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Ecuadorans sue over water pollution

LAGO AGRIO, Ecuador -- Under a warm setting sun, a half-dozen children gathered Tuesday around a plastic tub filling with water from a tube snaking from the ground. Women washed clothes under the spout, smacking shirts and pants against planks to dry them as the children played.

The makeshift well near the Aguarico River in northern Ecuador is part of the dirty legacy of decades of oil drilling in this region of the Amazon basin, much of it carried out by a company then known as Texaco Inc.

Although surrounded by rivers, this community of Cofan Indians now trusts only water drawn from deep in the ground by their tiny well. For years, they have watched relatives and friends grow ill from drinking or bathing in the contaminated river water.

Now the Cofan -- whose ancestral homeland has been severely reduced by oil-driven development -- and thousands of other indigenous Ecuadorans are confronting the huge US company they blame for polluting their jungle.

In a stuffy courtroom in this dilapidated frontier town, a class-action trial began Wednesday that could have far-reaching consequences for the environmental movement, US corporations doing business overseas, and poor Ecuadorans who have never had a voice in their country's judicial system.

"Always we have counted on water from the Aguarico, until it was contaminated," said Toribio Aguinda, a Cofan leader from the village of Cofan Dureno, 15 miles east of here. "We have asked them for help in the past. But they have always forgotten us."

Lawyers for ChevronTexaco Corp., formed in 2001 from the merger of Texaco and Chevron Corp., deny the company is liable. "We think that the allegations against the company are false, and are not backed up by credible evidence," Ricardo Veiga, vice president and general counsel of ChevronTexaco Latin America Products, told reporters Wednesday in Quito, the capital.

The trial, which follows a decade of legal maneuvering in the United States, convenes at a time when hostility to free trade and foreign corporations is rising in many parts of Latin America. Last week, President Gonzalo Sanchez de Lozada of Bolivia was driven from office by protests over his free-market economic policies.

The oil case was originally filed in New York, but was sent here in August 2002 by the US Court of Appeals for the Second Circuit, which ruled that the Ecuadoran judicial system's decision would be legally binding on the parent corporation in the United States. Environmental attorneys say it is among the first cases in which a US court has recognized as binding a foreign court's jurisdiction over a US company for allegedly damaging the environment.

The plaintiffs are 30,000 indigenous Ecuadorans who allege that their lives and livelihoods were damaged by Texaco's operations here from 1971 to 1992, a period in which the company extracted 1.5 billion barrels of oil from the region.

The plaintiffs, a few dozen of whom rallied here Tuesday wearing traditional red face paint and feathered headdresses, estimate that the cleanup costs they seek from the company would exceed $1 billion.

The central allegation of the case is that Texaco failed to use "accepted industry standards" to dispose of 18.5 billion gallons of wastewater in a region of virgin jungles, tropical wetlands, and broad Amazon tributaries.

As part of an international consortium, Texaco drilled 323 oil wells and dug 627 pits for use in the drilling or production process during the period in question. Most of the pits were unlined, both sides agree, and the plaintiffs allege that toxic waste leached into the streams and rivers that most of the 500,000 people who live in the region rely on for household water.

At the time, Ecuador had no environmental protection law specifically governing its oil industry, which today accounts for 20 percent of its economy and generates most of its foreign exchange. The national legislature passed a measure in 1999 that holds oil companies responsible for cleaning up pollution from past operations; the company says it intends to challenge the retroactive application of the law.

In 1992, Texaco sold its stake in the enterprise to a fellow member of the consortium, Petroecuador, the state oil company. In 1995, Texaco paid out $40 million to clean up 207 pits holding toxic wastewater. That work was later certified by the Ecuadoran government, which the company holds up as proof that it fulfilled its obligations here. The company is also arguing that the plaintiffs cannot sue a company that ceased to exist after its merger with Chevron.

Oil industry experts hired by the plaintiffs say the practice of dumping wastewater into unlined pits was outlawed in the United States in the 1950s and 1960s, and accuse Texaco of continuing the practice here to increase profits.

"It was Texaco that was running the operation, it was Texaco that designed the system, and it was Texaco that profited," said Steven Donziger, a New York attorney helping to represent the plaintiffs.

Company lawyers say Texaco's local subsidiary, TexPet, run by a succession of US-based executives during the two decades under examination, earned roughly $500 million in profits in that period. Plaintiffs' attorneys say that does not include proceeds from sales on the international market, which they estimate brought Texaco billions more in profits.

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