Chevron Would Face $5 Billion Tab For
Amazon Cleanup, Expert Says--Wall Street Journal

2003-10-30

Wall Street Journal

by Marc Lifsher

LAGO AGRIO, Ecuador -- Cleaning up toxic wastes in the Ecuadorean Amazon region could cost ChevronTexaco Corp. more than $5 billion and take as long as 10 years, according to a U.S. expert advising the plaintiffs in a lawsuit being tried in this ramshackle, frontier oil town.

The Ecuadorean media and environmentalists tout the case, which pits 30,000 local Indians and subsistence farmers against a giant oil company, as the antiglobalization "trial of the century."The suit originally was filed in U.S. District Court in New York before a judge transferred jurisdiction to Ecuador in August 2002. The complaint accuses a subsidiary of Texaco, which merged in 2002 with Chevron, San Ramon, Calif., of polluting ground water, rivers and swamps in the Ecuadorean Amazon region. The plaintiffs allege that from 1971 to 1992, Texaco Petroleum Inc. recklessly dumped oil waste in more than 600 ponds over a 2,000-square-mile area of rain forest and wetlands. The complaint requests that the company be ordered to pay for a thorough cleanup.

ChevronTexaco denies responsibility for any possible environmental damage, citing a prior cleanup effort and a release from liability it received from Ecuador's government.

The waste, a chemical stew of heavy metals such as arsenic and carcinogens such as benzene, increased levels of cancer, infant mortality, spontaneous abortions, headaches, stomach ailments and skin diseases, the suit alleges. The effects of pollution also harmed crops and livestock, plaintiffs claim.

"To put this in perspective, you're looking at something, sizewise, larger than the Chernobyl disaster," said Dave Russell, an Atlanta-based toxics specialist serving as an expert consultant to the plaintiffs. "The damage is to the entire ecosystem." According to Mr. Russell, who provided the $5 billion cleanup estimate, the only way to effectively curtail pollution would be to dig up, transport and incinerate millions of tons of contaminated soil. Such a project would dwarf any decontamination effort ever undertaken, he said.

ChevronTexaco spokesman Chris Gidez dismisses the plaintiffs' assertions regarding damages and cleanup costs, saying they are based on "pseudoscience" and are "wild and unsubstantiated." He said the company's attorneys have asked the Ecuadorean judge to dismiss the case because plaintiffs have presented "no credible scientific evidence" that the oil company caused environmental damage or violated Ecuadorean pollution laws. He said the Ecuadorean government "released Texaco from further liabilities and obligations" upon the completion of a $40 million decontamination program in 1998.

Moreover, ChevronTexaco noted that the government oil company, Petroecuador, held a majority interest in Texaco's local operations during a first production phase and assumed full control in 1990.

In the trial's first phase, which lasted two weeks and ended yesterday, ChevronTexaco didn't present any witnesses. Lawyers representing the company in court said they hadn't been authorized to comment on the case.

Questioning of witnesses, including experts, in an Ecuadorean trial is done by the judge working from questions proposed by the parties' lawyers; there are no cross-examinations. Next week, the judge will begin conducting a personal investigation in the field before bringing the parties back for potential further questioning. His decision, which could be appealed to the Ecuadorean Supreme Court, is expected in six to eight months.

Texaco's contract with Petroecuador expired in 1992. Residents of the eastern Ecuadorean Amazon sued the company in U.S. federal court in New York in 1993. A federal judge shifted the case to Ecuador with the stipulation that any eventual ruling could be enforced by the U.S. court.

ChevronTexaco's effort to shift any remaining responsibility to the Ecuadorean government doesn't reflect legal and technical realities at the time Texaco pioneered Amazon oil exploration in the early 1970s, said Cristobal Bonifaz, thelead attorney in the U.S. for the plaintiffs. As the "operating partner," Texaco had a legal obligation to employ "best practices in respect to the environment," he said.

© Dow Jones & Company, Inc.