Chevron Calls for Dismissal of Ecuador Lawsuit

SAN RAMON, Calif., Oct. 8 /PRNewswire-FirstCall/ -- Chevron Corporation today filed a petition in an Ecuador Superior Court seeking dismissal of an ongoing environmental lawsuit that has descended into a judicial farce, constituting a denial of Chevron's right to a fair and impartial trial based on evidence and the rule of law.

Chevron's petition to dismiss cites multiple examples of inappropriate interference in the civil proceeding by the executive branch of the government, judicial misconduct and misconduct by the plaintiffs' attorneys as well as their technical staff. The petition also argues that the court has failed to recognize the overwhelming volume of admissible evidence and irrefutable legal defenses that exonerate Chevron and cites the court's lack of jurisdiction, lack of due process and demonstrated bias (see Note to Editors).

"Chevron has acted in good faith throughout this trial, producing significant, scientifically sound evidence disproving the allegations of the plaintiffs' attorneys. A verdict delivered today and based on the only credible and properly submitted evidence presently before the court would exonerate Chevron," said Charles James, Chevron vice president and general counsel. "However, too many improper, unethical and illegal events have occurred, and the court must dismiss this case if it is to preserve any semblance of credibility. For the case to proceed in its current form would constitute a denial of Chevron's right to a fair trial based on evidence and the rule of law."

Chevron's legal team has demonstrated through volumes of credible scientific evidence that the allegations of the plaintiffs' attorneys are without merit. The petition outlines a long list of actions during the trial that, taken together, constitute a denial of justice.

"The court has now abandoned the law of the case and the Ecuadorian Code of Civil Procedure and has denied Chevron due process by acquiescing (likely as a result of political pressure and nationalistic bias) to plaintiffs' requests," Chevron states in its petition. "In the absence of a complete dismissal, therefore, this matter will result in a violation of Ecuador's Political Constitution. ... Moreover, a failure by this court to dismiss this case -- followed by any judgment against Chevron on the plaintiffs' unproven claims -- would likely constitute a violation of Ecuador's obligations under international law."

Further, the petition states that Petroecuador, which has exclusively owned the oil fields since 1992 and has operated them for more than 17 years, never fulfilled its remediation obligations and has operated the oil fields in a manner that has caused numerous environmental problems, including frequent spills. Petroecuador officials admitted publicly that Petroecuador -- not Texaco Petroleum Co. (Texpet, a third-tier subsidiary of Texaco Inc.) -- is responsible for cleaning up the remaining well sites in the former Consortium area that were not remediated by Texpet.

In its petition, Chevron describes the various efforts of the plaintiffs' attorneys and their supporters to politicize the lawsuit by convincing senior members of the government of Ecuador to offer their support to the civil lawsuit. For example, in April 2007, plaintiffs' attorneys, activists and senior members of the Ecuadorian government held a joint news conference and a highly publicized visit to certain former Petroecuador-Texpet consortium sites. With the plaintiffs' supporters at their side during one of these visits, senior members of the administration offered "the national government's full support" to the plaintiffs. Also in April, the executive branch of the government issued a news release announcing the government's intention to provide plaintiffs with "assistance in gathering evidence" against Chevron.

According to Chevron's petition filed before the court, "This manner of interference by the executive branch in a private civil dispute certainly suggests an ulterior motive (i.e., the avoidance of Petroecuador's liability), and it intolerably offends the most basic tenets of due process ... this illegitimate conduct has unfairly prejudiced Chevron, changed the course of the trial, and caused the court to deny the due process to which Chevron, like all litigants, is entitled."

Chevron's petition argues that the court's failure to follow the law of Ecuador or even its own procedural orders casts serious doubt over its adherence to the rule of law. The failure to address legitimate legal defenses, while simultaneously absolving plaintiffs of any obligation to substantiate their claims with legally qualified evidence, amounts to a clear denial of justice for Chevron. If not addressed by the court, these violations of the most basic and fundamental principles of universal justice will destroy any legal legitimacy for the results of this proceeding and sentence the litigants on both sides to a lifetime of appellate and collateral litigation. Accordingly, Chevron has requested the judge to dismiss the lawsuit in its entirety.

For a complete copy of Chevron's petition for dismissal and additional information on this litigation, please visit http://www.texaco.com/sitelets/ecuador/en/.

