar remediation in which he participated.
The final party to speak during the visit was Eric Bloom, an attorney for the Ecuadorean government from the Washington-based firm Winston & Strawn, who emphasized the significance of the visit.
"It matters, we believe, to much of this world, given the importance of this rainforest, and we know that it means the world to the people whose very lives depend on this rainforest," Bloom said.
Bloom reminded that the panel that the proceedings had greater significance for the residents who would not leave.
"For some of us, this is an exotic adventure of sorts, but I try very hard not to forget the fact that we are around people where it's their very lives," he said. "It's not a one-week adventure."