A Plague on Both Their Houses: A Modest Proposal for Ending the Ecuadorean Rainforest Wars

  • June 2013
  • 1 Stan. J. Complex Litig. 509
  • Article
Burt Neuborne

Long ago and far away, Texaco, an American energy corporation, is alleged to have despoiled the natural environment of the Ecuadorean rainforest while searching for and extracting oil. While the parties disagree strongly over the precise scope of the damage caused by Texaco, there is widespread agreement that significant environmental degradation took place, at least in part because Texaco failed to follow established industry procedures designed to limit environmental harm. Texaco apparently made money during the project’s twenty-eight-year run from 1964-92, but the lives of thousands of indigenous peoples whose culture—indeed whose very existence—was deeply intertwined with the environment of the rainforest were radically disrupted, perhaps permanently impaired, as the result of Texaco’s failure to take steps to limit environmental damage.

“So what?” you may say. That’s usually the fate of weak bystanders unlucky enough to be standing between a powerful corporation and large sums of money. Nobody blinked, for example, in 2001 when an economically powerful Chevron took over a financially weakened Texaco. Texaco’s economic woes began in 1985 with a contractual dispute with rival Pennzoil over whether Texaco had unlawfully interfered with Pennzoil’s alleged oral contractual agreement to buy Getty Oil. The dispute resulted in a huge Texas state jury verdict for Pennzoil of more than $10 billion ($7.53 billion compensatory; $3 billion punitive; plus prejudgment interest) that forced Texaco into bankruptcy, and that ultimately resulted in a $3 billion settlement. Then, in 1996, just as Texaco was regaining its economic footing, it was charged with widespread racial discrimination in hiring and promotion, resulting in the payment of $176 million in compensation and the release of embarrassing tape-recorded comments by ranking officials. Once Texaco was seriously weakened by the prospect of a nationwide boycott, Chevron pounced, making an offer to merge the two companies that Texaco couldn’t refuse. Why should we be surprised, therefore, that Texaco and the right-wing military junta that governed Ecuador in the 1960’s and much of the 1970’s muscled some indigenous peoples aside and despoiled their land in the scramble for corporate wealth? Except, that when financially strong Chevron swallowed financially troubled Texaco in 2001, Chevron was obliged to follow a carefully charted legal path designed to protect innocent bystanders. Is it impossibly naive to dream that law also provides a path to protect the innocent indigenous bystanders who live in the Ecuadorean rainforest?

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