Indigenous Peoples and the Oil Frontier in Amazonia: the Case of Ecuador, Chevrontexaco, and Aguinda V

\\server05\productn\N\NYI\38-3\NYI301.txt unknown Seq: 1 3-NOV-06 13:23 INDIGENOUS PEOPLES AND THE OIL FRONTIER IN AMAZONIA: THE CASE OF ECUADOR, CHEVRONTEXACO, AND AGUINDA V. TEXACO* JUDITH KIMERLING** I. Introduction.................................... 414 R II. Governments and Policy in Ecuador ............ 417 R A. Government Instability and Petroleum Politics ... 417 R B. Amazon Policy and the Rights of Indigenous Peoples ...................................... 426 R C. Environmental Protection Policy ................ 433 R III. Texaco’s Operations and Impact ............... 449 R IV. Environmental Audit ........................... 468 R V. Aguinda v. Texaco: “The Rainforest Indians’ Lawsuit” in Texaco’s Homeland ................ 474 R * In addition to the sources cited infra, this Article draws on the author’s observations during regular visits since 1989 to oil field facilities and affected communities in Ecuador’s Amazon region; participation in local, national, and international fora; and interviews and ongoing dialogue with local residents, oil company workers and executives, and governmental officials, including environment officials in successive Ecuadorian governments and some U.S. and European officials. ** Associate Professor of Law and Policy, The City University of New York, Queens College and School of Law; J.D., Yale Law School, 1982; B.A., University of Michigan, 1978. The author has worked on issues discussed in this Article in various capacities since 1989 and participated in some of the events reported herein. At the time this Article was written, she served as the international representative of thirty-one indigenous Kichwa and Huaorani communities who came together in the wake of the dismissal of Aguinda v. Texaco to take legal action to remedy environmental and social injuries caused by Texaco’s operations in Ecuador and was accompanying them in a lawsuit against ChevronTexaco Corp. and Texaco Petroleum Company in Ecuador, briefly discussed in this Article. She would like to thank the many residents of the oil patch who have welcomed her into their homes and communities over the years for their insights and hospitality. She is also grateful to Edith Holleman, Irving Leonard Markowitz, Mark Cullen, Laura Glynn, Rita Kimerling, Sol Kimerling, Elsie Monge, Meghan Morris, Janelle Saffin and Wilma Subra for providing comments for this Article; special thanks are also due to the editors and staff of JILP. This Article is dedicated to the memory of Laura Glynn and Angel Shingre. 413 \\server05\productn\N\NYI\38-3\NYI301.txt unknown Seq: 2 3-NOV-06 13:23 414 INTERNATIONAL LAW AND POLITICS [Vol. 38:413 VI. Texaco and Ecuador’s Response to the Litigation ....................................... 484 R VII. Outside Court .................................. 493 R VIII. The First Dismissal of Aguinda v. Texaco ........ 514 R IX. Political Turmoil in Ecuador: Reopening the Record ......................................... 523 R X. The Second Dismissal and the Court’s Forum Non Conveniens Analysis ....................... 528 R A. The Adequate Alternative Forum Analysis ....... 532 R 1. Plaintiffs’ Objections to an Ecuadorian Forum .................................. 534 R 2. Independence and Impartiality ......... 546 R B. Private and Public Interest Factors—Degree of Deference and Material Facts .................. 571 R C. Consideration of Private Interest Factors ........ 575 R 1. Witnesses and the Nexus between the Operations and the United States....... 575 R 2. Deficiencies in Ecuador’s Legal and Judicial System ......................... 591 R 3. Special Due Process Needs of Absent Class Members.......................... 596 R 4. Justice Delayed ......................... 597 R 5. Ability to Join Additional Parties in Ecuador ................................ 601 R 6. Balancing Private Interests .............. 603 R D. Consideration of Public Interest Factors ......... 606 R E. “The Two Faces of Texaco” .................... 613 R F. Summary and General Observations ............ 620 R XI. The Second Appeal ............................ 625 R XII. Epilogue: Two Lawsuits Against Chevrontexaco in Ecuador ..................................... 628 R XIII. Conclusion and Recommendations ............. 652 R I. INTRODUCTION The discovery of commercial quantities of oil in the Ama- zon rainforest in Ecuador in 1967 by a consortium of foreign companies (Texaco and Gulf, both now part of ChevronTex- aco)1 was heralded as the salvation of Ecuador’s economy, the 1. Both Gulf and Texaco are now part of Chevron Corporation. See Norsul Oil & Min. Co., Ltd. v. Texaco, Inc., 703 F. Supp. 1520, 1524 (S.D. Fla. 1988) (Chevron Corp. acquired Gulf Oil Corp. in 1983); Press Release, \\server05\productn\N\NYI\38-3\NYI301.txt unknown Seq: 3 3-NOV-06 13:23 2006] INDIGENOUS PEOPLES AND THE OIL FRONTIER IN AMAZONIA 415 product that would, at last, pull the nation out of chronic pov- erty and “underdevelopment.” At the time, the national economy was based on agriculture, centered on the production and export of bananas.2 