Reposted from The Chevron Pit
A legal decision handed down last week by U.S. federal Judge Carl Barbier found that BP's "gross negligence" caused the Deepwater Horizon blowout in the Gulf of Mexico.
The decision increased the company's liability to roughly $50 billion. For our purposes, Judge Barbier's decision – which sets an important benchmark for corporate accountability – has a deeper meaning.
Judge Barbier's finding underscores the obvious racism behind Chevron CEO John Watson's claim that the company's $9.5 billion judgment in Ecuador represents some sort of gouging by that country's courts. While BP pays for its spill, Chevron has managed to obtain effective impunity for decades of contamination resulting in disease and death in the rainforest of Ecuador.
Chevron has steadfastly refused to pay any part of the judgment whatsoever. The company chooses instead to spend countless millions on law firms to carry out its threat of a "lifetime of litigation" for the villagers.
It gets worse. BP's liability for the less impactful Gulf spill in the U.S. is now five times higher (and still growing) than Chevron's in Ecuador. Yet Chevron's contamination in Ecuador is more widespread, has lasted far longer, was deliberate, has severely impacted indigenous groups, and is afflicting the world's most delicate ecosystem. Further, responsibility was adjudicated after an eight-year trial.
So what gives?
Well, let's speak the unpleasant truth about environmental racism in the oil industry today.
The truth is that in Ecuador, the victims of Chevron's contamination are Ecuadorian indigenous peoples and poor villagers. In the U.S., the victims are Americans. While there is certainly extensive environmental racism in our country, the discrepancy between BP's payout and Chevron's extraordinary conceit and greed in the face of intense human suffering is a clear illustration of something gone profoundly awry.
This is not to take away from the loss of 11 lives on the Gulf Coast. At the same time, at least 1,400 Ecuadorians have died from cancer and other diseases linked to the contamination and thousands more have had serious illnesses. Far more will likely die if there is no clean-up.
We would submit there is no way on God's Earth that CEO Watson and the members of the Chevron Board of Director would dare to treat American victims of the company's pollution as viciously as they continue to treat their victims in Ecuador. If they did, they would be booted out of their country clubs, banished from their churches, and personally shamed in the town square.
Here's another illustration of this phenomenon. At the same time that Chevron's predecessor company Texaco was systematically discharging billions of gallons of toxic waste into Amazonian waterways, in the U.S. the company was properly re-injecting the same waste into deep underground wells. This was to ensure there were only minimal environmental impacts in the U.S. But clearly the company felt it could away with NOT doing it in Ecuador where there was little oversight.
Chevron also proposed that the Ecuador court adopt a clean-up standard for oil field hydrocarbons 100 times greater than that used in its home state of California. Put another way: in Chevron's universe, an Ecuadorian life is worth 100 times less than an American life in California.
Of course, Chevron's victims in Ecuador are indigenous and Latino farmers in an isolated region of a Third World country. Unlike the American victims, they do not have a law like the Clean Water Act that if used properly can lead to a penalty that begins to fit the magnitude of the transgression.
Nor do they have an elected president willing to call out the corporate polluter publicly in the strongest possible terms. President Obama, just days after the spill in the Gulf began, said repeatedly that BP would pay dearly – and that's exactly what happened. When Ecuador President Rafael Correa did the same to Chevron decades after the fact, Chevron's legal and public relations machine attacked him mercilessly for "interfering" with legal proceedings.
Chevron has spent years trying to sabotage the trial that it wanted to take place in Ecuador precisely because it thought it could manipulate the result through corrupt means. (For some examples of Chevron's corruption and delaying tactics in Ecuador, see this declaration by Ecuadorian lawyer Juan Pablo Saenz.)
Judge Barbier's finding triggers up to $18 billion in additional penalties for BP under the Clean Water Act. That's on top of the $28 billion BP already has doled out to clean up the environment and to compensate its victims.
Chevron's executives must read that number and get down on their knees to thank the gods of corporate greed for their good fortune. Chevron has yet to clean up properly even one of its estimated 1,000 waste pits sitting on the jungle floor in Ecuador that to this day continue to contaminate soils and groundwater and cause untold suffering to the people living there.
CEO Watson knows Chevron is getting off easy in Ecuador. But he still presses on with a scorched-earth strategy that includes 60 law firms and 2,000 legal personnel. He wants to send a broader message to restless natives the world over who might have claims against the company. The case will end, he told Fortune magazine, when the lawyers "give up" and go home. That's an effort to buy impunity.
BP still faces lawsuits from various Gulf states such as Alabama and Mississippi that could increase its liability for the Gulf spill to $75 billion or more. To underscore how profitable the oil majors are – and how easily Chevron could pay the Ecuador judgment – BP is still producing profits and dividends for its shareholders.
When Watson and Chevron General Counsel R. Hewitt Pate claim the Ecuadorian verdict is too high, what they mean is it is too high for the particular people who won it. Consider these facts:
- Chevron lawyer Rodrigo Perez Pallares admitted during the Ecuador trial that the company deliberately discharged 15 billion gallons of toxic water into fresh water sources in the Amazon rainforest. The amount is an estimated 85 times more oil waste than BP discharged into the Gulf.
- Chevron's dumping in Ecuador was done by design to increase profits. BP's spill – even though the result of gross negligence – was still an accident.
Another case involving Anadarko's recent settlement over 2,700 contaminated sites in the U.S. also underscores Chevron's inexcusable double standard. In that case, Anadarko inherited the polluted sites from Kerr McGee when it bought the company, just like Chevron inherited Texaco's pollution liabilities when the companies merged in 2001.
Like Chevron has done with Texaco, Anadarko tried to spin off the environmental liability into a separate shell company that had little capital. A U.S. bankruptcy judge rejected Anadarko's subterfuge and ordered it to clean the sites. In Ecuador, three layers of courts rejected Chevron's use of the same legal trick to evade liability.
But in Ecuador, according to Chevron, that amounts to a violation of "due process" and is an example of "fraud" against the company.
Watson and his army of lawyers have ruthlessly attacked Ecuador's government for not cleaning up their own contamination in Ecuador. Now we see that the U.S. government did not lift a finger for decades to address Kerr McGee's contamination – largely because the issue of liability was still being contested. In the end, Kerr McGee settled the matter for $5.6 billion, further underscoring how major polluters routinely pay out billions of dollars for their liabilities.
Unless you are Chevron.
Let's sum up.
In one country (Ecuador), a U.S. oil major has refused for almost 50 years to clean up its contamination, compensate its victims, or engage in meaningful settlement discussions with the affected communities. In another country (the United States), a British oil major put up $20 billion within days of its spill to compensate its victims and engaged in settlement discussions with lawyers for the victims that resulted in further liability.
We might also add that BP has put aside $40 billion in cash to deal with the Gulf spill. Chevron has put aside zero to pay off its Ecuador liability.
Watson and Chevron's Board of Directors owe the people of Ecuador – not to mention their own shareholders – an explanation for this thoroughly disparate treatment.