Fifth Circuit Court of Appeals hears oral arguments in international dispute worth $27 billion

NEW ORLEANS, La.—Chevron Corporation, by way of its Texaco subsidiary, is embroiled in a more than decade’s long legal battle over alleged environmental damage in the Amazon rainforests of Ecuador. On Monday, as an outcome approaches in the Ecuadorian province of Lago Agrio, Chevron’s legal counsel were in New Orleans, arguing for access to evidence held in the United States.

The US District Court of Southern Texas ruled that the desired evidence was pertinent and ought to be available. However, the Ecuadorian plaintiffs are appealing this outcome to the Fifth Circuit Court of Appeals.

The original, alleged crimes – the release of toxic waste into and pollution of Amazon waterways – occurred during the 1972 to 1992 period, when Texaco earned net profits of $490 million from Ecuadorian activities. However, the current case did not begin until 2003, after Chevron had acquired the company and liability.

Now, with an expected judgment early in the New Year and a compensation assessment of $27.3 billion, the company is under immense pressure.

However, Chevron’s representatives defend themselves from two angles. They contend that the issue of environmental damage had already been addressed by the government of Ecuador prior to 2003 – “essentially a settlement agreement” – and that they are the victims of judicial collusion and fraud.

Chevron has a 1998 “Final Compliance Document,” from the then-named Ministry of Energy and Mining. This certified their “environmental remedial work” and released them from “obligations, liabilities, and claims.”

However, the plaintiff’s spokesperson, Karen Hinton, dismisses this agreement as irrelevant.

“The agreement does not release third-party claims, only government claims. It specifically says that only government claims are to be released and that third-party claims, such as ours, are not impacted.”

In 2006 the Ecuadorian State Comptroller General also came to the conclusion that Texaco employees had concealed many of their wells and misrepresented their remedial work.

According to Hinton, “tests conducted by the plaintiffs and by Chevron have found illegal levels of contamination at the so-called ‘cleaned up’ sites in the agreement… The agreement is a fraud.”

Hinton also contends that her case began prior to the compliance document.

There was an earlier case, regarding the same allegations, that continued from 1993 to 2002. However, the presiding New York Federal Court dismissed it, and according to Andrea Neuman, a member of the Chevron defense team, that case was never re-filed.

“They pretend like this case is a continuation of that, but it’s not.”

The issue most at stake now appears to be the credibility of claims regarding environmental damage and the independence of compensation estimates. That has led to the tussle over remaining evidence, which includes out-takes from the documentary film Crude.

Kent Robertson, a Chevron litigation manager, believes that there is growing evidence of intervention between the plaintiffs’ lawyers and the court appointed damage assessor, in violation of the Ecuadorian court’s orders. He also accuses the plaintiffs of deliberately tying up evidence, so as to wind down the clock.

“The plaintiffs are pushing as hard as they can to close down the proceeding in Ecuador to any new evidence – certainly any evidence of their fraud and to force a ruling of the court.”

Hinton counters that Chevron’s “strategy is to divert attention from the real fraud in this lawsuit — the poisoning of the environment and the people in the Ecuadorian rainforest over three decades of oil contamination by Texaco.”

There is time for further arguments, but those involved anticipate a result by the end of the week.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicanpolicy.org, and one can follow him on twitter.