Ecuadorian Court Reduces Chevron Corporation's (CVX) Fine For Allegedly Polluting The Amazon Rainforest To $9.5 Billion

An Ecuadorian court ordered Chevron Corporation (CVX), the U.S. oil company, to pay a $9.5 billion penalty for environmental damages to the Amazon rainforest that were caused by its sister company, Texaco. The final verdict is about half of the $18 billion original verdict that was issued two years ago.

The suit centers on what Ecuador alleges were 40 years of harmful oil extraction by Texaco, according to a story published in Russia Today on Wednesday. While Texaco no longer operates in Ecuador, it was the first company to drill for oil in the Amazon.

Chevron has called the ruling “illegitimate and unenforceable,” while a spokesman for the plaintiffs said it was “reasonable, fair and a clear victory for environmental justice.”

Because Chevron no longer operates in Ecuador, it may be difficult -- or impossible -- for the plaintiffs to collect the penalty.

Chevron acquired Texaco in 2001. The company operated in Ecuador between 1964 and 1990.

The ongoing dispute between Ecuador and U.S. energy companies spurred Ecuadorian President Rafael Correa to cancel the country’s investment protection treaty with the U.S.

The Hague’s Permanent Court of Arbitration ruled on Sept. 18 that Ecuador had released Chevron from pollution liability.

The original settlement of $19 billion is equal to almost 20 percent of Ecuador’s gross domestic product.

Chevron is suing Ecuador and its lawyers for extortion in a U.S. court. Ecuadorian judge Nicolas Zambrano awarded residents of Lago Agrio, a town near the country’s border with Colombia that is known for its large oil fields, $18 billion to be paid in 2011, but the residents have not collected any of the money.