In the ruling made public Tuesday, the U.S. Court of Appeals for the Second Circuit reversed a lower court decision dismissing the lawsuits on jurisdictional grounds. Texaco is headquartered in White Plains, N.Y., which is within the Second Circuit's venue. 

The plaintiffs have estimated that clean-up costs, compensation for devastation to the rainforest and alleged increased cancer risks for thousands of people could exceed $1 billion. 

The three-member appeals court panel also reversed a ruling that barred the Republic of Ecuador from joining in the litigation. Ecuador's move to participate in the cases marked the first time a foreign government tried to sue a U.S. oil company in an American court over alleged environmental destruction in its homeland, according to plaintiffs' lawyers. 

The ruling by the Second Circuit sends the case back to the district court for reconsideration. 

A Texaco spokeswoman said the company had no comment yet on whether it would fight the ruling. However, she pointed out that the appeals court dealt only with the question of whether New York is the proper venue for litigation and did not address the merits of the allegations in the case. 

Joseph Kohn, one of the lawyers representing the Indians, said the suits had been filed in New York because Texaco no longer does business in Ecuador and cannot be sued there. 

"We are very gratified by the ruling," said Kohn, of Philadelphia. "Hopefully we will get back on track to pursue the merits of our claims." 

The ruling stems from two suits filed in 1993 and 1994 by residents of the Oriente region of Ecuador and residents of Peru who live downstream from Ecuador's Oriente region. The plaintiffs alleged that a Texaco subsidiary dumped an estimated 30 billion gallons of toxic waste into their environment while extracting oil from the Ecuadoran Amazon between 1964 and 1992. 

The plaintiffs alleged that instead of pumping the substances back into emptied wells, Texaco dumped them in local rivers, directly into landfills or spread them on the local dirt roads. 

They also allege that the Trans-Ecuadoran Pipeline, constructed by Texaco, leaked large amounts of petroleum into the environment. The Indians alleged that they and their families suffered various injuries, including poisoning and development of pre-cancerous growths. 

The litigation has been complicated by the fact that, according to court papers, powers within the Ecuador government were split over whether they should join the litigation in U.S. courts. 

Ecuador's ambassador to the United States had objected to the U.S. State Department, but the Ecuador government later filed a motion in New York federal court seeking to participate in the litigation. 

A New York district judge dismissed the suits in 1996 and 1997 on grounds that New York was not the proper place for the litigation and that Ecuador would be a more convenient location. He also denied Ecuador's motion to intervene. 

However, the appeals court reversed the lower court. It ruled, among other things, that for the case to be dismissed in favor of a different venue, Texaco would have to consent to being sued in Ecuadoran courts. 

Texaco's stock ended at $62.375, up 6 cents on the New York Stock Exchange.
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