In an unusual case of one natural-resources company battling others over the environment, a South American timber consortium has sued two affiliates of BP PLC in a U.S. court, accusing them of desecrating an Argentine rain forest with drilling activities. The case was filed Jan. 28 in Delaware Chancery Court by Candlewood Timber Group LLC, the New York owner of the forestry venture, against BP Argentina Exploration Co., an affiliate of the large London oil company, and Pan American Energy LLC, an Argentine company in which BP Argentina owns a majority stake. Candlewood is seeking unspecified damages and an order for the affiliates to cease drilling activities the company says have caused substantial damage to the primeval San Pedrito Forest in the foothills of the Andes near Bolivia. Pan American officials deny inflicting the damages cited in the suit and vow to vigorously defend the company. They say they have followed accepted industry standards in the drilling, in consultation with various environmental groups. BP officials say they believe their affiliate, BP Argentina, was wrongly named in the suit because it didn't conduct any of the actual drilling; that work was done by Pan American. The BP affiliate holds a 60% stake in Pan American, while Argentine company Bridas Corp. holds the rest. Candlewood said it has suffered irreparable harm, because the damages have prevented it from going forth with a plan to thin the subtropical forest of trees in a manner that would allow the logs to be labeled as made in accordance with specifications of an environmental-certification group. The specifications discourage large clearcuts and damage to streams, among other practices. Trees cut in adherence with the specifications can then be sold on the expanding market for "green," or environementally friendly, wood products in the U.S. and Europe, Candlewood officials said. However, Candlewood said in its complaint that substantial portions of the forest have been marred by clearcuts, debris and other damage, jeopardizing the company's ability to gain certification for its products from the Forest Stewardship Council, the group that oversees certification of such "green" wood world-wide. One problem cited in the complaint has been the alleged practice by the BP venture of dumping tons of excavated rock, soil and vegetation into the forest around the drilling site. "Whether you're an environmentalist or not, when you look at pictures of this you say there has to be a better way," attorney Michael P. Kelly said. Mr. Kelly is managing director of the Delaware office of McCarter & English LLP, the Newark, N.J., law firm that is helping to represent Candlewood in the matter. Mr. Kelly said the case was filed in Delaware because Candlewood, BP Argentina Exploration and Pan American Energy are incorporated there. The matter could have been filed in Argentina, but environmental experts say more similar suits are being filed in the U.S., where plaintiffs believe they have a better chance for a fairer hearing than they do in many developing countries. Candlewood officials said they founded the company a few years ago to pursue the commercial market for certified-timber products. The company, through an Argentine subsidiary, acquired about 250,000 acres in that country during 1997 and 1998, including about 70,000 acres in the San Pedrito Forest. San Pedrito is one of the last mostly undisturbed forests in the country and is home to wildlife such as the jaguar, tapir, peccary and toucan. Around the time of Candlewood's acquisition, company officials said, the BP-led venture in South America acquired mineral rights in the San Pedrito Forest for crude-oil and natural-gas exploration. Candlewood said the oil companies worked out a deal to get access to the company's forest lands, and since 1997 they have drilled a number of wells to tap natural-gas reserves beneath the forest floor. But Candlewood officials say the BP venture didn't keep a promise to tread lightly in the forest; as a result, the officials say, the company has had to postpone a third-party audit that would have allowed it to begin producing certified-wood products such as lumber and furniture.