ChevronTexaco Faces Toxic Legacy in Ecuador(A)

It is difficult to describe the degree of degradation of this once pristine environment. The rainforest of the region is completely degraded by open tar pits with runoffs entering the watershed of the region. The tar and oil in the pits appear to be of such viscosity and consistency that it clings to people’s hands and feet. The pungent acrid smell is pervasive, particularly in the vicinity of the oil ponds. The continuous run-off from the oil ponds and lagoons contaminate the wetlands and the rivers…The people of the Oriente, their pets and livestock, have no option but to live amidst this despoiled area.”
— Affidavit of Dr. Aaron D. Bannett describing his visit to the Oriente region of Ecuador in 1995.
In October, a trial judge in Ecuador finished hearing testimony from Aguinda v. Texaco. Lawyers for the plaintiffs argued that between 1971 and 1992, Texaco Petroleum extensively polluted forest and wetlands in the Ecuadoran Oriente region and failed to adequately clean up the mess, causing harm to the health of the region’s inhabitants. Lawyers for the plaintiffs believe that this is the first time that a U.S. multinational oil company will have to submit to the jurisdiction of a foreign court, with the judgment being enforceable in the U.S. The plaintiffs, 76 individuals representing a class of 30,000 indigenous Ecuadorians and subsistence farmers, are seeking to have ChevronTexaco clean up 600 toxic unlined waste-filled pits that dot the 2,000 square-mile area. Cleanup estimates range up to $5 billion over ten years.
A Toxic Legacy
Over a twenty-year period, Texaco Petroleum Co. (or “TexPet,” a subsidiary of Texaco, which was acquired by Chevron in 2001) extracted1.5 billion barrels of oil from the Oriente region of Ecuador in a joint venture with the Ecuadorian government. According to the plaintiffs’ lawyers, Texaco earned an estimated $25-30 billion in profits from its 37.5% stake. Most of the product was shipped to markets in California.
Along the way, 16.8 million gallons of crude oil were spilled (1.5 times that of the ExxonValdez spill), 236 billion cubic feet of natural gas waste was burned, and 19 billion gallons of untreated toxic waste were dumped directly into the environment.
The result was the creation of a toxic soup for the communities who relied on rivers, streams and lakes for drinking water, fishing and other needs. In a study of one community near the pumping station known as Sacha Sur, fishing water samples were found to contain carcinogenic compounds known as PAHs that exceeded the Environmental Protection Agency’s safety guidelines by 10 – 1,000 times. River water was found with up to 288 times the amount of hydrocarbons considered acceptable for drinking water by the European Community. In this area and others, rates of cancer, respiratory infections, dermatitis and miscarriages skyrocketed.
The impact of the 312-mile pipeline on indigenous peoples was devastating. Roads followed the pipeline, bringing settlers who deforested 2.4 million acres of jungle. The Tetetes vanished, the Huaorani fled into the jungle, and the Cofan’s lands were overrun by roads and wells, making game harder to find and introducing new diseases.
CVX has made several arguments in its defense. The company downplays its role in the consortium by pointing out that Ecuador’s state-owned oil company, PetroEcuador, was the majority partner and received 95% of the total earnings generated. It points to two independent audits that were conducted before it exited the country, both of which agreed that the consortium’s operations had had “minimum general impact on the environment in the concession area.” Problems found in the audit led to a $40 million remediation program that cleaned up 250 pits. It was completed in 1998 with the Ecuadorian government’s seal of approval and a release from further obligations. Hence, the company argues, any claims should be made against the government. Furthermore, company spokespersons have told reporters that the medical claims are “wild and unsubstantiated” and based on “pseudoscience.”
The plaintiffs dispute the contention that ChevronTexaco was a passive partner in the consortium. General Rene Vargas Pazzos, the former general manager of PetroEcuador who dealt with Texaco Petroleum in the mid-1970s, told the court that when it came to technical matters, TexPet was in the driver’s seat, with the Ecuadorian government presiding only over sales and production rate decisions. “All of the technical decisions [that] were made for the development of the petroleum operations in Ecuador were made from the U.S….All of the [Ecuadorian] executives…assumed that the technology employed by Texaco for the exploration and extraction…was first rate technology; that Texaco and other large petroleum companies of the world utilized in the U.S. and in other countries of the world…..Texaco and its subsidiaries had complete autonomy to carry out exploration and extraction of petroleum in Ecuador.” Texaco’s accusers have also presented for evidence a letter indicating that the subsidiary decided not to line the pits because it was too expensive.
A key factor in the outcome of the case is how the judge will respond to ChevronTexaco’s contention that it has no obligations to the plaintiffs because the way it conducted its operations was completely legal in Ecuador at that time. According to the plaintiffs’ lawyers, this is one of the first cases to advance the theory that a right to a healthy environment is part of customary international law. The judge’s decision will be closely studied by other multinationals that fail to go beyond legal compliance in companies with lax standards.
Cross-Border Environmental Practices
CVX may be technically correct that its actions were not illegal in Ecuador in the 1970s and ‘80s, but the question of its ethical obligations transcends the legal issue. By the mid-1980s, it was recognized as no longer “best practice” to dispose of waste in unlined pits or to dump wastewater into streams. The latter practice was outlawed in most U.S. states as early as the 1940s, and banned by the federal government in 1979. CVX is not the only company to apply different standards across borders. Dow Chemical, for example, continues to sell the insecticide Dursban in India and other countries, despite its ban in the U.S.
In 2003, Trillium Asset Management partnered with Amnesty International to introduce a shareholder proposal at ChevronTexaco calling on the company to adopt a comprehensive human rights policy explicitly based on the Universal Declaration of Human Rights. We withdrew the proposal when CVX committed to developing a corporate-wide policy, and to date have been impressed with the serious attention the company has devoted to this task.
No doubt the adoption of such a policy will help prevent future Ecuadors for ChevronTexaco. However, Trillium Asset Management believes that CVX must deal proactively with its past as well. We have therefore partnered with the group Amazon Watch to file a resolution calling on CVX to report to shareholders on any new initiatives to address the environmental and health impacts of its legacy in Ecuador.
Sources for this article include AmazonWatch.org, TexacoRainforest.com, ChevronTexaco.com, The Los Angeles Times (“The Hunt for Black Gold Leaves a Stain in Ecuador,” by T. Christian Miller, November 30, 2003), The Sacramento Bee (“Testimony Ends in Oil Giant’s Ecuador Trial,” by Tom Knudson, October 31, 2003).
For more information
Amazon Watch
Aguinda V. Texaco web site — www.texacorainforest.org
ChevronTexaco 2002 Corporate Responsibility Report
2004 ChevronTexaco shareholder proposal filed by Trillium Asset Management