CHEVRON
by Philip Mattera
Chevron, once part of the Standard Oil empire, has grown over the past quarter century into the world’s fourth largest petroleum company, thanks to a series of ambitious acquisitions: Gulf Oil in 1984, Texaco in 2001 and Unocal in 2005. Chevron is a frequent target of criticism by environmental groups and human rights organizations for its practices in the United States and countries such as Ecuador, Nigeria, Burma, Chad and Angola. Each year many of these organizations get together to publish an alternative annual report called The True Cost of Chevron that documents in great deal the company’s checkered track record.
Environment and product safety
Chevron has spent heavily on an advertising campaign with the theme “Will You Join Us,” which is apparently meant to give the impression that it is in the vanguard of environmental reform and all-around socially responsible behavior. It presumably is also meant to deflect attention away from the fact that for more than two decades Chevron has had a far-from-unblemished track environmental track record of its own.
Some of the company's worst sins have taken place in Richmond, California, where it has a petroleum refinery and other facilities. A local group called Citizens for a Better Environment published a report in 1989 that acknowledged that Chevron had reduced waste-water discharges at the facility but said that toxic air emissions were still at unacceptably high levels. In 1988 the company paid $550,000 to settle a state lawsuit brought in connection with toxic emissions at the plant.
That same year the company paid a fine of $1.5 million to the EPA for waste-water discharges at its El Segundo refinery near Los Angeles. The federal agency said that there had been some 880 violations of pollution laws at the facility since 1981.
In 1992 Chevron pleaded guilty to criminal and civil charges in connection with violations of the Clean Water Act at an offshore drilling platform in the Santa Barbara Channel and paid $8 million in fines. That same year it paid $1 million in penalties for Clean Air Act violations at its refinery in Philadelphia.
In 1993 Chevron paid $500,000 in fines after pleading no contest to charges of misdemeanor criminal violations of California law in connection with a 1991 oil spill off El Segundo.
Also in 1993 the EPA proposed a fine of $17 million against Chevron for violations of the Toxic Substances Control Act. The dispute was later settled, with Chevron paying only $375,000.
In 1996 Chevron agreed to pay $700,000 to settle charges that its refinery in Perth Amboy, New Jersey violated the Clean Air Act through sulfur dioxide emissions.
In 1997 Chevron agreed to pay $1.1 million to settle U.S. Interior Department civil charges that the company violated critical safety regulations at an offshore drilling platform near Ventura, California.
In 1998 Chevron agreed to pay $540,000 to settle charges brought by EPA that the company bypassed a wastewater treatment system at its Richmond refinery, resulting in toxic releases into the San Pablo Bay over a period of five years.
In 2000 the company paid $7 million to settle charges of Clean Air Act violations at an offshore loading terminal near El Segundo.
In 2001 Chevron agreed to pay $750,000 to settle charges that its oil production facilities in Rangely, Colorado violated the Clean Water Act during a spill in 1995. The company also agreed to make improvements at the site.
In 2001 a group of companies including Chevron settled a lawsuit that had been brought by Communities for a Better Environment over the contamination of ground water in California by the carcinogenic gasoline additive MTBE. In the wake of that agreement Chevron faced a series of other MTBE cases in California and other states. In 2008 Chevron and several other oil majors agreed to pay $422 million to settle suits that had been brought by public water systems in 20 states and consolidated in federal court.
In 2002 Chevron was fined $2 million by the government of Angola for environmental damage caused by leaks in pipes used to transport oil from offshore drilling platforms. A government investigation had found that the pipes were not properly maintained.
In 2003 Chevron reached a settlement with the U.S. Justice Department and the Environmental Protection Agency in which it agreed to spend about $275 million to reduce airborne emissions from five of its U.S. refineries in California, Hawaii, Mississippi and Utah.
In 2004 Chevron Phillips Chemical agreed to pay a $1.8 million civil penalty for Clean Air Act violations that led to two explosions and releases of toxic chemicals at a manufacturing facility in Pasadena, Texas in 1999 and 2000.
