An Oily Case: Chevron’s Never-Ending, Record-Breaking Lawsuit in Ecuador

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Protesters hold signs at a demonstration outside Chevron headquarters last February. The company is embroiled in a long-running lawsuit over oil pollution in Ecuador.

How long has the legal battle between indigenous groups in the Ecuadorean Amazon and the oil giant Chevron been going on? So long that Texaco—the company originally accused of dumping 18 billion gallons of toxic sludge in and around the Ecuadorean town of Lago Agrio—no longer exists, having been acquired by Chevron in 2001. So long that six separate Ecuadorean judges have been involved in the case, and one federal judge in New York died before he could make a ruling. So long that former President Bill Clinton had just moved into the White House when the lawsuit was first filed in 1993. And until recently, it looked like it could easily go on for another 18 years—as a Chevron spokesperson once said: “We’re going to fight this until Hell freezes over—an then we’ll fight it out on the ice.”

But the multi-billion dollar case—potentially the biggest environmental lawsuit in history, aside from the BP Deepwater Horizon spill—may be inching towards a conclusion. Last week an Ecuadorean judge upheld an earlier ruling that would award $18 billion in damages against Chevron. That doesn’t mean the case is over—Chevron has vowed to keep fighting the case (see above quote)—but even analysts who assume the case had no merit are beginning to suspect that the oil company may be forced to settle, as Fadel Gheit of Oppenheimer told the Financial Times:

“At the very beginning, it didn’t look as though the case was going anywhere. Oil companies get sued every day by everyone, everywhere, and most of the cases we never hear about.”

Now he expects Chevron to agree to pay $2bn-$3bn to bring the dispute to an end.

How did we get here—and could this case really be in its endgame?

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As Patrick Radden Keefe writes in the New Yorker this week—in un-paywalled piece that you should really read in full—the case has continued for so long, against such huge odds chiefly because of the efforts of a crusading American lawyer named Steven Donziger, who has worked on the case almost from the beginning. But the pollution that triggered the lawsuit began much earlier. In the 1970s Texaco led the way in producing crude from the Ecuadorean Amazon, essentially building the oil business in the South American country. But oil exports—which helped double Ecuador’s per-capita GDP in a decade, and which still provide the bulk of public revenue—came with a price. Rather that safely storing the toxic produced water that comes as a byproduct from drilling oil wells, Texaco simply dumped the fluid into vast pits. The company allegedly left hundreds of pools of toxic sludge behind, resulting in what the plaintiffs of the lawsuit called a “rainforest Chernobyl.”

Chevron—which took over the lawsuit after it bought Texaco—denies all of the charges, and says that Texaco’s operations were in line with the law. It also says there have been no proven health effects from the pollution—the plaintiffs tie birth defects and high rates of cancer to the waste—and they’ve blamed the trial lawyers, particularly Donziger, for pushing the suit out of personal profit, not justice. The company has even sued Donziger for extortion and fraud, claiming that he was manipulating the evidence for his own ends. (His supporters believe that Chevron chiefly filed its own suit to intimidate Donziger and the Ecuadorean plaintiffs.)

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All of the endless legal back-and-forth and billable hours can obscure the very real environmental damage at the heart of the lawsuit. Keefe describes the “toxic tour” of the former oil field of Lago Agrio, first led by Ecuadoreans:

During the plaintiffs’ portion of the tour, a local man named Donald Moncayo showed me around. Wearing white surgical gloves, he dug up a fistful of black mud and held it so that the sunlight caught the telltale blue-orange tint of petroleum. At one fetid pit in a jungle glade, he stepped gingerly onto the surface of the pool, where the solid matter in the produced water had congealed into a tarlike crust that was sturdy enough to support him. Smiling a little, Moncayo shifted his weight from one foot to the other, until the whole surface began to undulate beneath him. He looked like a kid on a waterbed. According to the plaintiffs, there are nearly a thousand of these pits in the Oriente, scattered across an area the size of Rhode Island.

Watching Moncayo, I had a sense of déjà vu. He is the regular master of ceremonies on the toxic tour; I had read accounts of his routine, and had seen it enacted, in nearly identical fashion, in “Crude,” the Berlinger documentary. But, if Moncayo’s cadences were rote, there was nothing feigned about his indignation. He led me down a steep ravine to a creek. In the gauzy light filtering through the canopy, the water, which was only a foot deep, looked crystalline. Moncayo drove a stick into the creek bed and churned the mud until the water grew clouded by sediment. At his encouragement, I skimmed my hand across the surface of the creek. My palm was coated in an acrid film.

And then he visits with Chevron:

Jim Craig, a Chevron spokesman, took me around Lago Agrio. He told me that the company has taken its own water samples in the Oriente, and has never identified a positive reading for hydrocarbon contamination. He speculated that, in some cases, the plaintiffs may have “spiked” local water sources after Chevron did its tests.

Craig told me that the skin infections and gastrointestinal problems attributed by the plaintiffs to oil pollution were more likely caused by sewer lines that run into local streams and rivers. “You can imagine all kinds of stomach problems arising from the ingestion of that crap,” he said.

A few miles outside Lago Agrio, we stood on the lip of a waste pit, and Craig told me that the vile-looking residue on its surface was only a few inches thick. To illustrate this point, he picked up a rock and lobbed it into the pit. It landed, with a sickly thud, on the surface. “If we had a bigger rock . . .” he said, and threw a much larger one. It, too, failed to sink.

Ultimately, though, the lawsuit isn’t really about the environmental damage that did or did not occur in Lago Agrio, so much it is about Texaco’s (and now Chevron’s) responsibility under the law. And that’s why the suit has ramifications that go well beyond the lives of the indigenous tribes of Ecuador. Major oil companies operate around the world, under wildly varying legal structures—and more than a few times, they’ve been accessed of doing things in poor developing nations that they would never do in richer countries. (See Delta, Niger.) If a group of poor Ecuadoreans—admittedly with the help of some deep-pocketed firms in the U.S.—can make a major oil company pay for its alleged environmental crimes, it would mark, as Donziger has said, “the first time that a small developing country has had power over a multinational American company.”

But if Chevron wins decisively, it would be that much harder for an indigenous community to take on a major oil company in court again, especially after the personal and professional abuse Donziger has endured from Chevron’s own well-paid lawyers. There’s one thing we can be sure of, however—this case isn’t close to being done.

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