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Chevron Case Highlights Difficulty of Making Oil Companies Pay for Spills

The biggest oil spill cases show that lengthy and expensive litigation works in favor of oil companies

By Michael Keller and Stacy Feldman

Mar 20, 2011
Oil contamination in the Ecuadorean Amazon rainforest.

When an Ecuadorian judge ordered Chevron to pay plaintiffs $8.6 billion last month for damages from oil contamination in the Amazon jungle after 18 years in the courts, environmental and indigenous people's advocates were euphoric.

Some hoped the time had finally come for larger environmental judgments against oil majors, widely derided for not paying the full costs connected to their oil spills.

But their hopes are fading. International arbiters at the Hague, Netherlands and a U.S. District Court in New York have separately blocked enforcement of the verdict. On March 11, the Ecuador ruling. The appeals process could drag on for years, during which time no payment can flow.

The case is especially complex — it marks the first time a U.S. oil giant was held accountable in a foreign court for pollution overseas. But it raises a fundamental question about all court orders forcing energy companies to pay for spill cleanup and damages: Are they working?

The short answer is not as much, or as fast, as many would like.

A look at some of the biggest oil spills over the last three decades that led to litigation shows that most energy firms pay partial rewards but very few, if any, environmental damages; outcomes vary with no apparent rhyme or reason; and cases, which follow appeal after appeal, can take decades to litigate.

Environmental advocates fear what this means for the more than 400 lawsuits filed against BP in the Deepwater Horizon spill, the largest accidental oil spill in history.

But the ramifications at home are far broader, now that environmental security has become a national priority.

Ground zero for this is the spread of a relatively new gas drilling method, known as hydrofracking. According to , wastewater from the practice contains radioactive material and is being dumped in public waters.

Another concern for some lawmakers and advocates is the proposed Keystone XL oil pipeline, awaiting a thumbs up or down on a U.S. presidential permit. The line would carry as many as 900,000 barrels of tar sands crude a day from Canada to Texas, and pass through the sensitive Ogallala aquifer that many Midwesterners rely on for drinking water and irrigation.

The pipe's builder, Canadian energy company TransCanada, that it would be responsible for immediate cleanup and an alternative water supply in case of an oil leak.

But whether such declarations are legally enforceable is questionable.

Enbridge Energy, for example, another Canadian firm, suffered a pipeline break last summer in Michigan that released about 820,000 gallons of crude into the Kalamazoo River.

In the accident's aftermath, the company and CEO himself declared that all impacted residents would be compensated. In January, lawyers for Enbridge told a circuit court in Michigan that such statements are "mere expressions of intentions, not [legal] offers."

Can oil companies be held liable for public promises when accidents strike?

"The modus operandi is always the same," said Steve Kretzmann, executive director of , a Washington, D.C.-based advocacy group. "First they deploy their PR people and then they send in the lawyers to whittle away at their responsibility. I'm not saying there's an industry playbook for this, but is sure seems like there is."

Billions in Damage, Decades to Litigate

If there is one common thread that runs through all oil spill litigation, it is that eventual payouts account for a fraction of actual economic and ecological damages, though judgments have toughened over time.

In 1978, the Amoco Cadiz crude carrier spilled 67 million gallons off the coast of Brittany, France. It was the largest spill of its kind at the time and the biggest loss of marine life ever recorded, with damage still evident.

I think that any company

I think that any company whether it be oil, environmental, or otherwise be held completely responsible for the damage that they do. This include loss of life, in any form. Maybe this is just an impossible dream.


    Der einzige Nachteil beim Pokern in besteht darin, dass Sie nicht über die Mimik der Mitspieler auf deren Blatt schließen können, da deren Gesichter nicht sichtbar sind.

False equivalency.

Chevron in Ecuador is not properly classed with other spills. Ecuador itself is responsible for the spill. I'd love to hate Chevron on this one, but it isn't correct.

Also highlights the better behaviour of BP

when it comes to paying out and cleaning up... so much better than Exxon... and yes, I know it doesn't make them perfect; just a little better.

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