The $8.6 billion penalty announced Monday did not include an additional 10 percent allowed under the law for environmental management costs, according to Pablo Fajardo, attorney for the Amazon communities that sued Texaco in 1993.

It is believed to be the largest fine imposed on an oil company resulting from an environmental lawsuit.

Chevron, which inherited the lawsuit when it purchased Texaco in 2001, blasted the court's decision as a "product of fraud" and said it will challenge it.

Despite the victory, the plaintiffs also plan to appeal, saying the penalty is insufficient compared to the health and environmental damage caused by caused by Texaco's oil extraction between 1964 and 1990.

They say soil and rivers were contaminated and that local residents reported higher rates of cancer. They were seeking more than $27 billion.

"We have instructed our lawyers to file the appeal for the judge to reconsider the figures," Luis Yanza, director of the Assembly of People Affected by Texaco, said Tuesday.

The ruling came from a court in the town of Lago Agrio in the province of Sucumbios, near the Colombian border.

Chevron claims it was absolved of liability because Texaco paid $40 million in cleanup efforts, approved by the government, before it was bought by Chevron.

Chevron said the judgment "is illegitimate and unenforceable. It is the product of fraud and is contrary to the legitimate scientific evidence."

This fine passes the record of $5 billion initially imposed on ExxonMobil Corp. for an oil spill off the coast of Alaska in 1989. But that amount was later reduced to $500 million after a series of appeals by Exxon.

Last year, British oil giant BP contributed $20 billion to a compensation fund for cleanup efforts and victims of its massive oil spill in the Gulf of Mexico.

earlier related report
Ecuador orders Chevron pay $8 bln over oil damage
Quito (AFP) Feb 14, 2011 - A court in Ecuador on Monday ordered US oil giant Chevron to pay an estimated $8 billion for causing environmental damage in the Amazon region, in a ruling that both sides plan to challenge.

Chevron blasted the decision as a "product of fraud," while lawyers representing the Ecuadoran Amazon communities that filed the decades-old lawsuit claim $8 billion is far too low.

"We're preparing an appeal because we believe that the amount is insufficient compared to the damages caused," said attorney Pablo Fajardo, noting the ruling came from a court in the town of Lago Agrio in the province of Sucumbios, near the Colombian border.

The plaintiffs were seeking more than $27 billion, claiming Chevron was responsible for damage between 1964 and 1990 in the Amazon rainforest caused by oil extraction by Texaco, a company it bought in 2001.

They say soil and rivers were contaminated and that local residents reported higher rates of cancer.

Chevron inherited the lawsuit, which was originally filed in 1993. It claims it was absolved of liability because Texaco paid $40 million in cleanup efforts, approved by the government, before it was bought by Chevron.

"The Ecuadoran court's judgment is illegitimate and unenforceable," Chevron said in a statement. "It is the product of fraud and is contrary to the legitimate scientific evidence."

Fajardo described the court's fine as slightly more than $8 billion, while The Wall Street Journal reported the total is $8.6 billion, more than half of which would go toward restoring polluted soil.

Environmental activists applauded the ruling.

"Chevron has spent the last 18 years waging unprecedented public relations and lobbying campaigns to avoid cleaning up the environmental and public health catastrophe it left in the Amazon rainforest," US-based Amazon Watch and Rainforest Action Network said in a statement.

The organizations called the court's decision "historic and unprecedented," saying it was the first time indigenous people won a lawsuit against a multinational corporation in the country where the damage occurred.

Chevron pledged to appeal, arguing that earlier rulings by US and international courts will bar enforcement of the decision.

"Chevron does not believe that today's judgment is enforceable in any court that observes the rule of law," it said in the statement. "Chevron intends to see that the perpetrators of this fraud are held accountable for their misconduct."

The lawsuit on behalf of Ecuadoran Amazon communities was originally filed in New York in 1993.

The Ecuadorans allege that Texaco dumped billions of gallons of toxic waste into the Amazon.

Chevron, the second-largest energy company in the United States, has long claimed the process was tainted.

In 2009, Chevron posted videos online purporting to show a bribery scheme implicating the judge presiding over the lawsuit. The judge recused himself days after the videos were released.

This award passes the record of $5 billion initially imposed on ExxonMobil Corp. for an oil spill off the coast of Alaska in 1989. But that amount was later reduced to $500 million after a series of appeals by Exxon.

Last year, British oil giant BP contributed $20 billion to a compensation fund for cleanup efforts and victims of its massive oil spill in the Gulf of Mexico.

The disaster, which began with a deadly April blast aboard the BP-leased Deepwater Horizon drilling rig, sullied the coastline from Texas to Florida, killing wildlife and devastating key local industries such as tourism and fishing.

Chevron closed at $96.95 per share in trading Monday on the New York Stock Exchange, up by $1.22 per share.

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