Amazon pollution case could cost Chevron

updated 8:17 a.m. ET Dec. 26, 2008

LAGO AGRIO, Ecuador - When the sun beats particularly hot on this land in the middle of the jungle, the roads sweat petroleum.

An expanse of what was once pristine Amazon rainforest is crisscrossed with oil wells and pipeline grids built by Texaco Inc. a generation ago. And for the past 15 years, a class-action lawsuit has been winding its way through the courts on behalf of the more than 125,000 people who drink, bathe, fish and wash their clothes in tainted headwaters of the Amazon River.

Now a single judge is expected to rule in the case in 2009 from a ramshackle courtroom in this northern frontier town. Statements from a court-appointed expert suggest Chevron Corp. — which bought Texaco in 2001 — will be held responsible for the many oil spills and dumping of toxic wastewater. If Chevron loses, it could be ordered to pay up to $27.3 billion in damages, though an appeal would be likely.

The expert, geological engineer Richard Cabrera, largely accepts plaintiffs' claims that Texaco left a mess when it left in the early 1990s. He is recommending damages based partly on his calculation of 1,401 pollution-caused cancer deaths.

Chevron does not deny "the presence of pollution and we don't deny that there were impacts," says spokesman Kent Robertson. But Chevron contends a 1998 agreement that Texaco signed with Ecuador, after spending $40 million on remediation, absolves it of any legal responsibility. It says, and few dispute, that its former partner, state oil company Petroecuador, kept polluting after Texaco departed.

But two wrongs don't make a right, argues law professor Judith Kimerling, a former New York state prosecutor whose 1991 book "Amazon Crude" first publicized what some environmentalists have called a rainforest Chernobyl.

"I really think the remediation they did was a sham," she says.

Oil used to keep dust down
When Donald Moncayo was a kid, he remembers, Texaco soaked the dirt thoroughfares it cut through the jungle with crude to keep dust down.

"We would run on roads they coated with oil," he says. "We went to sleep with our feet black. You could only remove it with gasoline."

Pipelines across the area connected the wells to the 313-mile Trans-Ecuadorean Pipeline built by Texaco to carry crude to the Pacific. Moncayo, 35, can't remember when the pipelines weren't springing leaks.

His mother died in 1987 from an internal infection he blames on oil contamination. Now he works for the plaintiffs, taking visitors on "toxic tours."

One of the first stops is a fresh spill. It's little more than 50 gallons, dark and gooey. Bigger spills have smothered crops, choked birds, killed cattle.

In the early days of the oil bonanza, Ecuador's government encouraged people to settle in the oil patch by offering free homesteads. But it provided almost no services — hardly any of the area's drinking water is treated.

Dolores Ochoa / AP Donald Moncayo, left, and Pablo Fajardo extract mud that contains oil from a yard in Lago Agrio, Ecuador.

Ecuadorean governments reaped the wealth of Texaco's jungle project, with gross domestic product more than tripling from 1972 to 1977. By the time Texaco departed, the consortium it headed had extracted nearly 1.5 billion barrels of oil from more than 350 wells.

In the meantime, Ecuadorean oilfield workers slathered the crude on their legs, believing it cured rheumatism. Some coated their scalps because American supervisors told them the crude warded off baldness, they said.

"They were pulling our legs," recalls Margarita Yepez, a former Texaco social worker who believes such careless exposure to crude killed some of her colleagues. "What did we know? They were the experts."

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