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$16 billion environmental lawsuit tests Chevron

The case filed by Ecuadorean indigenous groups is one of the largest environmental suits against an oil firm and could set a precedent. Chevron dismisses it as a 'charade.'

By Kelly HearnCorrespondent of The Christian Science Monitor / April 9, 2008

Environmental damage: Indigenous women stood near an oil pit in Ecuador's Sucumbios Province in this 2005 photo.

Dolores Ochoa/AP

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Lago Agrio, Ecuador

On a chaotic street in this sweltering jungle town, Emergildo Criollo spent several days near the entrance to a courthouse that looks more like a run-down mall.

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He was, he says, "vigilando" – watching.

"We waited to know the moment he arrived," says the middle-aged indigenous man who was raised in this oil-rich Amazonian rain forest near Ecuador's northern border with Colombia.

The man Mr. Criollo and his friends were waiting for is Richard Cabrera, a court-appointed expert who last week poured fuel on an epic environmental lawsuit filed by Ecuadorean indigenous groups against US-based Chevron-Texaco.

Mr. Cabrera, an Ecuadorean geological engineer, recommended to an Ecuadorean judge last Tuesday that Chevron pay $8 billion to $16 billion for environmental damages if the company loses a bitterly contested case that started in 1993 with a lawsuit in New York courts, which ruled that the case should be tried in Ecuador.

The Ecuadorean case, which Chevron has repeatedly rejected as flawed, is one of the largest environmental suits against an oil company and could raise the political risks for multinationals extracting resources from similar remote and pristine regions.

"The litigation is terribly important," says Professor Robert Benson, law professor emeritus at Loyola Law School in Los Angeles. "If Chevron loses the case there, certainly a historic precedent will be set putting oil companies on notice."

Plaintiffs call report a milestone

Texaco, bought by Chevron in 2001, operated as a minority partner in an oil venture with Ecuador's state-owned oil company, Petroecuador, from the 1970s to 1992, when Petroecuador took full control of operations. Chevron has long claimed that Petroecuador is responsible for the environmental damages.

Still, lawyers for the plaintiffs – who say Texaco dumped 18 billion gallons of toxic waste into unlined pits, rivers, and streams here – hailed Cabrera's report as a milestone.

"We consider the report to be very positive," says Pablo Fajardo, the plaintiff's lead attorney.

"After three years of hugely expensive 'he said, she said' environmental reports, this is a huge validation of the scope of contamination presented by the plaintiffs," said Aaron Marr Page, a lawyer who has worked with the plaintiffs.

But Chevron, which has long maintained that the lawsuit lacks credible scientific evidence and that Texaco was released from liability by Ecuador's government years ago after a $40 million remediation campaign, attacked the report and its author.

"We consider the report null and void because it is the result of irregular processes that do not conform with court orders," Ricardo Reis Veiga, managing counsel for Chevron Latin America, said in a telephone interview.

Mr. Veiga said Chevron attorneys had been denied the chance to inspect the qualifications of the technical experts who helped Cabrera write the report. He also said Cabrera overstepped his judicial mandate to simply confirm any petroleum-related environmental damage by assessing culpability and assigning monetary values – a job Chevron says rests with the judge.

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