The discovery of “black gold” fueled dreams of easy money, and oil quickly became the centerpiece of Ecuador’s quest for modernization and progress. Exports of Amazon Crude began in 1972, after Texaco completed construction of a 313-mile pipeline to transport crude oil out of the remote Amazon region, across the Andes Mountains, to the Pacific coast. The “first barrel” of Amazon crude was paraded through the streets of the capital, Quito, like a hero. In some neighborhoods, residents could get drops of crude to commemorate the occasion. After the parade, the oil drum was placed on an alter-like structure at the Eloy Al- faro Military Academy.3 But the reality of oil development turned out to be far more complex that its triumphalist launch. For indigenous peoples in the Amazon rainforest, the arrival of Texaco’s work crews meant destruction rather than progress. Their home- lands were invaded by outsiders with unrelenting technologi- cal, economic, and political power. The first ones came from the sky; over time, they dramatically transformed natural and Texaco, Texaco Stockholders Approve Company’s Merger with Chevron (Oct. 9, 2001), http://www.chevron.com/news/archive/Texaco_press/ 2001/0/pr10_9c.asp; Press Release, ChevronTexaco, ChevronTexaco Cor- poration Changes Name to Chevron Corporation, Unveils a New Visual Im- age (May 9, 2005), http://www.chevron.com/news/press/2005/2005-05-09. asp (reporting that Texaco Inc. and Chevron Corp. merged in 2001 to form ChevronTexaco Corp. (ChevronTexaco); in 2005, ChevronTexaco changed its name to Chevron). 2. The other principal exports were cocoa and coffee. JOHN D. MARTZ, POLITICS AND PETROLEUM IN ECUADOR 157 (1978). As an exporter of agricul- tural products, Ecuador had long been subject to rounds of economic boom and bust. It was first incorporated into the world of international trade through cacao production; by the turn of the twentieth century, the export of cacao was the core of the national economy. Id. at 66-67. Unlike many Latin American nations, Ecuador did not participate in the process of indus- trialization spurred by import substitution policies in the 1930s. Efforts to move the country away from the dominant agro-exporting model began in the 1960s and initially focused on textiles and food products. Notwithstand- ing those efforts, Ecuador’s economic axis remained banana production un- til the oil boom began. Id. at 122, 157. 3. Interview with Mariana Acosta, Executive Director, Foundation Images for a New World, in Quito, Ecuador (Mar. 3, 1994). \\server05\productn\N\NYI\38-3\NYI301.txt unknown Seq: 4 3-NOV-06 13:23 416 INTERNATIONAL LAW AND POLITICS [Vol. 38:413 social environments. Their worlds changed forever, Amazo- nian peoples have borne the costs of oil development without sharing in its benefits and without participating in a meaning- ful way in political and environmental decisions that affect them. In 1993, a class action lawsuit was filed against Texaco in federal court in New York, on behalf of indigenous and settler residents of Ecuador’s oil fields who have been harmed by pol- lution from the company’s operations. In 2002, the case, Aguinda v. Texaco, Inc., was dismissed on the ground of forum non conveniens, in favor of litigation in Ecuador. The distrct court denied the plaintiffs a day in court here, ruling that the lawsuit belongs in Ecuador because it has “everything to do with Ecuador and nothing to do with the United States.”4 The Second Circuit Court of Appeals affirmed, subject to the con- dition that Texaco agree to submit to the jurisdiction of Ecua- dor’s courts and waive defenses based on any statutes of limita- tion that expired between the date the lawsuit was filed and one year after the dismissal.5 This Article begins with a brief review of events leading to that lawsuit and an analysis of petroleum policy, Amazon policy, and environmental protection policy in Ecuador. The review calls into question the court’s conclusion that the case has “nothing to do with the United States.” A history of the litigation and related events follows. The Article then examines the application of the forum non conveniens doctrine. It concludes that application of the doctrine by the District Court and the decision to dismiss the lawsuit were colored by a series of detailed but questionable factual assumptions, including er- roneous and unsupported findings about the history of litigation in Ecuador’s courts, and rulings on material facts related to decisionmaking and control of the operations that caused the alleged injuries. It further concludes that the balancing of private and public interest factors by the court was uneven and did not take into account a number of factors that favored the 4. Aguinda v. Texaco, Inc., 142 F. Supp. 2d 534, 537 (S.D.N.Y. 2001). 5. Aguinda v. Texaco, Inc., 303 F.3d 470, 478-79 (2d Cir. 2002). On remand, the district court conditioned dismissal on Texaco’s agreement to submit to jurisdiction of Ecuador’s courts and waive defenses based on statutes of limitations expiring between the date the case began and sixty days after dismissal.

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