Texaco was deemed liable for the environmental damages caused by their oil extracting operations in Ecuador. The dumping of approximately 16 billion gallons of “production water”, which was illegal, led to this court case, as well as Texaco’s system to discharge their waste into the local environment in a “cost-effective” manner without taking into consideration the local environment and the health of the local communities surrounding the area.

The Court awarded an approximate total of US$9.5 billion as a result of the damages to rivers and soils from Texaco’s oil extraction operations in Ecuador. However, Texaco refused to admit fault, blaming the court and creating obstacles throughout the trial to avoid liability or in order to “buy time”. Moreover, they claimed that their case was invalid as they were following Ecuador’s Environmental Management Act (EMA), which did not exist until 1999. In other words, they were following the Environmental Management Act from previous years, although it had been updated since. Their claim of defense was that holding a party liable for conduct that would have been lawful at the time of their operations is “impermissible” as rule of thumb. In addition, they claimed that a lack of regulations imposed by the local government meant that they could continue abiding the guidelines of the previous act, rather than using other oil extractive methods which would be less harmful to the environment, but at the same time not as “cost-effective” as their previous methods. This would be an extra cost for them, which they valued less than the local environment and the health of members of the community.

The local community believed that from Texaco’s point of view, their negligence to respect and follow through the guidelines of the Environmental Management Act (EMA) from 1999 was driven by profits. In spite of this, they received several penalties over the course of their operations, yet no improvements or investments were ever made to extract oil in a more “environmentally friendly” way.

I believe that Texaco was at fault by not abiding by the EMA’s guidelines despite several warnings. However, the local community did take advantage of this to extort Texaco by demanding exaggerated sums of money for their wrongdoings and lack of professionalism. There were no possible excuses that Texaco could have presented to the court to suspend the trial, as they knew about the updated Act.