ChevronTexaco on Trial

Chevron-Texaco on Trial

Lago Agrio, Ecuador- Huddled under the awning of the La Ganga appliance store, nearly a hundred indigenous men, women, and children and their campesino (peasant farmer) neighbors tried to keep their bodies warm and their headdresses dry. One of the heaviest rains of the season had begun the night before and showed no sign of letting up anytime soon.

"The forest is crying, crying for all those years of injustice," explained Luis Yanza, a campesino leader of the Frente de Defensa de la Amazonía (Amazon Defense Front), the regional grassroots umbrella organization for indigenous and farmer communities. "Or, they could be tears of joy that our day has finally come," said Emergildo Criollo, leader of the indigenous Cofan.

Just after 8 a.m., the crowd had swelled to 200 and begun to march through town to the courthouse, chanting "Justice and truth!" They arrived to find riot police and several armed soldiers forming a human barricade at the entrance. A flatbed truck rolled up laden with a sound system, and banners reading "Justice" and "Amazon Free of ChevronToxico" were draped over the balconies of the buildings across the street. Huaorani women in traditional clothing, faces red with achiote paint, began singing "Hermanos Unámonos," a traditional chant sung when the community needs to unite to defeat an enemy. They would continue the mesmerizing atonal chant throughout the day.

It was October 21, 2003, a Tuesday. A new and hopeful chapter in one of the worst ongoing ecological and social disasters in the Western Hemisphere was set to unfold. ChevronTexaco, the world's second largest energy company, was due in court to face charges brought on behalf of 30,000 Ecuadorian indigenous people and campesinos-people forced to live alongside the toxic legacy left by the energy giant's oil operations in the rainforests of the Oriente, as the Ecuadorian Amazon is known. First filed in New York 10 years ago, the case was delayed because, among other reasons, the company (Texaco, until its merger with Chevron in 2001) refused to accept the jurisdiction of the U.S. court. It was one of the first environmental lawsuits ever filed in the United States by foreign plaintiffs alleging that a U.S. corporation violated international law by causing pollution abroad.

The significance of the case extends beyond the walls of the tiny courtroom in this provincial town. Many consider it a trial of globalization itself. While the promise of benefits from the "rising tide" of unfettered free trade and global capitalism has often gone unfulfilled, millions of people in the global South believe that multinational corporations have reaped billions of dollars in profits while leaving behind ravaged ecosystems, exploding health crises, and socioeconomic decay-and shielding themselves from accountability behind a screen of subsidiaries. "If globalization creates the conditions for multinational companies to come here, then profit, pollute, and run, it certainly should create the conditions to hold them accountable," said Yanza.

Perhaps it has begun to do so. When New York courts dismissed the case against Union Carbide on behalf of Indian victims of the deadly Bhopal gas leak, the matter was left entirely to India's courts. But the ChevronTexaco case, brought under the 1787 Alien Tort Claims Act, has paved the way for other such suits now in U.S. courts by yielding a remarkable decision: an order issued last year by the 2nd Court of Appeals in New York to ChevronTexaco to submit to the laws of Ecuador, a Latin American country where it no longer has assets, and a commitment from the court to enforce any judgment for damages leveled against the oil giant. Environmental remediation experts have estimated those damages at over $6 billion.

"To the best of our knowledge," says John Bonifaz, a member of the plaintiffs' legal team, "this is the first [case] of its kind in world history: where an American company is forced by American courts to show up in another country's courtroom and comply with whatever judgment that comes out of that courtroom."

Gains and Losses

Thirty years ago, the rainforests of the northern Ecuadorian Amazon were a pristine zone harboring some of the greatest diversity of plant and animal life in the world. In these important Amazon headwater areas, a thriving indigenous population could be found collecting drinking water and catching fish from the Aguarico and Napo Rivers. The forest and river ecosystems have been these traditional communities' subsistence base, both environmentally and spiritually, for thousands of years. However, since Texaco's arrival in the early 1970s, indigenous groups-the Cofan, Secoya, Siona, Huaorani, and Quichua-and the environment they depend on have been pushed to the brink of collapse.