In 2007 Chevron agreed to pay $1 million to settle civil charges that had been brought against it by the state of New Jersey in connection with a spill of more than 100,000 gallons of crude oil into Arthur Kill off Perth Amboy in 2006.
In 2009 Chevron was ordered by the United Kingdom Environment Agency to pay a fine of £11,500 in connection with a diesel spill at the company’s Poole Harbor oil terminal three years earlier.
In January 2010 the EPA’s criminal investigation division seized computers and records at Chevron’s oil facilities at Cook Inlet in Alaska. According to the Anchorage Daily News, the agency was investigating whether the company knowingly violated its air pollution permits at the locations.
In April 2010 at least 18,000 gallons of oil were spilled into the waters of the Delta National Wildlife Refuge in Louisiana as a result of an accident involving a pipeline owned by a joint venture of Chevron and British Petroleum.
In November 2011 officials in Brazil threatened to revoke Chevron’s license to drill in that country’s waters after an oil spill and then sued the company and its drilling contractor Transocean, seeking $22 billion in damages. (Chevron later agreed to pay about $130 million to settle the matter.)
Chevron reported that as of the end of 2011 it had been identified as a potentially responsible party at about 180 Superfund toxic waste sites in the United States.
In September 2012 the San Francisco Chronicle reported that it had learned that federal authorities had opened a criminal investigation of Chevron after discovering that the company diverted pollutants away from monitoring equipment at its Richmond refinery and burned them off into the atmosphere. The previous month, a series of explosions and fires tore through the Richmond refinery, spewing thick black smoke into the air. In January 2013 the California Division of Occupational Safety & Health announced $963,200 in fines against Chevron for willful and serious violations at the facility. And in August 2013 Chevron entered a no contest plea to six state criminal health and safety charges; it agreed to pay $2 million in restitution and costs and was put on probation for three and a half years.
In December 2013 the Utah Department of Environmental Quality announced that Chevron Pipe Line would pay $5.35 million to settle violations connected to a diesel fuel spill near Willard Bay State Park the previous March.
See also the discussion of Ecuador, Nigeria and Kazakhstan in the human rights section below.
Labor
Chevron’s predecessor Standard Oil of California (Socal) shifted from ruthless labor policies early in the century to a policy of paternalism after the First World War, but for years it resisted unionization.
In the late 1910s the Oil Field, Gas Well and Refinery Workers Union was formed, motivated largely by the need to improve conditions at other petroleum companies. Nonetheless, in 1919 the union began a drive to organize Socal's workers—with limited success.
It was not until the 1930s that significant organizing activity resumed in the oil industry. The union, which in 1937 changed its name to the Oil Workers International Union (OWIU), made some gains but not at the Standard Oil companies, where there was a stubborn attempt to maintain company unions instead of independent collective bargaining organizations.
Although explicit company unions were barred by the Wagner Act, such organizations continued to represent workers at Socal, even after a wave of strikes in the 1940s. It was not until the late 1950s that the Oil, Chemical and Atomic Workers (the successor to the OWIU) was able to organize most of the company. After that Socal (and later Chevron) generally followed industry patterns in dealing with the union, which is now part of the United Steelworkers (USW). In 2009 USW members at Chevron ratified a new three-year industry pattern agreement.
In 2000 about 500 members of the United Mineworkers of America struck Chevron’s Pittsburg & Midway Coal Company for about two months before negotiating a new collective bargaining agreement.
Worker Safety
An explosion and fire in 1989 at the Richmond refinery severely burned three workers. A U.S. Occupational Safety and Health Administration inspection following the accident found that workers who were responsible for assisting firefighters had not been provided with even basic safety equipment. OSHA later fined the company $877,000 for more than 100 willful and serious violations. After an appeals process the company agreed to improve its company-wide fire protection policy and pay a fine of $275,000.
