Case in Ecuador Viewed As Key Pollution Fight

U.S. Legal Team Suing ChevronTexaco

By Brooke A. Masters, The Washington Post
6 May 2003

For tourists wanting to see the Ecuadoran Amazon, Lago Agrio is a major jumping off point. But the area right around the city of 26,000 has no flora and fauna to speak off, despite being surrounded by what used to be the rain forest.

Residents blame the dearth of life in the Oriente region on 30 years of oil drilling and exploration by the company that is now ChevronTexaco Corp.

An American legal team has flown to Lago Agrio and today plans to file a billion-dollar lawsuit against ChevronTexaco on behalf of 88 Ecuadoran plaintiffs. The case, which kicked around the U.S. courts for nine years before being sent to Ecuador, is being closely watched by public-interest lawyers and multinational corporations.

Legal experts say it could be a groundbreaking case, establishing a new way for environmental activists to force multinational corporations to pay for what activists say is environmental devastation.

U.S.-based multinational corporations often try to get cases tried in developing countries, a tactic that can kill the case entirely because most American plaintiffs lawyers have neither the money nor the expertise to sue in Third World courts. Later if the corporations lose, they often argue that the overseas legal process was flawed or that their U.S. headquarters should not be held responsible for the errors of a subsidiary in the developing world.

Foreign courts also have had problems making U.S. multinational companies obey their decisions.

In the ChevronTexaco lawsuit, the U.S. Court of Appeals for the Second Circuit agreed last year with ChevronTexaco's request to send the case to Ecuador. The judges, however, warned ChevronTexaco that U.S. courts would step back in if the company tried to avoid a judgment imposed by the Ecuadoran court.

Chris Jochnick, a New York lawyer who founded the Center for Economic and Social Rights, said that if this approach -- oversight by the U.S. courts of a foreign case -- "puts pressure on the Ecuadoran court system to perform, that might be the best resolution. There are thousands of these cases, and there are only so many the U.S. courts can handle."

The Ecuadoran plaintiffs allege that from 1964 to 1992 the oil company dumped 18 billion gallons of drilling byproducts into open pits and waterways. Drinking, bathing and cooking with contaminated water has damaged the health, culture and livelihood of five indigenous tribes and 30,000 people, they allege.

"These are not just random spills. This is the result of a decision made by Texaco to install a type of drilling process that would lead to a systematic dumping of toxins," said Steven Donziger, one of the plaintiffs' lawyers.

Cristobal Bonifaz, an Ecuadoran-born Massachusetts lawyer who first brought suit against Texaco in 1993, estimated it would cost more than $1 billion for ChevronTexaco to compensate residents, clean up the waste pits, install new technology to prevent further dumping, and provide medical care and monitoring.

ChevronTexaco officials responded that Ecuador's national oil company set policy for the venture, and that the drilling met all of the country's environmental requirements. Ecuador's laws allowed oil drillers to dump wastewater, rather than making them use the more expensive process, mandated in the United States, of re-injecting the oil-contaminated water back into the well.

In addition, company officials said Texaco, which merged with Chevron in 2001, paid $40 million to survey and clean up more than 250 drilling sites.

The company also disputes the environmentalists' claim of health damages. "Over 10 years of litigation have yet to produce any credible and substantiated scientific information," said ChevronTexaco spokesman Chris Gidez.

The plaintiffs say they could not afford large scientific studies to back up their claims, only a close look at the cancer and other health problems in one village. That study of an area with 30 oil wells found 10 cases of cancer in the village, resulting in a cancer rate of more than twice the national average.

"ChevronTexaco left the environment full of toxins, the rivers, the land, and a lot of people are suffering," said Luis Yanza, a plaintiff who has lived in the region for 26 years and now works as a community organizer. "They haven't cleaned up the toxins."

A Massachusetts Institute of Technology-affiliated toxicologist hired by ChevronTexaco called the analysis "inadequate . . . cursory and misleading."

It is not clear how the Ecuadoran courts will respond to the lawsuit -- oil is crucial to the country's economy and the government of President Lucio Gutierrez is seeking foreign investment.

But the plaintiffs' lawyers said the local tribes that have borne the brunt of the alleged contamination have been gaining steadily in political clout. Gutierrez had key backing from indigenous groups both when he led a 2000 coup and when his supporters won elections two years later.

The Ecuadoran government changed sides in the earlier U.S. legal proceedings over the same allegations. Right after the suit was filed, Ecuador submitted a brief asking the U.S. judge to dismiss the plaintiffs' claims. But after control of the government changed hands, Ecuador intervened on the side of the plaintiffs, saying it wanted "to protect the interests of the indigenous citizens of the Ecuadoran Amazon who were seriously affected by the environmental contamination."

A spokesman for the Ecuadoran embassy in Washington said the government has not taken a position on the lawsuit that is about to be filed. But he said "it is very clear that the people in the region have health problems and have suffered for more than 10 years. More work is needed to repair the area."

Environmental activists generally prefer to bring cases in developed-world courts for several reasons -- the courts are more independent, there's a corps of public-interest plaintiffs' lawyers to draw on, and the cases draw more public attention -- that bring pressure on companies to settle. U.S. courts are particularly attractive because of rules that require both sides to share information and make it relatively easy to bring class-action lawsuits on behalf of a large group of people.

Alleged victims of the chemical disaster in Bhopal, India; a cyanide spill in Guyana; and oil drilling pollution in Nigeria have tried to bring cases in Europe or the United States. The defendant companies, such as Union Carbide Corp., Cambior Inc. and Royal Dutch/Shell Group, have argued that the trials should be held overseas, in the countries where the events took place.

The jurisdictional question has tied many of these cases up for years. For example, a group of 450 Nicaraguan banana workers won nearly $500 million in January in a lawsuit over the use of pesticides. But so far they have been unable to collect from the defendant companies -- Dow Chemical Co. and subsidiaries of Royal/Dutch Shell and Dole Food Co. -- which contend that there were problems with the legal process.

"The legal wrangling can go on for years," said Malcolm J. Rogge, a Canadian scholar who has written about transnational environmental cases.

© 2003