In the words of Quichua leader Inocencio Macanilla, "Before Texaco's arrival we were the guardians of all of the richness of the Amazon. Today, we are the guardians of contamination. We are the guardians of poverty and sickness. All the indigenous peoples of the Amazon are facing death."

After oil deposits were found in the Oriente in the late 1960s, Texaco was the first international oil company invited into the country, to install the drilling technology and a 498-mile trans-Andean pipeline to bring the oil to the coast for export. On behalf of its partners (Gulf Oil and the national oil company Petroecuador, originally known as CEPE), Texaco designed, managed, and controlled all of the consortium's oil operations from 1971 to 1992 in a 1-million hectare area of undisturbed rainforest. When Texaco's contract expired in June 1992, the assets and operations were turned over to Petroecuador. Texaco's hundreds of toxic waste pits, scattered near local communities, rivers, and streams, were simply abandoned.

The premise of the case is that Texaco made a cost-cutting decision that led to most of the environmental devastation and the resulting health crisis in the region. Oil operations routinely bring toxic waste waters to the surface during extraction. The lawsuit charges that instead of designing the operations to re-inject those waste waters back into the deep subsoil formations they came from-standard industry practice at the time-Texaco chose to dump the dangerous brew, which included benzene, toluene, arsenic, lead, mercury, and cadmium, directly into local streams and tributaries. (ChevronTexaco has been unable to cite one other instance, anywhere in the world, where it dumped toxic wastewater into streams or unlined pits.) The suit alleges that these practices saved the company money while violating laws and swamping local communities in a devastating wake of environmental destruction and contamination-a legacy that remains widespread and easily visible in the polluted fluvial systems that local indigenous and farmer communities use for drinking, bathing, fishing, washing, and swimming. At the height of its operations in Ecuador, ChevronTexaco was releasing some 4.3 million gallons per day of toxic wastewater directly into the environment. This amounts to 464,766,540 barrels, or roughly 20 billion gallons, over the company's 21 years of operation.

The payoff? The case argues that during the company's two-decade tenure in Ecuador, Texaco extracted more than 1.5 billion barrels of oil. By dumping the byproducts instead of re-injecting them, the company saved an estimated $3 per barrel, or about $4.5 billion.

The suit also enumerates several other grievances:

  • Oil spills that were never cleaned up. Ecuador's Ministry of Energy and Mines reports that by 1991 the pipeline built by Texaco, known as the SOTE (Sistema Oleoducto TransEcuatoriano) had spilled at least 16.8 million barrels over its 20-year life. These are only the spills that were officially reported-by a government body that has had little will or capacity to monitor and control oil industry abuses. The spills total nearly twice the amount lost by the ExxonValdez.
  • Abandonment of at least 627 open, unlined oil sludge pits. These continue to seep into groundwater and overflow their banks during heavy rains, and remain a lethal hazard for unsuspecting livestock and curious children.
  • Rainforest devastation. Nearly 2.5 million acres were deforested when Texaco carved almost 300 miles of roads into previously inaccessible jungle. Oil-related infrastructure created new arteries into the forest, which were used by other extractive resource industries, colonists, missionaries, and the military-and which brought new diseases, interests, and worldviews. Texaco also sprayed dirt roads with excess crude oil to keep dust down, creating a constant source of pollution for tributaries and those walking barefoot, as many forest people did.

The human cost of the project is difficult to quantify, although studies of the area's indigenous populations indicate higher-than-expected rates of cancer and miscarriage (see "Chornobyl West?" below). More generally, the extensive disruption of natural systems and human societies in the region has contributed to shocking declines in local populations. The Cofan, for instance, numbered approximately 15,000 when Texaco's first oil well was drilled on their territory; now they are counted in the hundreds. The Secoya and Siona also cite the company's oil operations as a factor in their shrinking numbers, partly because the waters they once depended on for drinking, fishing, cooking, and bathing are now dangerously polluted and their forests irreversibly damaged.

Collectively, Texaco's practices were so egregious that Petrobras, the Brazilian state-owned oil company, sent a team of engineers to study them-as a model of how not to extract oil in a rainforest environment. Because Texaco pioneered Ecuador's oil boom, it set the tone for future oil extraction in the Oriente. And as one reporter who had covered the company's operations noted, "Texaco entered the Ecuadorian Amazon with the subtlety of an invading army."

