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Chevron, Locals Prepare Ecuador Pollution Appeals

Date: 17-Feb-11
Country: ECUADOR
Author: Victor Gomez

Chevron, Locals Prepare Ecuador Pollution Appeals Photo: Reuters/Guillermo Granja
Ecuadorean workers clean up an oil waste pit owned by state petroleum company Petroecuador in Shushufindi, some 410 km (254 mi) east of Quito December 8, 2009.
Photo: Reuters/Guillermo Granja

Lawyers for Chevron Corp and plaintiffs who accuse the U.S. oil giant of pollution return to a provincial court in Ecuador's Amazon this week to appeal one of the world's largest ecological damage rulings.

Lawyers for the 47 named plaintiffs in the lawsuit say they will file papers on Thursday before a three-judge panel at a court in the remote jungle town of Lago Agrio to try and increase the $8.6 billion award.

Chevron's lawyers will also appeal judge Nicolas Zambrano's order on Monday that the company pay the damages and apologize to local indigenous communities for drilling-related contamination.

The California-based company says it is innocent and that the case was driven by politics and greedy trial lawyers.

"The objective, of course, is to overturn this illegitimate ruling that is the product of fraud and collusion and divorced from all legitimate scientific evidence presented in the case," Chevron spokesman James Craig said.

The company is ready to appeal to Ecuador's top court, National Court of Justice, if necessary, he added.

Resolution of the more than 17-year-old legal saga could be years away, and few analysts expect the company to pay anything soon. Chevron's stock price was not hit by Monday's ruling, as investors had widely expected the verdict.

It is one of the biggest environmental rulings in history. In 1994 an Alaskan court ordered Exxon Mobil Corp to pay $5 billion for the Exxon Valdez oil spill, but after years of legal wrangling the fine was slashed to $500 million.

SOME EVIDENCE DISCARDED

The Ecuadorean plaintiffs say the billions, awarded by one judge on the court, are not enough to clean up areas they accuse Chevron of ruining by pouring drilling waste into the jungle, contaminating water supplies and causing health problems including cancer.

Chevron denies that any health problems in the region are its fault and says it cleaned up pollution for which it was responsible.

"We want to ensure the damage award will adequately remediate all the contamination that Chevron is responsible for," said Karen Hinton, a Washington-based spokeswoman for the plaintiffs.

The plaintiffs have not said how much they will ask for in additional damages, but had first sought at least $27 billion.

Investors and the oil industry are watching closely to see if the Ecuador case could set a precedent leading to large claims against other companies accused of contaminating countries where they operate.

Chevron says that the plaintiffs' lawyers ghost-wrote a report for a court-appointed environmental expert, who was supposed to provide an objective analysis of the Rhode Island-sized area in eastern Ecuador where Texaco operated in the 1970s and 1980s.

Chevron inherited the case when it bought Texaco in 2001.

Because of the doubts over the quality of the report in question, Judge Zambrano discarded it, opting to use evidence from other expert witnesses to reach the ruling, he told reporters on Tuesday.

The suit has spawned a plethora of international legal actions that Chevron says effectively block Ecuador from enforcing any local ruling.

Chevron, which made $19 billion in net profit last year, has no assets in OPEC-member Ecuador. The plaintiffs want to get Chevron assets in other countries as a way of enforcing any final ruling against the company.

(Editing by Xavier Briand)

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