Ecuador Hits Chevron With $8.6 Billion Judgment, U.S. Court Blocks Enforcement, Namibia Coast a National Park, Deja Vu in U.S. House (by Bob Percival)

After nearly two decades of litigation that began in the U.S. in the early 1990s, plaintiffs from the oil-contaminated Oriente region of Ecuador today won a $8.6 billion judgment against the Chevron Corporation in a trial court in Lago Agria, Ecuador. The plaintiffs claim that they have been harmed by pollution caused when Texaco, which Chevron acquired in 2001, developed oil fields there at the request of the government of Ecuador during the 1970s and 1980s. The judgment includes $5.39 billion to restore polluted soil, $1.4 billion to create a health system for the community, $800 million to treat people affected by the pollution, $600 million to restore polluted water sources, $200 million to help native species recover, $150 million supply water to the community from unpolluted sources, and $100 million to create a community cultural reconstruction program. A Chevron spokesman denounced the judgment as “illegitimate,” “unenforceable,” “the product of fraud,” and “contrary to the legitimate scientific evidence.”

The judgment was widely anticipated, and six days before it was issued Chevron won a temporary restraining order from a federal district court in New York prospectively blocking enforcement in any court in the world of any judgment from the Ecuadoran court. The order is premised on Chevron’s allegations that the plaintiffs and their lawyers are engaged in a racketeering conspiracy to shake down the company. At a hearing in New York on February 8, Chevron alleged that lawyers and experts for the plaintiffs had doctored evidence. Ironically, Texaco could have had the lawsuit decided by courts in the U.S. during the early 1990s, but the company insisted that Ecuador was a more convenient forum. The federal court in New York dismissed the case on the condition that the company accept the jurisdiction of the courts of Ecuador. After a change of government, Ecuador no longer became the friendly forum Chevron had anticipated. The battle is likely to continue as the judgment is appealed in Ecuador and the parties fight over its enforceability in countries where Chevron has assets. Texaco (before being acquired by Chevron) pulled out of Ecuador after settling claims against it with the government.

Namibia just became the first country in the world to set aside its entire coastline as a national park. The park, which extends along all 976 miles of the nation’s coastline, covers an area larger than the entire country of Portugal. On Friday some of my environmental law students are leaving for Namibia to participate in Maryland’s new international clinic. While in Namibia they will be working on water rights issues under the direction of Professor Barbara Olshansky, a well known human rights lawyer. Professor Olshansky’s first major victory as an environmental lawyer came in 1993 when she prevailed over Floyd Abrams in the U.S. Court of Appeals for the Ninth Circuit while defending a California anti-greenwashing law defining what materials can be called recycled against a First Amendment challenge brought by advertising companies.

Last week the Committee on Energy and Commerce of the Republican-controlled U.S. House of Representatives held hearings on legislation to strip EPA of authority to regulate GHG emissions. The legislation is entitled “The Energy Tax Prevention Act of 2011” (Does that imply that something can be a tax even if it is not debated as such, exactly the opposite of what opponents of the constitutionality of the health care mandate are saying?).” EPA Administrator Lisa Jackson sparred with committee Republicans over the value of Clean Air Act regulations, including the agency’s plan to regulate emissions of greenhouse gases (GHGs). The committee’s website displays a banner reading: “In a power grab that rivals ObamaCare in audacity and job-killing effects, the EPA has claimed unto itself the power to regulate carbon dioxide, a byproduct of human and animal respiration and the basis for all life on earth, as a pollutant.” It seems the committee has forgotten that it was the U.S. Supreme Court in its April 2007 Massachusetts v. EPA decision that ruled that CO2 was a pollutant that must be regulated under the Clean Air Act if it endangers public health or the environment.

After consulting with industry groups, but not environmentalists, House Republicans have unveiled a list of “job-killing” regulations that sounds oddly reminiscent of the list prepared by President Reagan’s Task Force on Regulatory Relief exactly 30 years ago. One of the regulations targeted by the Reagan Task Force was EPA’s limit on the lead content of gasoline, which if relaxed would have caused enormous damage to public health by dramatically increasing lead poisoning. The Reagan effort ultimately backfired because it was not a serious effort to reform regulation, but rather a single-minded effort to reduce costs to industry, regardless of the benefits of such regulations. This was illustrated by the lead regulation which ultimately was strengthened prior to lead additives being banned from gasoline entirely, a measure now being adopted throughout the world.

On Monday February 7 I spoke at a program on “Free Market Environmentalism” sponsored by the Maryland chapter of the Federalist Society. Speaking for the Cato Foundation was my former classmate Doug Bandow. I noted that incorporating market mechanisms into some environmental regulations had proven useful, such as the SO2 emissions trading program in the Clean Air Act and catch quota for managing fisheries, but that the free market vision of going back entirely to the common law was a fantasy. Doug did an excellent job of representing the views that Cato often espouses, including cutting environmentally damaging subsidies, on which we could agee. I was surprised though that he was still bringing up the 1989 Alar controversy as an example of environmental alarmism when it illustrates how informed consumers more quickly forced the removal of an unreasonably dangerous pesticide from the market than regulators could.