Chevron May Yet Have to Pay Billions for Its Ecuadorian Catastrophe

A hand covered in crude from one of the hundreds of open toxic pits Chevron (formerly Texaco) abandoned in the Ecuadorean Amazon rainforest near Lago Agrio.A hand covered in crude from one of the hundreds of open toxic pits Chevron (formerly Texaco) abandoned in the Ecuadorean Amazon rainforest near Lago Agrio. (Photo: Caroline Bennett / Rainforest Action Network)

After a biased New York judge blocked a ruling by an Ecuadorian court that Chevron must pay a $15 billion fine for, among other things, dumping 18 billion gallons of toxic waste into the Amazon’s waterways, the Ecuadorians appealed to Canada’s Supreme Court. On September 4, this court rejected Chevron’s attempt to get the fine blocked there, too. The decision means that the lawsuit may proceed.

Like ExxonMobil, Chevron has a very long history of bad behavior. “Like the other oil giants,” environmentalist Bill McKibben wrote, “Chevron shows the same casual disregard for people around the world.” Here are three examples:

The Richmond Explosion

In August 2012, there was an explosion at Chevron’s refinery in Richmond, California, resulting in a big fire and toxic release, which sent 15,000 people to the hospital. Failing to get adequate compensation from Chevron, Richmond filed a lawsuit in 2013, charging it with “disregard of public safety,” reflecting “years of neglect, lax oversight and corporate indifference to necessary safety inspection and repairs.”

According to Reuters, the US Chemical Safety Board said:

Chevron did not act upon six recommendations over 10 years to increase inspection and replace the line…. During the 10 years before the August 6 blast, refinery officials saw signs the pipeline’s walls were thinning due to corrosion.

California Carbon Emissions

Although Chevron has from the beginning been aware of California’s 2007 order to develop a cellulosic biofuel replacement for gasoline, in 2013, it declared that it has “not come up with a solution to be able to comply,” because the task is “not achievable.” Chevron’s assessment, however, is likely due to the fact that it “quietly shelved most of its biofuels work in 2010.” As we have seen, the effort to create cellulosic biofuel for vehicles has made tremendous progress in the past few years. But far from continuing to test the breakthroughs, “Chevron is leading a lobbying and public relations campaign to undercut the California mandate.” As for Chevron’s real reason for declaring the mandate unachievable, a man who left Chevron in 2010 said: “You can make money today making advanced biofuels, you just won’t make as much money as the oil companies would like.”

Pollution of the Amazon

Another example of Chevron’s bad citizenship has been its refusal to pay for “the worst oil-related environmental disaster on the planet.” Although much of the pollution was actually caused by Texaco, which operated oil fields in Ecuador from 1964 to 1990, Chevron absorbed Texaco in 2001, thereby assuming all of its liabilities as well as its assets.

An Amazonian website says: “Texaco’s operations were systematically drilling and dumping 24/7 for almost three decades.” Because of its destruction of the habitat of Ecuadorian Indigenous tribes who lived near the wells, members of the tribes sued Texaco in a New York court in 1993 with the guidance of attorney Steven Donziger, who has given much of his life to defending Ecuadorians. According to the suit:

Texaco dumped more than 18 billion gallons of toxic waste into Amazon waterways, abandoned more than 900 waste pits, burned millions of cubic meters of gases with no controls and spilled more than 17 million gallons of oil due to pipeline ruptures.

After absorbing Texaco and hence its liabilities, Chevron asked a New York appeals court to transfer the case to Ecuador. The court agreed, with the stipulation that Chevron would need to abide by the Ecuadorian court’s decision. In 2011, the Ecuadorian court found Chevron guilty and ordered it to pay damages of $8.6 billion, but after Chevron failed to make the public apology ordered by the court, the fine was raised to $19 billion. A month later, this Ecuadorian court order was blocked by a federal judge, Lewis A. Kaplan, in Manhattan. However, an appeals court reversed Kaplan’s order, telling him that he had no authority “to dictate to the entire world which judgments are entitled to respect and which countries’ courts are to be treated as international pariahs.” Chevron then appealed to the US Supreme Court, asking it to override this decision, but the court refused.

Still not willing to pay the fine, Chevron decided on a threefold plan: (1) To arrange a retaliatory trial, arguing that Ecuador’s victory over Chevron had been based on a fraudulent conspiracy. (2) To rely on Judge Kaplan to support Chevron. (3) To carry out, in the words of a Chevron press operative, an “L-T [long-term] strategy … to demonize Donziger.”

In the retaliatory trial, Chevron attacked Donziger under the RICO statute (Racketeer Influenced and Corrupt Organizations Act), which is generally used to prosecute big crime bosses. Although Chevron’s countersuit began as a jury trial with the goal of winning $60 billion in damages, Chevron dropped the claim for damages, which meant that no jury was necessary, so that the verdict could be reached by Kaplan alone. Chevron then asked Kaplan to bar scientific evidence about damage to the environment and human health – which were the bases on which the Ecuadorian court had convicted Chevron. Chevron also asked for many kinds of evidence to be barred, including:

  • Contacts with high-level government officials in Ecuador to try to illegally quash the case;
  • Videos showing company technical experts in Ecuador laughing at the pollution while discussing ways to hide it from the court;
  • The attempt to orchestrate a fake bribery scandal to derail the trial;
  • The existence of dummy companies to hide Chevron’s control of a supposedly independent laboratory.

Kaplan acceded, and with all of this evidence hidden, Chevron’s lawyer was able to charge that Donziger “‘masterminded and orchestrated’ a scheme that involved multiple acts of wire and mail fraud, extortion, bribery, witness tampering and money laundering.”

However, reported Rolling Stone, “The oil company’s sole witness to its central charge of bribery was a corrupt Ecuadorian ex-judge named Alberto Guerra, whose entire family has been naturalized and relocated on Chevron’s dime.” Not surprisingly, Kaplan accepted Chevron’s three-point argument and the truthfulness of this corrupt judge, charging Donziger with fraud, witness tampering and bribery, and on this basis blocked the ruling from being enforced in the United States. Donziger, saying that he had made mistakes but engaged in no fraud, witness tampering or bribery, planned to appeal.

Since absorbing Texaco, Chevron has become the second-largest and most profitable oil company in the United States. But Chevron has refused to pay the fines for Texaco’s crimes, although Chevron had accepted Texaco’s liabilities and also agreed to abide by the Ecuadorian court’s verdict. As one commentator said, if Chevron would pay the fine, “the money would fund a cleanup of the contamination and provide clean drinking water and health-care services for people living in Chevron’s former concession area.” Chevron is indeed a bad US and global citizen.

Note: This article is an adaptation of an excerpt from “The Abolition of Dirty Energy,” chapter 18 of David Ray Griffin’s book Unprecedented: Can Civilization Survive the C02 Crisis? (Clarity Press, 2015). Full endnotes are available in the book.