Human Rights Activist Bianca Jagger Seconds Trillium Asset Managment Shareholder Proposal at ChevronTexaco (A)

SAN FRANCISCO, CA, April 29, 2004. A shareholder proposal filed by Trillium Asset Management addressing the company’s potential legal liabilities in Ecuador drew the support of 9% votes cast yesterday at ChevronTexaco’s (NYSE: CVX) annual meeting in San Ramon. Human rights activist Bianca Jagger spoke in support of the proposal, which called for a report on ‘new initiatives instituted by management to address the specific health and environmental concerns of villagers living near unremediated waste pits and other sources of oil-related contamination in the area where Texaco operated in Ecuador.’ The full text of the proposal is attached.
ChevronTexaco is being sued by a class representing 30,000 indigenous and settlers for polluting thousands of acres of virgin rainforest in the 1970s and 1980s, with devastating ecological and social impacts. During its two decades in the region, ChevronTexaco released 18.5 billion gallons of drilling wastewaters directly into streams, rivers and other waterways, and left hundreds of open, unlined pits filled with oil other drilling waste products.
Preliminary figures released by the company indicated that at least 9% of votes cast (58 million shares) supported the proposal, three times the threshold level required for resubmission in 2005. The New York State Common Retirement Fund voted in favor of the proposal, as did the California Public Employee Retirement System (CALPERS).
CEO David O’Reilly did not respond to shareholders’ questions concerning the company’s failure to disclose this potential liability in its Security and Exchange Commission filings. Regulation S-K Item 303 requires disclosure of material financial issues, including potential monetary sanctions imposed by a governmental authority greater than $100,000.
Introducing the proposal, Trillium Asset Management’s Director of Social Research & Advocacy Shelley Alpern stated: “This issue is fast becoming ChevronTexaco’s Exxon Valdez. Shareholders cannot afford that as the competition to develop scarce oil and gas reserves becomes even fiercer in the coming years.” Earlier in the month, Alpern visited a number of sites in the region allegedy contaminated by Texaco.
“The damage was evident to the naked eye,” she told meeting attendees
Ms. Jagger said: “None of my past experiences as a human rights advocate prepared me for the suffering I witnessed in the provinces of Orellana and Sucumbios. I met many residents afflicted with cancer, including leukemia, women experience unusual spontaneous abortions, and children suffering from skin diseases as a consequence of direct exposure from bathing in toxic waters.
“What Texaco did in Ecuador is not just an environmental catastrophe and a human tragedy, but also a major potential corporate governance issue for the company. Has ChevronTexaco’s management adequately disclosed to shareholders the potential for a six billion dollar legal liability?” Ms. Jagger added, referring to a cleanup estimate made by one environmental consulting firm.
Thirty-five minutes of the two and a half hour meeting were dominated by shareholder concerns about Ecuador. Amazonian indigenous leader Toribio Aguinda and Rosa Morena, a licensed nurse from an oil drilling town, made the two day journey from the Oriente region to appeal to CEO David O’Reilly directly. Mr. Aguinda described how his people, the Cofan, “are on the brink of extinction. I fear we many not be here in another five years.” The Cofan people number only 800, down from 15,000 when Texaco began oil operation on their territory in the 1970s. Ms. Moreno, who has lost three family members to cancer, spoke of the high number of rare cancers, infections and other disorders she sees regularly at her clinic in San Carlos.
In response to the criticism, Mr. O’Reilly on several occasions told meeting attendees that the Ecuadorian government was solely responsible for the Amazon region’s ills, saying the oil pollution that has contaminated the region is a result of subsequent oil operations by Ecuadorian state oil company Petroecuador.
Ms. Alpern’s visit to Ecuador was organized by Amazon Watch, a U.S. nonprofit which works with indigenous and environmental organizations to defend the environment and advance their rights in the face of large-scale industrial development-oil and gas pipelines, power lines, roads, and other mega-projects.
CHEVRON TEXACO SHAREHOLDER PROPOSALWHEREAS:
Through its TexPet subsidiary, Texaco extracted over 1.5 billion barrels of oil from the Ecuadorian Amazon between 1971 and 1992. Texaco was acquired by ChevronTexaco in 2001.
An estimated 16.8 million barrels of oil were spilled from the pipeline during this time, contaminating land and water. None of the hundreds of oil spills from Texaco operations were adequately remediated.
It is estimated that over 20 years of operations in Ecuador, Texaco systematically dumped 18.5 billion gallons of toxic waste waters into open unlined pits (New York Times, 10/24/03), or directly into streams, rivers, or swamps although it was standard practice at the time in the U.S. to re-inject formation waters into the ground in the oil production process.
Texaco completed a limited cleanup of 207 of the 627 unlined toxic waste pits through an agreement with the Ecuadorian government in 1998. The baseline of this cleanup was set by an environmental audit conducted by a consultancy overseen by Texaco and Petroecuador, Ecuador’s state oil company. Texaco did not address groundwater contamination in its remediation activities.
Evidence has emerged that challenges the adequacy of Texaco’s environmental cleanup:
Waste pits approved as “clean” contained hydrocarbon levels 50-500 times that permitted in the U.S. A 10/03 study by Petroecuador and Frente de Defensa de la Amazonia tested soil and water samples from 323 wells and 627 waste pools left over in camps operated by Texaco. It found hydrocarbon contamination exceeding levels set by Ecuadorian environmental law. The Petroecuador study also revealed the severe hydrocarbon contamination of five large wetland areas next to Texaco facilities.Studies have linked Texaco’s soil and water contamination to devastating health impacts on neighboring communities:
A 1994 study conducted by the Center for Economic and Social Rights found that water samples from drinking, bathing and fishing sources used by communities living near the contamination sites contained levels of PAHs up to 1,000 times greater than the U.S. Environmental Protection Agency’s safety guidelines. A 2000 study by the London School of Hygiene and Tropical Medicine and Ecuadorian health authorities found eight types of cancer in San Carlos, a community near former Texaco wells, and that the incidences of these cancers are far exceed historical norms. According to the Petroecuador study, exposure to and consumption of the contaminated waters has led to numerous types of infections and cancers.RESOLVED:
The shareholders request that ChevronTexaco’s Board prepare a report on new initiatives instituted by management to address the specific health and environmental concerns of villagers living near unremediated waste pits and other sources of oil-related contamination in the area where Texaco operated in Ecuador.
SUPPORTING STATEMENT
In our view, Texaco’s cleanup efforts were inadequate and our company has a continuing ethical obligation to redress the outstanding environment and health consequences of its activities in Ecuador. Negative publicity generated by this situation damages our credibility as an environmentally responsible corporate citizen and jeopardizes our ability to compete in the global marketplace.