Opening Shots

The scene on the trial's opening day in Lago Agrio looked like a movie set, with dozens of cameras, indigenous elders and children in full tribal regalia, attorneys in suits, and hundreds of onlookers waiting for hours for the chance to see a bit of history in the making. The events of the next six days in the courtroom would make headlines as far away as New York, New Delhi, and Lagos.

At 9 a.m., the plaintiffs and members of their legal team-two Ecuadorian lawyers, with their colleagues who had brought the case in New York-edged past the riot police and entered the courthouse. The rented four-story building looked almost modern, with its metallic blue reflective windows and faux marble façade. (Inside, the effect was compromised somewhat by the moldy walls, dingy stairwell, and crumbling tiles.) To avoid the gathered crowd around the courthouse's only entrance, ChevronTexaco lawyers and their hired bodyguards had entered the building an hour earlier.  

The courtroom comfortably sat 40 and was stark white except for a mural, painted on the wall behind the judge's bench, of a woman holding the scales of justice against a backdrop of a lush forest. The room was crowded with indigenous people and campesinos, many of whom had waited 30 years for this moment. Questions and speculation abounded: "Which ones are the Texaco lawyers?" ("They look like oil company lawyers.") "Will the CEO come?" "Will the judge accept the case and let the trial begin?" Other than the three ChevronTexaco attorneys, no company supporters or witnesses were present.

For Judge Alberto Guerra Bastidas, president of the Supreme Court of Justice in Lago Agrio, oil was not a new topic. He had served as a legal advisor to Ecuador's College of Geology, Mines, and Petroleum, and later advised the government's National Hydrocarbon Agency. His first judicial appointment, in 1995, was as a civil judge in Pichincha province, home of Ecuador's capital city, Quito. He alone was charged with presiding over the trial and rendering a verdict. "Now I work 15 hour days because I want our justice system to be dignified," said Guerra of his new responsibility.

At 9:10 a.m., Judge Guerra convoked the hearing and asked ChevronTexaco to present its response to the complaint. Adolfo Callejas, lead attorney for the company, opened a 200-page document and began reading. He would read every word, taking well into the afternoon. But it didn't take nearly that long for the first shock to arrive. The judge himself squirmed noticeably in his seat when Callejas said, "There does not exist a single reason that this case should move forward and you, Mr. Judge, don't have the competence nor the jurisdiction" to handle it.

ChevronTexaco, after arguing for nine years in New York courts that the case should not have been filed in the United States but in Ecuador where the damages occurred, had changed its mind and was now arguing that the Ecuadorian court was the wrong forum after all. The company also said that the plaintiffs were suing the wrong company-in fact, that the plaintiffs should be suing ChevronTexaco's fourth-tier (and now defunct) subsidiary Texpet, which had operated the oil block. Further, the company argued that:

  • Texpet had complied with existing laws and industry standards;
  • the Ley de Gestión Ambiental, or Law of Environmental Management (the pertinent environmental law; see sidebar, "The Law Behind the Lawsuit," page 16) was not retroactive and therefore did not apply to their operations, even though the waste pits continue contaminating streams and soils;
  • if there had been damages, the company had already conducted a cleanup; and
  • even if the cleanup was inadequate, the Ecuadorian government had already released the company from any further liabilities associated with its operations under an agreement signed in 1995.

Meanwhile, outside the courthouse, the deluge had given way to the first rays of sun and Lago Agrio reverted to its normal character-bustling boomtown-despite the stifling jungle heat. By late morning, the crowd had swelled to several hundred, representing thousands of families living near contaminated areas. Some had traveled for days by foot and canoe; others had spent long hours in buses coming from the towns of San Carlos, Shushufindi, and Coca. The canoes ferrying dozens of Cofan, Secoya, and Siona leaders were finally able to cross the swollen Aguarico river, and a brightly colored open-air bus brought them the final hour along the winding oil road into downtown.

By midday, the town was abuzz with news of the trial. Radio Sucumbios, the regional station that broadcasts to remote rainforest communities along the Aguarico, transmitted live throughout the day. The station could be heard blasting from nearly every storefront and passing taxi. At noon the court recessed for lunch, and the plaintiffs and their lawyers poured out onto the streets amid uproarious applause and chants of "Justicia! Justicia!" The company lawyers ordered in.

