Lago Agrio: More Details On Chevron’s Lobbying of the State Department

Chevron has lobbied the State Department with regard to the Lago Agrio dispute on several occasions. The contacts between the company and the Department have been more extensive, and at a much higher level on both sides, than I previously was able to report.

In my last post on the issue, I reviewed the evidence revealed from the State Department’s first production of documents responsive to my FOIA request. Those documents came from the Office of Human Rights and Refugees, which is part of the Office of the Legal Adviser. Now I’ve received documents from the Bureau of Economic and Business Affairs and the Bureau of Western Hemisphere Affairs. These new documents paint a more complete picture of Chevron’s contacts with the Department.

The first thing that’s evident is that Chevron has been talking about the case with senior officials in the State Department for a long, long time. In October 2005, approximately two years after the LAPs—having lost their bid to litigate the case in New York—sued in Ecuador, and while the inspections of sites in Ecuador was ongoing, David J. O’Reilly, then Chevron’s Chairman and CEO, raised concerns with Robert Zoellick, then the Deputy Secretary of State (the second highest-ranking official in the Department), about “the lack of resolution of our investment dispute in Ecuador.” He urged Zoellick not to finalize a free trade agreement with Ecuador until the dispute was resolved:

We remain concerned over Ecuador’s inability to honor important contractual commitments to our company, including specific releases from any and all environmental liability associated withour former petroleum operations there and the national oil company’s legal commitment to us from third-party claims. This failure to perform has left Chevron embroiled in costly, and highly politicized litigation in the Ecuadorian court system, which, itself, is in a state of disarray due to judicial strikes and other governmental failures.

Zoellick responded that the Department “shares your concern about the resolution” of the investment dispute. He noted that the Department was working with the USTR and the embassy in Quito on the issue and had raised it several times with senior Ecuadoran officials. He avoids affirmatively tying free trade agreement negotiations to a resolution, but he noted that Ecuador was aware “that we are pressing for the resolution of outstanding investment disputes in parallel with the Freet Trade Agreement negotiations ….”

O’Reilly remained directly involved in the dialogue with the Department, and the Department appears sympathetic. In 2007, O’Reilly telephoned Nicholas Burns, the Under Secretary for Political Affairs (the Department’s fourth highest official), to ask “if there was a way for the USG to help Chevron and to level the playing field” in light of public statements by President Correa in favor of the plaintiffs. A few days later, O’Reilly argued to Burns: “We hope that you agree that” Ecuador’s support for the plaintiffs “requires an equivalent response by our government.” Burns posed a question to senior Department officials, including Thomas A. Shannon Jr., Assistant Secretary for Western Hemisphere Affairs, and Linda L. Jewell, the US ambassador in Quito: “How can we best help Chevron in this situation?”

Although the 2005 exchange between O’Reilly and Zoellick makes it clear that Chevron was already seeking to tie trade preferences to the Lago Agrio dispute, in 2007 we begin to see discussion of using the impending renewal of trade preferences under the Andean Trade Preference Act to pressure Ecuador to take action. In mid-2007, Jaime Varela-Walker, Chevron’s representative (in Ecuador, I think), put the question to two foreign service officers: he “asked about using ATPA renewal in 8 months as a tool.” The officers demurred, calling ATPA a “blunt instrument” and noting that the embassy “cannot really get involved in a judicial process.” At the meeting, Chevron also disclosed another part of its strategy: “Chevron plans to focus on the judge that has committed several of the procedural irregularities, to try and get him to ‘do the right thing.'” The documents don’t spell this out in any greater detail.

Chevron officials, most notably Lisa B. Barry (vice president and general manager) and William Irwin (manager of international government relations) continued to provide information to the Department about goings-on and to request meetings with senior officials. For example, Irwin provided Shannon with a copy of the decision in Gonzalez v. Texaco, Inc., (N.D. Cal. 2007), an early US decision taking a very dim view of Ecuadoran environmental claims against Texaco and Chevron. Irwin also passed along Chevron press releases to various officials in the Department, who circulated them. Barry requested a meeting between Shannon and Ed Scott, Chevron’s vice president and deputy general counsel, in August 2007. Later, in 2012, she requested a meeting between Scott and Jose Fernandez, Assistant Secretary of State for Economic and Business Affairs, “to exchange views on matters relating to ongoing issues with the Republic of Ecuador.” And in September 2012, she sought a meeting between Scott and Robert Hormats, the Under Secretary for Economic Growth, regarding ATPA renewal: “Given official actions and inactions by Ecuador, and exascerbated by unhalting public commentary by its officials, we believe the urgency to check against statutorily defined participation criteria for the program is particularly acute.”

There is a bunch of additional correspondence in 2012 and 2013, which I will review in a later post. But I do want to note maybe the most interesting document in the whole bunch, which appears to be a note of a meeting or telephone call between Chevron’s current CEO, John Watson, and someone in the Department on May 21, 2013.The writing is a little difficult to read, but here is my reconstruction (with the aid of esteemed readers who responded to my call for help decoding the handwriting:

John Watson—Chevron CEO

Ecuador → only 2 ways to stop.
Ecuador to recognize release agreements.
Other way → stop the lawyers with
civil RICO case
Ecuador stands in line & needs
trade preferences
USTR has not accepted petition
Don’t think Ecuador should get again
GSP.
Ecuador violation.
Good result out of Canada plaintiffs will
appeal.

Collection action in both Argentina and Brazil
in the court system now.

Watson → appreciate your weigh-in.

I’ve asked Chevron and the State Department to confirm that a conversation happened and to identify the State Department official. Chevron has refused to comment substantively, saying:

Throughout this case we have kept a wide range of stakeholders informed on the proceedings and related background. We do not disclose the content or nature of those conversations, if any.

I will update you if I hear more on this.

As I continue to get more documents, it will be interesting to see whether the Department’s approach to Chevron changed at all with the change of administrations in 2009. Right now, I don’t think we have enough data to know

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

4 thoughts on “Lago Agrio: More Details On Chevron’s Lobbying of the State Department

Leave a Reply

Your email address will not be published. Required fields are marked *