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Environmental Claims Against Chevron in Ecuador: The Facts

During more than 20 years of litigation, allegations have been made about impacts on people and the environment from the former Ecuadorian oil operations of Texaco Petroleum Company (Texpet). The allegations have been repeated for years by Ecuador’s government and the plaintiffs’ lawyers and their supporters in an effort to justify a fraudulent $9.5 billion Ecuadorian court judgment against Chevron. Extensive research into each of these alleged impacts has proven them to be false.

History of Operations

The first commercial oil discovery in Ecuador’s Amazon was in 1967 when a consortium in which Texpet was a partner drilled its first well. In 1976, a predecessor of Petroecuador, the national oil company, obtained a majority 62.5 percent stake in the consortium. Texpet, with 37.5 percent, operated the oil facilities in the concession area until Petroecuador took over operations in 1990, and in 1992 the state oil company became the sole owner of the oil operations. Since 1990, Petroecuador has more than doubled the number of oil wells in the area and constructed two refineries, a gas plant and 21 production stations. In its quarter-century exclusively operating the former consortium fields, the state oil company has also presided over a dismal environmental record, spilling more than 125,000 barrels of oil and registering nearly 2,000 spills in the Amazon region from 1995 to 2011 alone – roughly 3 spills a week over this 17-year period.

Environmental Audits – 1990

The 1990 agreement between Texpet and Petroecuador that transferred all operations to the state required a joint environmental audit of the oil operations, which was conducted by independent U.S. auditors. Texpet also commissioned a separate audit by another U.S. consulting firm. Both audits concluded that the consortium’s practices were in conformance with typical operational practices and that Texpet’s operations were in compliance with Ecuadorian laws, regulations, and industry practices. Both audits found that some environmental impacts had occurred as part of the oil operations, and estimated remediation costs ranging from about $15 million to about $18 million.

Remediation & Settlement Agreements – 1994 – 1998

Based on the results of the audits, the Ministry of Energy and Mines, Petroecuador, and Texpet signed a Memorandum of Understanding in 1994 that set out the scope of the remediation work. In 1995, Texpet and Petroecuador signed a Scope of Work that required Texpet to remediate a portion of the oil well sites commensurate with its minority ownership interest in the consortium. Based on these agreements, Texpet remediated 67 spill areas and 162 pits. The methods and standards for the remediation were agreed to by the government of Ecuador, and the remediation was overseen and verified by government inspectors. Government inspectors assessed the work done by Texpet at each site, issued work orders where they identified additional work that needed to be done, and issued approvals that certified the work done at each site complete. The total cost for the remediation, infrastructure improvements, and socioeconomic contributions was $40 million. On Sept. 30, 1998, Petroecuador and the government of Ecuador signed a release agreement officially discharging and releasing Texpet from all claims and liabilities.

The Fraudulent Lawsuit Against Chevron – 2003 onwards

Despite the release agreements, in 2003 a lawsuit was filed in Lago Agrio, Ecuador, against Chevron, which had become the ultimate parent company of Texpet through its 2001 acquisition of Texaco. The lawsuit claimed Chevron was responsible for alleged environmental and health impacts as a result of Texpet’s operations. In 2011, the Lago Agrio court found Chevron liable for $18 billion for remediation and punitive damages, later reduced to $9.5 billion by Ecuador’s National Court of Justice. In March 2014, the U.S. District Court for the Southern District of New York found that the Ecuadorian judgment was the product of fraud and racketeering activity directed by lead plaintiffs’ lawyer Steven Donziger, finding it unenforceable in the United States.

Despite overwhelming evidence of fraud, bribery, ghostwriting, extortion and collusion in securing the Ecuadorian judgment, Donziger’s team, his few remaining supporters and Ecuador’s political leaders continue to promote the judgment and the false claims it’s based on.

Plaintiffs’ Claims & Chevron’s Response

Cancer Claims

The 2003 lawsuit claimed that “[t]he mortality rate in the communities exposed to oil contamination is higher than the national average. The incidence of cancer is three times higher than the national average and five times higher than the average of the Amazon provinces.” The source for these figures was not given, and it turns out that this claim is false. During the course of the trial, the plaintiffs admitted privately “we DO NOT have medical records” to substantiate their cancer claims, but nevertheless calculated a number of “excess cancer deaths” based on a survey they conducted in which people self-reported cancer. On the basis of that survey, they incorrectly calculated that 1,401 cancer deaths had occurred due to Texpet’s operations. Their own epidemiologist said that their approach “has little validity,” and that their “calculation of the excess of [cancer] cases is incorrect.” This false number has been repeated in the press even after the person who originally reported the number, Douglas Beltman of Stratus Consulting, admitted that it had no scientific merit.

Furthermore, Chevron asked epidemiologists to evaluate the Ecuadorian government’s cancer statistics to determine whether the cancer mortality rate was higher in oil-producing counties than in the rest of the country. Using figures published by the Ecuadorian census, a 2008 study of cancer mortality concluded: “Using regional oil well density as a surrogate for exposure, there were no significant elevations in cancer rates in cantons [counties] with a high density of wells relative to those with a low or zero density.” A second epidemiological study was performed and published in 2013, and its author, Dr. Moolgavkar, found that “the available epidemiologic evidence does not support a statistical association, let alone a causal relationship, of adverse human health outcomes with environmental exposure to petroleum from oil exploration and production activities.”