Human rights
Ecuador. When Chevron took over Texaco it also acquired a long-standing controversy over the company’s operations in Ecuador. For nearly a decade, Texaco had been fighting a lawsuit charging that it had engaged in a massive amount of toxic dumping over the course of two decades. After their case was blocked in U.S. federal court, the plaintiffs in 2003 filed a $1 billion action against ChevronTexaco in Ecuador. Critics confronted the company over the issue at events such as its annual meeting. At the 2005 meeting then-CEO David O’Reilly shut down the floor microphone before a prominent Ecuadorian rainforest leader had a chance to speak about the environmental impact of the company’s operations.
Chevron lobbied the Bush Administration to use trade sanctions to get Ecuador to drop the case, but the suit continued. In 2009 there were reports that the company could face damages as high as $27 billion, making it the world’s large environmental lawsuit. The Amazon Defense Coalition criticized the company for not disclosing the full extent of the potential liability to its shareholders.
In August 2009 the case took an unexpected turn when Chevron claimed it had video evidence that the judge in the case was being bribed by Ecuadoran government officials. The judge withdrew from the case, but Chevron kept up the pressure. It filed an arbitration action through a United Nations trade commission and demanded that the government pay the company’s legal fees and “moral damages” because of its alleged interference in the lawsuit.
Later, questions were raised about the integrity of the evidence and of the two businessmen who had secretly taped the judge. In March 2010 a U.S. federal judge ruled against an effort by the government of Ecuador to bar Chevron from proceeding with the UN arbitration action. In February 2011 the new judge in the Ecuador case ordered Chevron to pay more than $9 billion in damages (later increased to $18 billion and then lowered to $9.5 billion), but the company appealed the ruling both in Ecuador and the United States. In October 2012, however, the U.S. Supreme Court rejected Chevron's appeal without comment. Chevron then brought a racketeering lawsuit against the plaintiffs' U.S. lawyer, and in March 2014 a federal judge ruled that the judgment should not be enforced. Chevron then went after the plaintiffs' law firm, Patton Boggs, which gave in the to pressure and agreed to pay $15 million to Chevron.
Nigeria. Like Royal Dutch Shell, Chevron was a target of criticism during the 1990s for its ties to the repressive government in Nigeria. In 1998 journalist Amy Goodman reported that Chevron officials helped facilitate an assault by Nigerian troops on protesters who were occupying an offshore oil platform in the Niger Delta. Two protestors were killed and others were taken into custody and allegedly tortured by Nigerian authorities. It later came out that Nigerian soldiers had billed Chevron for their services.
In 1999 a group of Nigerian citizens filed a lawsuit against Chevron in U.S. federal court under the Alien Tort Claims Act. The case finally came to trial in 2008. After weeks of testimony, a jury found that Chevron was not legally responsible for what happened to the protestors. The plaintiffs appealed but were turned down by the U.S. Supreme Court.
Chevron was also one of the big petroleum companies sued in 2005 for gas flaring, but the environmentally hazardous (and illegal) practice continues.
Chad and Cameroon. In 2005 Amnesty International published a report warning that an oil pipeline project in Chad and Cameroon led by Exxon Mobil and Chevron threatened human rights in the two African countries because the agreement signed by the companies and the two governments (which have a poor track record in respecting rights) put such a high premium on maintaining the financial stability of the project.
Burma. In 2008 EarthRights International accused Chevron of complicity in human rights abuses in the areas around the natural gas pipeline it co-owns in Burma. Unocal, which was acquired by Chevron in 2005, had previously been sued by EarthRights International for its abuses in Burma; it settled the case out of court.
Kazakhstan. Chevron is one of the companies being targeted by groups such as Crude Accountability for human rights, environmental and labor abuses in connection with the Karachaganak oil and gas field in Kazakhstan.
Tax and Subsidy Issues
In 1994 Chevron paid $550 million to the Internal Revenue Service to settle a dispute over tax liabilities related to oil purchases from Saudi Arabia.
