Chevron fights suit in Ecuador

An American oil company being sued in Ecuador to clean up widespread pollution in the Amazon rainforest is pressing its case in a different jurisdiction: the U.S. Congress.

Chevron officials describe the suit, brought by thousands of indigenous peasants with the help of American trial lawyers, as a shakedown. They claim a $40 million settlement they reached with the South American government following Texaco’s exit in 1992 protects the company from further liability. (Chevron purchased Texaco in 2001.)

{mosads}But an expert appointed by the court estimated this spring that Chevron could be required to pay as much as $16 billion more to clean up billions of gallons of waste dumped in the region’s waterways. The plaintiffs describe the pollution in the Ecuadorian rain forest as the Amazon Chernobyl.

Practically each charge brought by one side brings a vigorous defense and countercharge from the other. Chevron officials dispute both the expertise and the impartiality of the official who provided the estimate to the Ecuadorian court.

The plaintiffs, meanwhile, argue that Chevron’s remediation efforts fell short of their promises and that the company is responsible for developing a dirty production process subsequently used by state-owned Petroecuador that has caused further damage. Chevron argues any further cleanup is the responsibility of Petroecuador.

The oil company would have little recourse but to fight it out in an Ecuadorian court if not for the Andean Trade Preference Act. That law extends trade benefits to several South American countries, including Ecuador, with the understanding that American investment in those countries will be protected.

The act expires at the end of this year, which has given Chevron an opportunity to play offense.

With a long roster of lobbyists with bipartisan ties on Capitol Hill, Chevron has pressed Congress and the administration to withhold trade benefits to Ecuador in response to the case.

Chevron has already paid more than $6 million to lobby Congress this year. Firms like Ogilvy Government Relations, Parven Pomper Strategies, and Lent Scrivner & Roth have lobbied against extending preferences to Ecuador.

Chevron spokesman Kent Robertson said the company had little recourse but to seek help from Washington.

“Our hand has been forced. We’ve acted in good faith,” Robertson said, referring to the remediation agreement with Ecuador.

{mospagebreak}The plaintiffs in the case have some high-powered representatives as well. Ben Barnes, a Democratic lobbyist and fundraiser, was hired by Kohn Swift & Graf, a Philadelphia law firm representing the plaintiffs, to block Chevron’s moves on the Hill.

Barnes said he didn’t agree to help until after he traveled to Ecuador to see the environmental damage from oil production.

“It’s a terrible mess,” he said.

{mosads}And the actual plaaintiffs are themselves lobbying Congress this week. Four Ecuadorians are meeting with members on Thursday and Friday.

The goal, according to plaintiff’s attorney Steven Donziger, is to counter Chevron’s campaign to get Congress and the United States Trade Representative (USTR) “to quash the legal rights of thousands of rainforest residents.”

Chevron isn’t the only one that has complained about the treatment of American companies in Ecuador, however. The U.S. Chamber of Commerce argued to the U.S. International Trade Commission this summer that American companies operating in Ecuador face the “systemic weakness and susceptibility to political or economic pressures in the rule of law.”

The trade act allows certain industries in Ecuador to import goods in the United States duty-free.

One person involved in the case estimated that as many as 400,000 jobs in Ecuador were tied to the trade deal. In 2007, more than $4.6 billion of goods exported from Ecuador entered the United States duty-free under the trade preferences program.

Gretchen Hamel, a USTR spokeswoman, said Chevron’s request that the administration suspend trade benefits to Ecuador remains under review.

“The administration has encouraged the government of Ecuador to ensure that the litigation in Ecuadorian court involving Chevron proceeds in a fair and transparent manner,” Hamel said.