A judge in Ecuador's Amazon has slapped a fine on US oil giant Chevron for polluting rainforests and rivers there. Oil companies and industry analysts will watch this case closely because of the precedent it could set for other lawsuits against companies accused of contaminating the countries in which they do business.
The New York Times reports that a judge has ruled that Chevron pay more than $9 billion in damages, one of the largest environmental awards ever. The judge found Chevron responsible for damages of about $8.6 billion. Indeed, the fine could double to $18 billion. The judge has threatened double the penalty if Chevron fails to publicly apologize for its actions within 15 days. That's a lot of money for a company that made a $19 billion profit in 2010.
This case has been going for many years. Marketplace reports that it goes back 17 years when villagers in northern Ecuador sued Texaco for pollution in the 90s, claiming its oil drilling and refining made them sick, and ruined their land and water. Chevron scooped up Texaco in 2001 and the case was left unresolved.
Chevron is fighting back. As the San Francisco Chronicle reports, Chevron refused to settle and actually filed a countersuit against the plaintiffs in the United States, accusing them of fraud and extortion. Chevron sees it as a shakedown.
Oil companies will have a vested interest in this case. If Chevron loses, it will set a massive precedent for the oil industry. On the other hand, it might encourage more of them to settle in the future and not go the way of Chevron.