NOTE TO EDITORS About the Lawsuit and the History of Texpet's Operations in Ecuador

In 2003, American and Ecuadorian attorneys, on behalf of 47 Ecuadorian plaintiffs, filed a civil suit in Ecuador against Chevron and sought unspecified damages for public environmental harm allegedly caused by Texpet's operations. Among other things, the lawsuit challenged the effectiveness of a remediation program carried out by Texpet, a third-tier subsidiary of Texaco Inc. Texpet rejected the allegations and demonstrated not only that the Texpet operation complied with Ecuadorian law but that the remediation work Texpet conducted was and remains effective. More detail can be found at http://www.texaco.com/sitelets/ecuador/en/.

More recently, the trial has become a judicial farce, where scientific evidence and due process is ignored, where misconduct by the plaintiffs' attorneys and their technicians runs rampant, where the court has failed to recognize the overwhelming volume of evidence that exonerates Texpet and Chevron, where improper external pressures are applied, and where the national government has exhorted the court to rush to judgment.

Inappropriate Interference by the Executive Branch

There has been improper and undue interference from the government of Ecuador as Chevron argues in its petition. Examples of improper interference include:

* The executive branch "offered the national government's full support" to plaintiffs. * In a news release, the government announced its intention to provide the plaintiffs with "assistance in gathering evidence" against Chevron. * On a recent trip to the former consortium's operations sites government officials, accompanied by plaintiffs' attorneys and their supporters, announced to the media that Chevron blatantly failed to carry out a proper remediation at those sites and that government of Ecuador and Petroecuador officials, who approved the remediation, along with Chevron representatives, ought to be prosecuted. However, government officials and plaintiffs' attorneys failed to acknowledge or point out that the sites they visited are the sole responsibility of Ecuador's state-owned oil company, Petroecuador.

Correspondence between the plaintiffs' attorneys and Ecuador's Office of the Attorney General, discovered in a separate proceeding, provides evidence of cooperation between the Republic of Ecuador and plaintiffs' attorneys:

* One of the plaintiffs' attorneys writing to a representative of Ecuador's Office of the Attorney General stated "if at some point we want the government and the attorney general to play for our side, we must give them some ability to maneuver." * An attorney general's representative writing to plaintiffs' attorneys stated, "I explained that the Attorney General's Office and all of us working on the state's defense were searching for a way to nullify or undermine the value of the remediation contract." Judicial Misconduct

There are numerous instances of judicial misconduct that, taken together, have denied the company the right to a fair and impartial trial:

* In 2003, Chevron moved to have the case dismissed on procedural grounds since there are no grounds to sue Chevron. * The court abandoned its own prior procedural rulings and reduced the plaintiffs' evidentiary burden by relieving them of the requirement to perform more than half of the judicial inspections previously ordered. This is in clear conflict with the Code of Civil Procedure (Articles 114 and 119). * The court has failed to enforce its own orders requiring the plaintiffs' suggested experts to adhere to court-ordered sampling and analytical protocols and to submit complete reports based on analytical work of all samples they collected during the judicial inspections. * Despite the undeniably suspect nature of the plaintiffs' evidence, the court has not expunged any of it from the official record. Chevron has filed 11 petitions asking the court to act on this matter. Article 258 of the Code of Civil Procedure provides that the court must conduct a hearing on the petition and issue a ruling. The court has not conducted a single hearing on any of the petitions. Rather, the court has denied one petition without the required examination, indefinitely postponed its ruling on three others, and ignored the rest. * Without completing even half of the 122 judicial inspections during the evidentiary first phase of the trial, the court granted the plaintiffs' request to proceed with the damage assessment phase (Phase 2) of the trial. This is a complete inversion of due process. The second phase of evidence production is now a wholly subjective, damage assessment conducted by a sole, patently unqualified expert appointed by the court. * Acknowledging that Phase 2 was to have relied on the scientific evidence collected during Phase 1, the plaintiffs made the untenable suggestion that environmental contamination could be inferred at all sites based on the plaintiffs' flawed Phase 1 findings. * The court appointed Richard Cabrera, a mining engineer with no known experience assessing environmental impacts from petroleum operations. This order directly contradicts the law of the case established by the court's October 2003 order, which provided that the expert determination would be conducted by the same group of experts who conducted the judicial inspections. * Mr. Cabrera submitted a proposed scope of work that largely ignores, and far exceeds, his mandate including: * Denying Chevron the basic right to participate in and observe his work that the court specifically ordered. * Refusing to provide or sign chain-of-custody documentation for the samples that he collects, which is in direct contrast to court orders. As a result, there will be no means to authenticate any of the analyses that Mr. Cabrera ultimately provides. * Sampling rainwater or surface water that has collected in a soil borehole and erroneously claiming that it is groundwater exemplifies Mr. Cabrera's lack of even the most basic skills of groundwater hydrology and site assessment. * Declining to visit all of the sites originally ordered by the court. * Refusing to present the names, qualifications and work plans for technical support teams. These teams are instead conducting their research secretly, with no oversight by the court or the parties involved. * Exceeding his mandate by proposing to conduct an "economic valuation" of the alleged damages, in violation of the court order that appointed him as an expert and designated his duties. * Failing to provide Chevron with adequate notice of his activities so that the parties can observe his work. * Failing to present evidence that demonstrates his qualifications to perform the work and his methodologies. In its petition, Chevron argues:

