Second Setback in Weeks Over $27 Billion Liability
Amazon Defense Coalition
22 December 2008 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
New York, New York - The U.S. Court of Appeals for the Second Circuit in New York has denied for a second time in a matter of weeks an attempt by Chevron to evade a multi-billion dollar liability in a legal case over environmental contamination in the Amazon rainforest.
In a docket entry, the court announced it had rejected Chevron's petition for a rehearing of a unanimous decision by a three-judge panel in October that the oil giant's claim over the contamination was "without merit". Chevron had sought in the appeal to shift liability in the case, now estimated to be as high as $27 billion, to Ecuador's government by obligating it to enter a binding arbitration over who should pay for the clean up.
Chevron has indicated in its lobbying materials to Congress that it expects a significant "adverse judgment" in the case, where a final ruling is expected in 2009. It also has refused to set aside funds to satisfy any judgment, upsetting some Wall Street analysts, according to reports.
The class action lawsuit, brought by five indigenous groups and thousands of farmers who own land in Ecuador's Amazon, initially was filed against Texaco in U.S. federal court in 1993. The suit charges that Texaco dumped billions of gallons of toxic waste into the Amazon between 1964 and 1990, when it was the operator of a large oil concession.
After years of pre-trial motions, the U.S. court moved the trial to Ecuador in 2002 after Texaco argued it would be a more appropriate forum. Texaco also agreed to jurisdiction in Ecuador.
Chevron, which bought Texaco in 2001, is now defending the lawsuit and will bear any liability.
The decision against Chevron upholds a federal trial court ruling by United States District Court Judge Leonard B. Sand that found no legal basis for the arbitration or for Chevron's claim its operating agreement required Ecuador to indemnify it with respect to any judgment in the civil lawsuit in Ecuador.
In March an independent expert appointed by the Ecuador court found that Chevron was responsible for the dumping of 18 billion gallons of toxic waste into Amazon waterways and the abandonment of more than 900 waste pits. Local residents have complained for years of severe health problems, including cancers and spontaneous miscarriages.
The latest ruling is another blow to Chevron's legal strategy in Ecuador. In the past year, the Ecuador court denied a Chevron motion to dismiss the case, Ecuador's national prosecutor indicted two Chevron lawyers and seven former government officials for fraud relating to a purported clean-up, and the U.S. Congress extended trade benefits to Ecuador despite protests by Chevron.