NY AG questions Chevron in pollution lawsuit

New York Attorney General Andrew Cuomo has sent a letter to the Chevron Corp., questioning whether executives have been upfront with shareholders about the company's potential liability for decades of pollution in the jungles of Ecuador.

For years, the nation's second-largest oil company has been fighting a lawsuit filed on behalf of tens of thousands of residents of the Amazon rain forest over environmental damage and alleged cancer deaths they blame on oil spills and water contamination.

Ecuadoreans say Chevron is liable for pollution from a network of oil wells and pipelines built by Texaco Inc., mostly in the 1970s. Chevron acquired Texaco in 2001. They say Texaco dumped billions of gallons of toxic wastewater from its drilling operations into unlined waste pits to save money.

The case now rests with a judge in Ecuador, who could order Chevron to pay more than $27 billion in damages as soon as this year.

In a May 4 letter obtained by The Associated Press, Cuomo said his office had received complaints from shareholders that Chevron was downplaying the risk that it could lose the case.

"Given the fact that both New York State and New York City public pension funds hold substantial Chevron Shares and that many New Yorkers are also shareholders (including Amnesty International USA), this office has an interest in ensuring that public statements about the litigation are accurate and complete," the letter said.

Cuomo asked that Chevron submit a written response, clarifying, among other things, its "expectation of the probable outcome of the litigation," and its estimate of possible damages. The attorney general also asked Chevron to explain how it was able to state in regulatory filings that it believed the Ecuadorean court had no jurisdiction to order a payout.

A spokesman for Chevron, Kent Robertson, said the company had received the letter and would respond.

"We presume the inquiry is a result of a campaign by the American trial lawyers behind this case that seeks to pressure Chevron into a settlement," he said. "We have communicated fully with stockholders about the Ecuador case and we will continue to do so in the future. We believe stockholders will be better served by the successful resolution of this case rather than paying a windfall to a group of American trial lawyers and lobbyists."

San Ramon, Calif.-based Chevron has argued that it is not liable because Texaco spent $40 million on a cleanup in the 1990s under an agreement with Ecuador's government that absolves it of all legal responsibility. It blames much of the pollution on Petroecuador, which continued operating in the damaged areas after Texaco left in the 1990s.

Chevron also says it can't get a fair trial in Ecuador.

Cuomo has chided energy companies before over their disclosures on pollution.

In 2007 he said he would investigate whether energy companies planning to build coal-fired power plants across the U.S. had properly revealed the legal and political risks of those projects.

Some companies later agreed to put more information in future financial filings about carbon emissions and the possibility they could be sued or subjected to tougher regulation.

Cuomo's Chevron inquiry followed a letter to his office from Amnesty International, in which the human rights group, which owns Chevron stock, complained about the accuracy of some of the company's public statements. Several public pension plans that own stakes in Chevron, including New York City's, had also expressed concern about the lawsuit.