Long ago and far away? Oil company liability

by Dianne Saxe on February 28, 2011

Chevron is not the only US oil company facing blockbuster claims for damages from South American indigenous groups, due to past environmental damage apparently sanctioned by their governments. The US Ninth Circuit Court of Appeals has agreed to allow 25 Peruvian plaintiffs to sue Occidental Petroleum in a US court. Occidental had argued that they should be forced to sue in Peru, knowing that the Peruvian limitation period has almost certainly expired. Also, enforcement of any judgment against Occidental would be much easier if the decision comes from a US court.

“These cross-appeals arise from the petroleum and oil exploration operations conducted by defendant Occidental Peruana (“OxyPeru”), an indirect subsidiary of defendant Occidental Petroleum Corporation (collectively “Occidental”), along the Rio Corrientes in the northern region of Peru. Plaintiffs, 25 members of the Achuar indigenous group dependent for their existence upon the rainforest lands and waterways along the river, and Amazon Watch, a California corporation, sued Occidental in Los Angeles County Superior Court for envi- ronmental contamination and release of hazardous waste. …

Occidental is among the largest oil and gas companies in the United States. Its Peruvian operations began in the early 1970s with the development of a pair of lots near the Ecuadorean border known as “Block 1-AB.” Its subsidiary, OxyPeru, built Block 1-AB into a thriving extraction, processing, and distribution site, providing 26 percent of Peru’s total historical oil production from 1972 to 2000, at which point Occidental sold its stake in Block 1-AB to the Argentine oil company Pluspetrol. … The company built dozens of wells, a 530- kilometer network of pipelines, refineries, and separation batteries for processing crude oil, as well as roads, heliports and camps to support the operation at Block 1-AB.

The Achuar are indigenous people who have long resided along the rivers of the northern Peruvian rainforest. Block 1- AB encompasses significant portions of the Corrientes and Macusari rivers, home to several Achuar communities. The inhabitants use the rivers and their tributaries for drinking, fishing, and bathing. The region is remote, with access typically limited to small planes, helicopters, small boats, and canoes.

The complaint alleges that, during its thirty years in the Achuar territories, Occidental knowingly utilized out-of-date methods for separating crude oil that contravened United States and Peruvian law, resulting in the discharge of millions of gallons of toxic oil byproducts into the area’s waterways. Achuar children and adults came into frequent contact with the contaminants by using polluted rivers and tributaries for drinking, washing and fishing. Tests have shown potentially dangerous levels of lead and cadmium in the blood of a sig- nificant number of affected individuals. Achuar Plaintiffs have reported gastrointestinal problems, kidney trouble, skin rashes, and aches and pains that they attribute to the pollution.

Plaintiffs further allege that the pollution led to decreasing yields of edible fish, and that the animals hunted by the Achuar have been turning up dead or diseased after drinking river water. The pollution has also allegedly harmed agricultural productivity and land values. Plaintiffs contend that Occidental was aware of the dangers posed by the contamination but failed to warn residents.

…Several dozen Achuar adults and children filed a complaint in Los Angeles County Superior Court against Occidental on May 10, 2007. Plaintiffs assert claims for common law negligence, strict liability, battery, medical monitoring, wrongful death, fraud and misrepresentation, public and private nuisance, trespass, and intentional infliction of emotional dis- tress, as well as a violation of California’s Unfair Competition Law. They seek damages, injunctive and declaratory relief, restitution, and disgorgement of profits on behalf of the indi- vidual plaintiffs and two proposed classes. On August 3, 2007, Occidental removed the action to United States District Court pursuant to 28 U.S.C. § 1332(d)(2). On September 10, 2007, the complaint was amended to name Amazon Watch as a plaintiff.”

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