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ChevronTexaco Pollution Trial Begins

Ecuador lawsuit is a test of whether a court can hold a foreign company responsible for damage to the environment.

October 23, 2003|T. Christian Miller | Times Staff Writer

LAGO AGRIO, Ecuador — It was a day they had long waited for.

Hundreds of poor farmers and bare-chested indigenous people had traveled this week to this sweltering northeastern jungle town by bus, foot and canoe. They crammed into a courtroom and flowed onto the street.

And finally, on Wednesday, it happened: the opening of their trial against ChevronTexaco Corp., accusing the San Ramon, Calif.-based firm of polluting their land, poisoning their families and killing their animals.

"It's a very special day in the history of our people," said Elias Piyahuaje, a 47-year-old indigenous leader whose people arrived here this week wearing brightly colored tunics and bearing dried palm fronds as a sign of peace. "For the first time, Texaco has returned to face us."

The case on behalf of 30,000 local residents is an important test in an emerging area of international law: whether a court in a foreign country can hold a multinational corporation financially responsible for environmental damage in that nation.

ChevronTexaco says that its oil drilling operations have not been responsible for poisoning people, animals or the environment of Ecuador.

With a few notable exceptions, U.S. companies sued abroad in the past have not been held legally responsible for damages; they have either won cases in areas that residents say have weak legal systems or simply ignored judgments against them.

But the ChevronTexaco case could be different. The lawsuit, first filed in the United States 10 years ago, dragged on in preliminary hearings and appeals until a federal appeals court dismissed it in 2002, finding Ecuador a more logical site for the trial. But as part of the dismissal, ChevronTexaco had to agree to abide by the Ecuadorean court's judgment.

That means that the company, if found responsible, may have to pay more than $1 billion to clean up the damage, an amount that would be one of the largest such judgments in history. Under Ecuador's complex legal system, no decision is expected for six months to a year.

Texaco, which merged with Chevron to form ChevronTexaco in 2001, began commercially producing oil in Ecuador in 1972, pumping about 1.5 billion barrels before shutting down operations in 1992. Ecuador came to rely heavily on the revenue generated, with as much as half of its budget coming from oil.

During that time, the company disposed of much of the waste water that accompanies oil production into unlined dirt pits and rivers and streams that feed into the Amazon River, about 370 miles to the southeast.

The lawsuit alleges that the operations have left a poisonous legacy: all told, more than 18 billion gallons of waste water dumped and 16 million gallons of crude oil spilled. The result has been environmental devastation and increased rates of cancer and miscarriage, the plaintiffs' lawyers say.

ChevronTexaco has maintained that one of its subsidiaries, TexPet, was only a minority partner in the consortium responsible for the drilling, with the Ecuadorean state oil company, Petroecuador, the majority shareholder. The company has said that its practices were standard for the time and that it broke no Ecuadorean laws.

A company spokesman said Wednesday that the firm paid out more than $40 million in a cleanup effort completed in 1998 that included funds for local schools and health clinics. And he rejected any allegations that the disposed waste was toxic to humans or the environment.

"There has never been any credible, scientific evidence to support the allegations made," said spokesman Chris Gidez, who flew into Quito, the capital, for the lawsuit.

The scene here has been part circus, part legal drama and part Love Canal-style allegations.

In a last-ditch effort at settlement Tuesday, hundreds of people flooded the streets in front of the tiny, four-story courthouse to chant, "Texaco poisoned our land!" over loudspeakers mounted on a rusty flatbed truck.

Members of the Secoya, Cofan and Huaorani tribes crowded in front of the court, wearing purple gowns and feathered tiaras and necklaces of nutshells. Ecuadorean policemen with machine guns and bulletproof vests surrounded the courthouse and blocked off streets.

Inside, in a courtroom the size of a bedroom and overflowing with journalists, environmentalists and locals, ChevronTexaco lawyers read a three-hour-long statement denying the allegations.

"Petroecuador and the Ecuadorean government must be responsible for the decisions since they were the owners," said Adolfo Callejas, one of ChevronTexaco's lawyers, as the judge looked on impassively. Above him hung a painting of a verdant jungle scene, a smoking oil derrick in the middle.

As the formal presentation of the suit began Wednesday, a local environmental group, the Amazon Defense Front, unveiled a study funded by Petroecuador that sharply criticized Texaco's cleanup effort.

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