In 1997 Caltex Petroleum, then a joint venture of Chevron and Texaco, was hit with a tax claim of $2 billion by the Internal Revenue Service relating to crude oil sales to Japan. In 1999 the case was settled for $65 million.
In 2000 Chevron paid the state of Louisiana $9.6 million to settle a dispute concerning oil severance (production) taxes.
In 2002 two accounting professors published a study estimating that Chevron had evaded more than $3 billion in state and federal taxes in the United States through a complex oil pricing scheme involving the company’s operations in Indonesia.
In 2006 the government of Chad ordered Chevron to cease its operations in the country, accusing it and the Malaysian company Petronas of failing to pay some $450 million in taxes on oil production. Chevron later agreed to pay the taxes and was allowed to resume operations.
In 2007 Chevron filed a challenge to the property tax assessment imposed on its refinery in Richmond, California by Contra Costa County. The company claimed it had been overcharged by nearly $60 million. In 2009 an appeals board ruled in its favor but decided on a smaller reduction in valuation than what the company wanted. In April 2010 the county agreed to refund $18 million to the company over the course of two years.
Government Contract and Royalty Issues
In 2000 Chevron agreed to pay $95 million to settle civil charges that it shortchanged the U.S. federal government on the payment of royalties on oil extracted from public and Native American lands. In 2009 the company agreed to pay $45.9 million to settle another royalty underpayment case brought by the federal government.
Chevron became a major beneficiary of an expensive mistake by the U.S. Interior Department, which in the late 1990s had failed to write a provision into many offshore oil leases to restore royalty rates to normal levels after they had been reduced during a period of low oil prices. When Chevron and a group of other companies made a major find in the Gulf of Mexico in 2006, it was estimated that the contract snafu would allow the firms to avoid paying more than $1 billion in royalties.
In 2008 Chevron was reported to be one of the oil companies that gave prohibited gifts and otherwise helped corrupt some of the employees of the Interior Department agency responsible for overseeing the federal royalty program.
Other: Questionable Payments
In 2004 there were reports that Chevron was among the companies being investigated by the U.S. Securities and Exchange Commission for making questionable payments to members of the ruling elite in the African country of Equatorial Guinea, including dictator Teodoro Obiang Nguema Mbasogo. No charges were ever filed.
In 2007 Chevron agreed to pay $30 million to settle charges relating to illegal payments made to Saddam Hussein’s Iraq under the United Nations Oil for Food Program.
Other Information Sources
Violation Tracker summary page
Watchdog Groups and Campaigns
Communities for a Better Environment
International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM)
West County Toxics Coalition (Richmond, CA)
Key Books and Reports
Amazon Crude by Judith Kimerling (Natural Resources Defense Council, 1991)
Contracting Out of Human Rights: The Chad-Cameroon Pipeline Project (Amnesty International, 2005)
Dirty Profits 2: Report on Companies and Financial Institutions Benefiting from Violations of Human Rights (Facing Finance, 2013).
Formative Years in the Far West: A History of Standard Oil Company of California and Predecessors Through 1919 by Gerald T. White (1962)
How Chevron, Texaco and the Indonesian Government Structured Transactions to Avoid Billions in U.S. Income Taxes by Jeffrey D. Gramlich and James E. Wheeler (2003)
Rainforest Catastrophe (Amazon Defense Coalition, 2006)
Rights Violations in the Ecuadorian Amazon (Center for Economic and Social Rights, 1994)
The Law of the Jungle: The $19 Billion Legal Battle Over Oil in the Rain Forest and the Lawyer Who'd Stop at Nothing to Win by Paul M. Barrett (2014).
The Seven Sisters: The Great Oil Companies and the World They Made by Anthony Sampson (1975)
True Cost of Chevron: An Alternative Annual Report (Amazon Watch and others, 2009)
Tyranny of Oil by Antonia Juhasz (HarperCollins, 2008)
Note: This page draws from a corporate profile originally prepared by the author for the Crocodyl website in May 2010.
Last updated October 13, 2014.