LAW:

Defendant in racketeering suit works as U.S. consultant on Gulf spill

An environmental consulting firm named as a defendant in a racketeering suit filed by Chevron Corp. over a landmark pollution lawsuit in Ecuador is continuing to work on another blockbuster case: the Deepwater Horizon oil spill investigation.

Boulder, Colo.-based Stratus Consulting, a long-term contractor with the National Oceanic and Atmospheric Administration and other federal agencies, is gathering and analyzing data concerning the Gulf of Mexico spill.

Stratus was named in February as a defendant in the federal racketeering suit filed by Chevron against Ecuadorean plaintiffs and their legal team who are seeking damages for environmental contamination relating to Texaco Petroleum Corp.'s operations there (Greenwire, Feb. 2).

Chevron acquired Texaco in 2001 and has been vigorously seeking to undermine the plaintiffs' case, both in Ecuador, where the case is being heard, and in U.S. courts, where the plaintiffs were expected to try to recover any damages awarded to them.

Just days after Chevron filed its racketeering suit, claiming the entire case was an extortion attempt, an Ecuadorean judge ordered the oil company to pay $8.6 billion, a sum that would be doubled if Chevron did not apologize and immediately pay up (E&ENews PM, Feb. 14). The case is now on appeal in Ecuador.

The filing of the racketeering suit raised eyebrows at NOAA, according to a government source familiar with the issue. The agency checked with the Justice Department to make sure it was OK to continue working with Stratus, the source added.

A Justice Department spokesman declined to comment.

It is not surprising that the government would want to take a closer look at the issue after the racketeering suit was filed, according to James Rubin, a former DOJ lawyer in the Environment and Natural Resources Division, now in private practice at SNR Denton.

"As a litigator, I, too, would be concerned if the credibility of one of my experts were impugned, even if there were no basis for the claim," he said. "I would at least want to know more to decide how to respond."

Chevron's allegations concerning Stratus' involvement in the conspiracy to extort the company center on the actions of an independent expert, Richard Cabrera, who was hired by the Ecuadorean court to conduct a study of the alleged environmental damage.

Chevron claims that the plaintiffs had lobbied for Cabrera's appointment, but more serious for Stratus is the evidence that Cabrera based a lot of his conclusions on Stratus' findings.

U.S. District Judge Lewis Kaplan of the Southern District of New York, who is presiding over the racketeering case, noted in one of his opinions not just that Cabrera's report was based on Stratus' work, but that Stratus later endorsed the Cabrera report in a press release issued by the plaintiffs.

Emails obtained by Chevron "confirm that Stratus drafted substantial portions of the Cabrera report," Kaplan wrote.

When Chevron lawyer Andrea Neuman of the Gibson Dunn & Crutcher firm deposed Stratus scientist Douglas Beltman, she warned him about the dangers of losing government contracts as a result of fraud.

"Are you aware that involvement in a fraud can serve as grounds for both individuals and companies to be permanently debarred from government contracting?" the lawyer asked, according to court filings.

The plaintiffs' lawyers objected at the time to Neuman's line of questioning.

Stratus maintains it has done nothing wrong.

Allegations 'demonstrably false' -- Stratus attorney

Asked why Stratus believes its contracts with the government should not be affected by the racketeering case, Joe Silver, an attorney who represents the firm, said it was because Chevron's allegations "are demonstrably false and its legal maneuverings are a transparent attempt to avoid its environmental responsibilities in Ecuador without, in the least, questioning the science."

Stratus "never engaged in the misconduct alleged by Chevron, and Chevron knows as much," Silver added.

The company does not dispute that it has worked with the plaintiffs. But Stratus says its role was limited to "technical analyses of oil field operations in Ecuador, the environmental contamination caused by those operations, and the resulting environmental impacts and damages," according to Silver's court filing responding to Chevron's allegations.

Stratus personnel "relied on their clients" to direct their work, including how it was submitted, and had "no knowledge or involvement in any collusion or conspiracy," the court filing states.

Regarding the Cabrera report, Silver wrote that Stratus "prepared materials and submitted them only to its clients."

The company "had no control over what the expert did with any Stratus Consulting materials he received."

Ben Sherman, a spokesman for NOAA, confirmed that Stratus is under contract as part of the agency's damage assessment, remediation and restoration program, which currently includes chronicling what happened in the Gulf of Mexico following the Deepwater Horizon incident.

The spill response is "the focal point" of Stratus' work at present, he added.

Experts say the information gathered as part of that process will be critical in any settlement negotiations with well operator BP PLC and the other responsible companies that take place down the road (Greenwire, April 20).

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