Witnesses for the Prosecution

The hearing resumed after 2 p.m. with Callejas continuing his reading of the prepared company statement. When he finished, Judge Guerra turned to Alberto Wray, a well-respected Ecuadorian attorney and lead counsel for the plaintiffs, and offered him the opportunity to respond. Wray, a former Supreme Court justice, made a brief but powerful statement: "If the merits of the defendants' arguments rested on the number of pages which they're presenting, without a doubt they would have a solid case. But, that is not the case."

Because the court had no stenotype machine, the court secretary transcribed the proceedings by using her index fingers to type every statement into a computer. This forced everyone to speak slowly, heightening the emphasis and underscoring the importance of each word. In this deliberate, dramatic fashion, Wray continued: "Texaco, under whichever of its names, under whichever one of its legal disguises, caused environmental damage in the Ecuadorian Amazon, which we will prove in our allotted time. It utilized procedures and technologies to conduct its operations that left the environment toxic and led to massive damage to human health, massive damage to flora, massive damage to the fauna, to the environment, and the balance of nature. They did it for exclusively economic reasons, knowing full well that other extractive and waste management methods existed that were less damaging to the environment and people's health."

The judge then rejected the defendants' bid to dismiss the case. There followed two days of handing over documents and completing other bureaucratic chores before testimony from the first witnesses for the plaintiffs began on Friday. In Ecuadorian courts, witnesses are not always questioned in open court, but rather by the judge himself, in chambers. But because of the swarm of cameras, press, and affected people who wanted to hear the testimony, Judge Guerra moved the witness stand to the larger hearing room across the hall.

The first witness, Galo Yépez, was seated in front of the secretary's desk and sworn in. Yépez was called to explain his exhaustive study, submitted that day, of every Texaco well and waste pit created before 1990 that was submitted to the court as evidence. The study used global positioning system (GPS) technology, along with data provided by the National Hydrocarbon Agency, to document each and every well and waste pit created by Texaco. It also included visual evidence, personal testimonies, and interviews with many of the 1,100 families that live near the oil pits.

Next up was Roberto Bejarano, co-author of a new 1,200-page study by Petroecuador and the Amazon Defense Front. Speaking with excruciating slowness to accommodate the court reporter's hunt-and-peck typing, Bejarano explained how investigators visited the Texaco oil production camps of Dureno, Lago Agrio, Atacapi, Shushufindi, Yuca, Auca, and Cononaco. Drilling down 3 meters in each of the 207 waste pits that Texaco claimed it had cleaned up, the team found all of them still contaminated with significant concentrations of petroleum. Thus was confirmed what residents have said for years: despite company claims, nothing like an adequate cleanup was ever performed (see sidebar, "Coming Clean?"). At the conclusion of his long testimony, Barajano stepped down from the witness stand and signed the transcript. The court adjourned for the weekend.

Smoking Arsenal

Anticipation ran high Monday morning, as one of the star witnesses was due on the stand. Rene Vargos Pazos, a former head of Ecuador's state oil company and ex-minister of energy and mines during Texaco's tenure in the country, was slated to testify regarding the relationship between Texaco Inc., and its consortium partners.

But earlier that morning, in the quiet hours before testimonies began, an information trove of a different sort was being delivered to the court: 75,000 pages of internal Texaco documents to which the plaintiffs had secured access in 1993, during the New York phase of the case. These pages amounted to smoking guns, detailing every aspect of Texaco's operations during its two decades in Ecuador, who was calling the shots, and who should be held accountable. Cristobal Bonifaz (John's father) has called the plaintiffs' case an effort at "breaching the corporate veil"-derailing corporate attempts to evade responsibility via hollow subsidiaries with virtually no assets and zero accountability.

For example, Texaco Inc. created Texpet, with headquarters in Coral Gables, Florida, to run the Lago Agrio drilling operation. Texpet was a wholly owned subsidiary of Texaco Financial Services Company, which is owned by Texaco Overseas Development Company, which in turn is owned by Texaco Inc. In Lago Agrio, ChevronTexaco argued that Texaco Inc. still exists and that the plaintiffs are suing the wrong company. They should be suing Texaco Inc., the company said, because it survived the merger between Texaco and Chevron (as a subsidiary). However, in New York the defendants had signed their last brief "ChevronTexaco" and argued that the case should be sent to California-because that is the location of ChevronTexaco's headquarters and Texaco Inc. no longer exists.

