Court Appointed Expert Says Chevron Should Pay Up to $16 Billion for Polluting Indigenous Lands in Ecuador

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Independent analysis validates most claims of plaintiffs in long Ecuador legal battle

In a long-awaited court report submitted as part of the final phase of a trial, an independent expert has proposed that Chevron pay a minimum of $7 billion and up to $16 billion to compensate for environmental contamination caused to Ecuador’s Amazon rainforest during a 26-year period when the oil giant operated a large concession in the country.

If the assessment is accepted by the court, the subsequent judgment likely would be the largest civil damages awards in an environmental case. The higher $16 billion figure could result if the court accepts an “unjust enrichment” penalty tied to Chevron’s actual cost savings over several decades for failing to use appropriate operational practices.

The lower figure represents actual costs to remediate soils around all 378 of Chevron’s former Ecuador production facilities, plus compensation for health care costs, a water system, loss of indigenous land, ecosystem impacts, infrastructure improvements, and other categories of damages.

The long-anticipated report – one of the last steps in the marathon class action trial that began in New York in 1993 – helps answer one of the most hotly disputed questions in the case. For years, plaintiffs have estimated environmental damages to be roughly $6 billion (later adjusted to $10 billion) while Chevron claimed they were negligible.

The Ecuador trial court has the final say over the size of the damages once it issues a finding on liability, which it has yet to do. But Ecuadorian courts generally give wide deference to the findings of court-appointed experts, who are akin to special masters in the United States. In this case, the special master was asked to assess both liability and damages.

“This report is a extremely significant because it is a direct rebuke to Chevron’s credibility and it validates the damages claims in the lawsuit,” said Pablo Fajardo, the lead lawyer for the plaintiffs.

A final judicial decision is expected after the parties respond to the expert report, which was submitted under armed guard by Richard Cabrera Tuesday morning in the Amazon town of Lago Agrio. Cabrera, the court appointee who is a respected geologist and environmental consultant, was assisted by a team of technical specialists. He also turned over what appeared to be several boxes of supporting documents that included more than 5,000 pages of annexes.

The report found that Chevron’s operations were the “main cause” of the extensive contamination when it was the exclusive operator of the concession, about 1,500 square miles in size, and concluded based on thousands of soil and water samples that all of 94 Chevron production sites examined in the trial had illegal levels of toxins in the soil and water. “[Chevron] operated … with few or no environmental controls and caused much of the contamination in the area,” the 60-page report says in its summary of findings.

The summary said Chevron “incorrectly managed the wastes from oil wells, dumped 100 percent of water of production into streams and rivers, and burned gases into the atmosphere.” It also found that the “pollution is well documented… and widely corroborated by historical sampling that place in years prior to the lawsuit.”

The report found that the concession area is contaminated with hydrocarbons in concentrations “many times higher than environmental clean-up standards in Ecuador and in other countries of the world.” It also said Chevron’s practices had caused “damage to the human population” including adverse health effects such as “cancer, death from cancer, [and] spontaneous abortions.”

It also concluded the area suffered at least 428 excess deaths from cancer as a likely result of Chevron’s practices, for which it proposed $2.9 billion in compensation.

Although significant by historical standards, the size of the proposed damages claim appears to be a compromise. It excludes damages for groundwater contamination (which the plaintiffs assert is extensive) and uses a soil clean-up standard significantly less strict than what the plaintiffs had sought. The plaintiffs will continue to press the court to order additional compensation for groundwater contamination, said Fajardo.

The lawsuit accuses Chevron of engaging in a host of negligent practices from 1964 to 1990, when it as the operator of the concession. These include the dumping of 18 billion gallons of toxic waste water into Amazon waterways, the construction of roughly 1,000 open-air and unlined toxic waste pits, and the uncontrolled burning of natural gas. Four indigenous groups claim they are fighting for survival as a result of the contaminants.

The content of the report, which is available for public viewing in the courthouse, was greeted with cautious optimism.

“The size of the damages claim is not surprising for those of us who have asserted for decades that Chevron used horrific operational practices in Ecuador’s Amazon,” said Luis Yanza, the coordinator of the lawsuit for the indigenous groups and a resident of the region.

“We must remember that no amount of money will restore the rich indigenous culture that has been lost as a result of Chevron’s greed,” added Yanza.

The overall damages claim has several components:

  • $3.4 billion was proposed for soil clean-up around hundreds of wells and waste pits, improvements in infrastructure, health care costs, a water delivery system, and recovery of indigenous land.
  • Between $3.7 and $4.6 billion was allotted to compensate families for the excess cancer deaths, as well as for damages relating to deforestation and ecosystem impacts.
  • $8.3 billion was determined to be the amount that Chevron benefited in “unjust enrichment” by failing to adhere to proper standards when it operated the Ecuador Concession. The expert left it to the court’s discretion to use all or part of this amount to compensate for losses stemming from the inability of clean-up technology to fully restore the area.

The total amount of damages using the highest numbers proposed is $16.3 billion.

By contrast, the total damages Exxon has paid in the Valdez disaster, the largest oil spill in U.S. history, is roughly $3 billion (an additional $2.5 billion is still under litigation). The plaintiffs in Ecuador have long asserted that the Chevron-created disaster in Ecuador, in terms of the amount of crude dumped, is 30 times larger than the Valdez spill.

For more information on this case see ChevronToxico, the international campaign to hold ChevronTexaco responsible for its toxic contamination of the Ecuadorian Amazon