Chevron rejects report submitted in Ecuador case

SAN FRANCISCO (Reuters) - Chevron Corp CVX.N on Monday rejected as "erroneous" an environmental damage report filed in Ecuadorean court just a month after Ecuador's government offered to broker a settlement to the decade-long legal battle.

A Chevron tanker truck unloads gasoline into underground storage tanks in Burbank, Calfiornia June 18, 2008. REUTERS/Fred Prouser

Peasants and Indians are suing the U.S. oil company for up to $16 billion over charges its Texaco unit polluted the jungle and damaged their health by dumping 18 billion gallons of oil-laden water from 1972 to 1992, before it turned over its operations to state oil company Petroecuador.

The report by court expert Richard Cabrera, an Ecuadorian geologist, found 42 sites operated by the company in the Amazon rainforest contained levels of toxins that violate norms in both Ecuador and the United States, according to the Amazon Defense Coalition, which represents plaintiffs in the case.

Chevron said it believed Cabrera was under a great deal of pressure from the public and government in the Andean country.

“It is clear that the deck is stacked against us in Ecuador and we’re not going to receive a fair trial down there,” Charles James, Chevron’s general counsel, told reporters on a conference call.

President Rafael Correa, a leftist who often scorns foreign oil companies and accuses them of cheating his nation out of billions of dollar in revenue, has said Chevron has done irreversible damage to the Amazon jungle.

But Ecuador Inspector General Diego Garcia, the country’s top attorney, said last month his government could help mediate an out-of-court settlement between the second-largest U.S. oil producer and 30,000 Amazon jungle dwellers suing the company.

Even before the recent developments in the case, experts felt a deal was unlikely.

Plaintiffs said they expect a ruling in the coming months.

Texaco, bought by Chevron in 2001, denies its operations affected the health of Amazon communities. The company has argued it was released from any liability because it paid $40 million for an environmental clean-up in the 1990s and blames Petroecuador for much of the pollution.

Steven Donziger, a U.S.-based attorney for the plaintiffs, said an indictment by Ecuador last week of two Chevron attorneys associated with its operations in the country calls into question that release from liability. Chevron described the two indictments as politically motivated.

According to plaintiffs, Cabrera found in his 4,000-page report, compiled with the help of 14 scientists, that more than 83 percent of 916 waste pits in Ecuador were excluded from Chevron’s remediation.

Chevron said many pits were identified by aerial photograph and some turned out to be “trees, shadows or tanks.”

Reporting by Braden Reddall; editing by Carol Bishopric, Leslie Gevirtz