The documents include transcripts of over 400 meetings of Texaco's board of directors between 1973 and 1986, as well as memos and briefings. Collectively they show the great lengths to which Texaco Inc. in the United States micro-managed even the most trivial details of Texpet's operations, approving purchases as small as a few hundred dollars. Although it held only a minority share in the consortium, as the operator Texaco designed, constructed, and ran each of the 350-plus wells the consortium built. According to the documents, the pivotal corporate decision to forgo the installation of proper re-injection technology and to dispose of the waste in unlined pits was made by Texaco Inc., in the United States. A Texaco official wrote in a 1980 letter that "the current [unlined] pits are necessary for efficient and economical operations of our drilling...operations. The total cost of eliminating the old pits and lining new pits would be $4,197,958.... It is recommended that the pits neither be lined or filled."

Chornobyl West?

Vargos Pazos's testimony confirmed these facts. He explained that, at the time, Ecuador's state oil company had neither the technical nor environmental expertise, nor the capital, to conduct the oil operations. "Our job was to monitor and comply with production rates, volume rates, opening new wells, construction of the pipeline, investments and payments, but never did we report nor have knowledge of the technical standards that they [Texaco] used," Pazos said. He added that because Texaco was a U.S. company it was viewed as having absolute credibility concerning oil development, and that CEPE relied on the company to install modern technology consistent with the latest industry standards in use in the United States and around the world.

The afternoon witness list was headed by Segundo Tobias Ojeda, who had worked for a Texaco contractor. He talked about the process of locating and constructing the oil wells and pits: "First we found a location for the well and would construct two pits next to the platform for [disposing of] crude and the drilling mud. It is true certain pools after drilling became full of oil and mud, and during the rainy season they became full of water and overflowed into the estuaries.... Where I live, pipelines broke on many occasions and I would always tell the engineers from Texaco. Sometime it was cleaned, other times it would remain for days. To clean it, they would burn it or on other occasions leave it buried."

Alejandro Rigoberto Soto testified about Texaco well 35, which was located on his father's farm. "I lived on the farm with my father since 1973 and I want to explain that in that time we fished with nets in the river alongside the farm," he said. "There used to be a great quantity of fish...but because of the spills that began with the drilling when the oil platform or pipelines would rupture, [the oil] would reach the rivers and they would never clean it up. The spills would cover the river, making the entire width of the river turn black, and it would asphyxiate the fish and they would throw themselves out of the water...and since that time the species of the river disappeared."

At times, it appeared as though the plaintiff's witnesses were on trial, as ChevronTexaco's questions, posed by Judge Guerra, attempted to discredit their life experience working for the company or living next to its abandoned pits: "Do you hunt? Do you kill animals? What is your technical specialty? What is your education or training? What expertise or specialty do you have in identifying chemicals or contaminants? Do you cut down and destroy the forest when you grow coffee or other crops?"

On the last day of the trial, nature offered another symbolic token of sorrow (or joy), and a fitting bookend to the week of testimony and evidence: a fierce early morning deluge that began at 3 a.m. with a display of thunder and lightning. The downpour continued all night and most of the morning. At 11 a.m., some 200 people braved the rains and began a march through town, joined by human rights activist Bianca Jagger and the leaders of the Cofan and Secoya.

This day produced some of the starkest testimony of the entire week. Dr. Miguel San Sebastian, a Spanish physician, explained the results of his groundbreaking health study that revealed the link between Texaco's oil operations and the health crisis in the region. The Yana Curi study (from the Quichua phrase meaning "black gold") was conducted in February 1999 in San Carlos, a town of 1,000 farmers who migrated from other parts of the country in search of land. The town and its farms lie near 30 of ChevronTexaco's wells.

Dr. San Sebastian's study attributed 10 deaths in San Carlos to 8 different kinds of cancer, with an 11th case listed as probable. The study suggests that the risk of all cancers in the San Carlos population is 2.3 times the expected rate. The men of San Carlos suffer a risk 30 times higher than expected for cancer of the larynx, 18 times higher for bile duct cancer, 15 times higher for liver cancer and melanoma, 4.6 times higher for stomach cancer, and 2.6 times higher for leukemia.