"Mr. Cabrera's conduct so far in the inspection process is marked by rank amateurism, disregard for scientific protocol, and irredeemable bias. He has destroyed evidence while his clandestine and unverifiable sampling and testing can never form the basis of any legitimate expert determination of the environmental impact or its source. Mr. Cabrera's work effects a complete denial of due process."

Misconduct by the plaintiffs' attorneys and their technicians

Plaintiffs' attorneys and technicians have demonstrated a complete disregard for the court's orders, generally accepted analysis protocol, and science:

* The plaintiffs have failed to comply with the court-ordered sampling protocol and the basic principles of scientific analysis, including: * Citing drinking-water source contamination at 43 sites, despite analyzing drinking water at only 12 sites. * Submitting less than the required number of judicial inspection reports and submitting reports without any supporting data. * Failing to report data for more than half of the samples collected during the first 19 judicial inspections. * Sending only five of 465 soil and water samples for analysis to an accredited laboratory. Notably, the five samples corroborate Chevron's defense. Meanwhile, for the first three years of the trial (consisting of 31 out of 45 judicial inspections), the plaintiffs used a Quito-based lab called HAVOC. According to the Ecuador Accreditation Organization, HAVOC was not accredited for the specific analysis required by the court. A civil court in Quito has attempted to inspect the HAVOC facilities eight times -- each time the plaintiffs' attorneys and/or attorneys representing the HAVOC laboratory have blocked the court from conducting the inspection. * Taking samples (75 percent) from areas outside Texpet's remediation obligation areas and misrepresenting their origin(1). * Reporting the presence of carcinogenic hexavalent chromium when their analytical method did not measure for hexavalent chromium. * Claiming that any metals in soil samples are the result of Texpet's failure to remediate, when in fact metals occur naturally in all soil. * Claiming that contaminants like benzene were present, when in fact these compounds were not detected. * Relying on current standards, which are inapplicable as they cannot be applied retroactively to claim that Texpet failed to conduct proper remediation that was done and approved in accordance with compliance parameters established by the government of Ecuador more than a decade ago. Summing up the reasons the court should reject the plaintiffs' evidence, Chevron argues: "Whether deliberate or the result of simple ineptitude, the technical reports submitted by plaintiffs' suggested experts show a pattern of gross scientific error that would lead any reasonable scientist or court to reject them. "Because the scientifically unreliable and biased inspection reports submitted by the plaintiffs' experts violated the Code of Civil Procedure and the Phase 1 protocol and suffered from essential errors -- gross mistakes that no reasonable person could conclude were accurate or even made in good faith -- under the procedures established by the court and Ecuador law, they should have been expunged from the record of this case." Evidence Exonerates Texpet and Chevron

Analysis of Chevron's 1,344 water and soil samples confirm Texpet's remediation was effective and demonstrated that the remediated areas pose no significant risk to human health or the environment:

* Greater than 99 percent of 172 drinking water samples meet safe drinking limits for petroleum compounds as defined by the World Health Organization and the United States Environmental Protection Agency (USEPA). * Greater than 99 percent of all soil samples collected from Texpet-remediated areas confirm that the remediation met the standards set by the government of Ecuador. * While the plaintiffs claim their data confirmed their case, the only court-ordered independent analysis (Settling Experts Report on well site Sacha 53) corroborated Chevron's conclusions stating: * Texpet's remediation was conducted in accordance with the required parameters of the Remediation Plan approved by the Republic of Ecuador and Petroecuador. * There is low health risk to humans and the environment from oil at that site. * Concentrations of heavy metals in the crude oil are very low and pose a very low risk to the environment. * Results for nearby drinking water showed no contamination from petroleum or metals. * While one isolated area of the site requires remediation, the report acknowledges it is an area outside of the scope of Texpet's remediation program, and appears to be the result of a spill of unknown origin. It is notable, too, that after the release of the Settling Experts Report on Sacha 53, plaintiffs' attorneys stopped funding their share of the expenses for the settling experts, in violation of court orders and the Code of Civil Procedure. The court has never acted on this matter. (1) More than 3/4 of plaintiffs' samples were taken from areas that are Petroecuador's admitted responsibility to remediate.