Indigenous People

The 2003 lawsuit claims that Texpet’s operations were “especially devastating for five indigenous groups,” the Cofan, Siona, Secoya, Huaorani, and Kichwa, who lived in the oil exploration zone. That claim was expanded on by Donziger, who incorrectly claimed that “one group, the Cofan, has seen its population drop from 15,000 in 1970 to approximately 800 today.”

To evaluate these claims, Chevron asked anthropologist Robert Wasserstrom to research the indigenous groups in the Ecuadorian Amazon. What he found (here, here, here) is that, in the 1960s, before Texpet began operating in Ecuador, the first systematic count of the Cofan people put their population at 580 individuals, not 15,000. In 2000, after Texpet left Ecuador, the first Ecuadorian census to specifically count indigenous people by ethnicity reported 1,044 Cofan, an increase in the Cofan population. According to the Ecuadorian census and multiple independent sources, the population of all five of the indigenous groups has increased since Texpet began operations in Ecuador.

Deforestation

The 2003 lawsuit claims that Texpet operations resulted in massive deforestation in the former concession area. Scientists and other experts investigating this claim concluded (here, here) that deforestation in this part of the Amazon has been a direct result of the government of Ecuador’s settlement and agriculture policies, not Texpet operations. The government seized on the discovery of oil to accelerate long-standing national security and development dream of “colonizing” its Amazon region. It ordered the consortium to build public access roads, relocated thousands of impoverished farmers and their families to “unoccupied” lands in the area, and required those colonists to clear-cut the forest and create pasture land in efforts to expand agriculture across the country’s northeastern rainforest.

Ecosystem Damages

Donziger and his team have claimed that Texpet’s operations in Ecuador resulted in an “Amazon Chernobyl.” To evaluate these claims, Chevron retained biologists in 2008 to evaluate the impact of oil operations on biological diversity. A study comparing forested areas near a former Texpet well and forested areas with no wells found no significant ecological differences. The authors concluded that a history of petroleum development, by itself, does not affect abundance and diversity of biological resources in this area. Other experts conducted ecological surveys of streams and sediments at well sites to evaluate any ecological impacts from petroleum and metals to those areas.

Health Risk Assessment

As part of the 2003 lawsuit, the plaintiffs claimed that residents in the area of the former oil operations were drinking contaminated water and exposed to contaminated soil from Texpet operations. An international team of experts in remediation, sampling, water resources, and risk assessment addressed these claims during the Lago Agrio trial. Surface water samples were collected at 175 sampling points and 173 met World Health Organization (WHO) and U.S. Environmental Protection Agency (USEPA) drinking water limits for petroleum and metals. The only two sample points that were exceptions were sites where Petroecuador had a major ongoing leak or spill.

Similarly, drinking water samples were collected from 221 drinking water sources and 220 met WHO and USEPA drinking water limits for petroleum and metals. Those same studies (here, here) found that 79 percent of the drinking water samples contained E. coli (fecal coliforms), indicating a lack of proper sewage treatment and lack of chlorination for well water. No groundwater contamination due to petroleum was detected.

During the trial, 47 pits remediated by Texpet were sampled by court-appointed experts. Those samples showed that 46 of the 47 pits complied with the soil remediation criteria applicable at the time that the cleanup was implemented. The remaining pit had been previously tested in 1997, at the time of the remediation, and the sampling at that time indicated that the remediated pit met the required soil cleanup criteria.

These same results were found time and time again by the Lago Agrio plaintiffs’ experts. Their first set of experts, Charles Calmbacher and David Russell, (here, here) found that there was “no evidence of any widespread health effects caused by oil contamination from Texaco, and no evidence of drinking water contaminated with petroleum from Texaco’s operations.” Plaintiffs’ second set of experts reached the same conclusion. Douglas Beltman, formerly of Stratus Consulting, testified that “none of the drinking water samples I have seen exceeded the drinking water guidelines or standards established by WHO and the U.S. EPA for any chemical compound related to oil operations, let alone exclusively TexPet operations.”

Almost 1,300 soil, sediment, and water samples were collected by the court-appointed experts for both parties during the trial. The results from the water and soil analysis were used to conduct a quantitative risk assessment that showed that there were no health risks due to Texpet’s operations. The methodology used was consistent with standard risk assessment processes used in the U.S. and Europe.

Conclusions

Chevron has been forced to respond to multiple claims regarding environmental liability despite Texpet’s six-year-effort to conduct an orderly exit from the Ecuadorian consortium, and despite conducting a $40 million remediation overseen by the Ecuadorian government, and despite receiving a release of all liability from Ecuador. For each of the environmental claims, as outlined above, the scientific evidence clearly shows that the assertions of harm in Ecuador made by the plaintiffs’ lawyers and their supporters have no merit.