"The level of pollution in the town's main river was found to be between 5 [and] 250 times higher that the allowable limit for drinking water," Dr. Sebastian said. "We found that the risk of suffering from miscarriages among the women who live near the oil production wells is 2.5 times higher [than that of] women who live where there are no oil operations."

The complete human costs may be never be known, but efforts have been made to put a price tag on cleaning up Texaco's mess. Testimony from Dave Russell, a chemical engineer who owns the Atlanta-based petrochemical remediation company Global Environmental Operations, Inc., suggested a preliminary cost estimate for clean-up of Texaco's former sites and downstream impact areas of $6.14 billion. Russell spent two weeks touring former Texaco sites and concluded, "The environmental devastation in Ecuador is only second to Chornobyl."

Even with $6 billion to spend, Secoya leader Umberto Piaguaje believes an environmental cleanup can only go so far: "We say that with the money from the lawsuit, there will be reparation, but I don't think that there will be a way to ever restore the forest to its original state."

"Damage" Control

Back in Quito on Friday, Texaco spokespersons held a press conference to attempt to put some positive spin on what had been a disastrous week in the media for them. The company again claimed ChevronTexaco had no responsibility for the despoiled areas of the Oriente. But they faced a critical and well-informed press corps. "So let me get this straight," said a reporter from the Wall Street Journal, "ChevronTexaco reports its earnings in a consolidated form, but when it come to its liabilities, it disperses them by each subsidiary?" A company spokesman wiped his brow, paused, searched for words, and launched into what can only be called a nonlinear explanation of corporate hierarchies, ending with "Well, of course Texaco is part of the same company, but it is also separate."

Unimaginable in a U.S. courtroom, the trial concluded without ChevronTexaco calling a single witness or presenting any evidence in its defense. This could foreshadow more delays and another battle in U.S. courts. "What you all saw happened this week, with the riot police, ChevronTexaco's bodyguards, was nothing but a charade," says John Bonifaz. "By asking for police protection, by not coming out of the courtroom, this allows them to go back to the U.S. and argue that the Ecuadorian courts were out of control."

Attorneys for the plaintiffs believe that Judge Guerra may render a decision within six months. His ruling could be appealed to the Superior Court in Quito and ultimately to the Ecuadorian Supreme Court. Regardless, the most historic aspect of this case is that any judgment rendered against ChevronTexaco will be enforceable by U.S. courts, in accordance with the decision by the U.S. 2nd Circuit Court of Appeals last year.

In the meantime, the Amazon Defense Front is organizing a network of affected communities to monitor the activities of the judge and daily developments in the courthouse until a verdict is rendered. The close monitoring is needed to safeguard against any possible irregularities, given the country's history of corruption and lack of transparency, and the import of the decision. ChevronTexaco will have members of their legal team present in the courthouse every day until the judgment.

The Lago Agrio trial has unmasked a vast crime and its perpetrators. The truth about indigenous and local peoples' sickness and death, and images of their suffering, repeatedly ran on the nightly news in Ecuador and echoed in press reports around the world. This environmental and human rights calamity has been under everyone's nose, hidden in plain sight. The trial revealed the industry's secret by exposing the human cost of their operations to public view.

In Lago Agrio it was shown that an oil company can no longer assume that its toxic waste pits, rainforest deforestation, and poisoning of communities will remain hidden or be easily forgotten. In an era of globalization driven by corporations and their allies, the trial against ChevronTexaco and the accompanying public campaign offer a chance to begin remaking the rules of international business so that local people and the environment weigh equally in the balance with commerce, and environmental and public health standards in the developing world are raised to the level of those in the industrial world.

 

Kevin Koenig is the Amazon Oil Campaign coordinator for Amazon Watch, a California-based nonprofit working to protect the environment and advance the rights of indigenous peoples in the Amazon basin. Updates on the ChevronTexaco lawsuit are available at www.amazonwatch.org. Photographer Lou Dematteis has covered social, political, and environmental issues around the globe for the past 25 years.

 

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