Chevron faces suit in Ecuador
Alleged environmental damage at issue
By Alan Zibel, BUSINESS WRITER

Lawyers for indigenous Ecuadoreans plan to file a lawsuit against San Ramon-based oil giant ChevronTexaco in a remote town of Ecuador today, saying the company should be forced to clean up environmental damage.

The suit, to be filed in the remote town of Lago Agrio, 115 miles northeast of the capital city of Quito, is the latest development in a nearly 10-year legal battle over Texaco's oil drilling in the Oriente region of the Amazon.

Allied with American activists and lawyers, tribal leaders from Ecuador allege that Texaco dumped "massive" amounts of toxic wastewater and crude oil into open pits and rivers,causing high cancer rates.

Texaco operated in Ecuador from 1964 to 1992 in a minority partnership with Ecuador's state oil company. ChevronTexaco, which inherited Texaco's potential liabilities, was formed from the 2001 merger between Chevron and Texaco.

Lawyers for the indigenous groups say Texaco was the driving force behind oil drilling in Ecuador.

"This case involved the engineering design and the decisions that were made from the top," said Joseph Kohn, a Philadelphia-based class action lawyer for the plaintiffs.
ChevronTexaco says that it helped pay for a cleanup and that two consulting firms performed environmental audits in the region and concluded that there was no long-term environmental impact from the operations in Ecuador.

"There is no credible substantiated scientific evidence to support the plaintiffs allegations," said company spokesman Chris Gidez.
At a press conference in Quito on Tuesday, Massachusetts-based attorney Cristobal Bonifaz, who was born in Ecuador, said cleanup and medical monitoring costs for the 30,000 Ecuadoreans the lawyers represent could exceed $1 billion.

"We will have for the first time in history a company like ChevronTexaco subjected to the laws of a small community," Bonifaz said.

Lawyers for the plaintiffs say the case represents an important precedent, because it could set a standard for American companies operating in foreign countries, with an American court enforcing any possible judgment against ChevronTexaco.

Still, Stanford University law professor Thomas Heller said the precedent isn't that remarkable.

"It happens all the time that U.S. defendants get sued in foreign courts," Heller said. Unless the verdicts are unreasonable, he said, "the U.S. courts will enforce their judgments."

The lawsuit was originally scheduled to be filed Tuesday, but transportation problems delayed its filing until today, said Andy Morris, a New York-based spokesman for the plaintiffs.

Bonifaz said the oil company left behind some 350 ponds full of water contaminated with oil and cancer-causing chemicals scattered across a 31-mile by 62-mile area.
In response, ChevronTexaco says that the company paid $40 million as part of a 1998 cleanup agreement with the government of Ecuador. The company says that many countries allow the discharge of water produced in the oil drilling process into rivers and streams. In California, water produced through oil drilling is used for irrigation, the company says.

The case was first filed in U.S. courts in 1993. After winding through the court system, the 2nd U.S. Circuit Court of Appeals in New York sided with oil company lawyers, ruling in August that the case should be heard in Ecuador.

The American lawyers originally wanted the case tried in U.S. courts because they said the Ecuadorean government's dependence on oil revenues would make it unlikely for courts to deliver justice. Oil exports account for about 40 percent of Ecuador's revenue.

The plaintiffs' lawyers worked with Ecuadorean legislators to draft a law similar to the U.S. Superfund law, which was enacted in 1980 and requires polluters in the United States to pay for cleanups even if a site was sold or is no longer operating.

Ecuador passed its "Superfund" law in 1999, Bonifaz said. He said he expected a ruling within six to seven months if the Ecuadorean court accepts the case.
The Associated Press contributed to this report.