Gov. deJongh sends HOVENSA agreement back to Senate
Published: October 19, 2013
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ST. THOMAS - Gov. John deJongh Jr. resubmitted the Fourth Amendment Agreement with HOVENSA to the Senate this week, along with a letter addressing the concerns raised by senators after they rejected the agreement in August.
DeJongh's administration had negotiated the proposed agreement with HOVENSA, but the senators rejected it on Aug. 7.
Later in August, Senate President Shawn-Michael Malone sent the governor a letter detailing the senators' concerns. At a session in September, members of the 30th Legislature adopted a resolution outlining what they want to see in a renegotiated agreement.
In his transmittal letter to Malone, deJongh said the resubmittal reflects "considerable efforts, cooperation and good will" of the senators and HOVENSA.
DeJongh said he took the senators' concerns, detailed in the resolution, and went back to the negotiating table with HOVENSA.
"On Oct. 16, 2013, following several weeks of discussions, I succeeded in obtaining from HOVENSA and its owners a formal document setting forth the requested assurances and clarifications," deJongh told Malone.
In a letter from HOVENSA's legal counsel, the oil company addresses the Senate's concerns and indicates that if the Fourth Amendment Agreement is ratified, the positions taken in the letter will be binding.
"Upon ratification, the assurances and clarifications to which that document commits HOVENSA and its owners will be part and parcel of the law, ensuring that any future interpretation of the Fourth Amendment is governed by those commitments. HOVENSA and its owners will be bound by them, precluded both by principles of contract and by the statute itself from any attempt to assert a different understanding of the Amendment and its terms," deJongh said.
Additionally, HOVENSA has agreed to provide health insurance to all non-employee contractors working at the HOVENSA site. The insurance will cost HOVENSA more than $1 million a year, according to the governor.
If the agreement is ratified, the following provisions will become mandatory:
- The V.I. government will take exclusive control of nearly $5 million, along with interest, in a third-party escrow account for Supplemental Environment Project funds HOVENSA paid as part of a consent decree with the Environmental Protection Agency. HOVENSA has agreed to be relieved from any future involvement with the funds.
- If HOVENSA has not been sold after a year, HOVENSA will give the government access to the Limetree Bay Channel - but not its dock facilities - while it operates a storage terminal business.
- The temporary adjustment in property tax payments from a section of the proposed agreement "is only a deferral of the unpaid amount until the refinery is sold or ceases to operate as an oil storage terminal, or until Aug. 15, 2019, whichever first occurs." When that happens, HOVENSA will make a lump-sum payment to the government so that the government recoups the value of the deferred payments.
- The recouped value of the deferred payments includes interest.
- If the refinery is sold, HOVENSA will pay the deferred property taxes or 20 percent of the gross sales proceeds up to $50 million.
- Although the government's assessment is that the facility would be best used as a refinery, HOVENSA will consider purchase offers made by parties who want to use the property for other industrial or commercial purposes. HOVENSA and its owners recognize that any buyer will have to negotiate a new agreement with the government, and any alternative use of the property would require government approval.
- HOVENSA will make fuels available to the government and public at its fuel loading rack as long as HOVENSA is operating a fuel storage facility there.
- The agreement does not cause a loss of legal rights by the parties if the refinery does not sell.
The only item from the Senate's resolution that was not included in the new agreement is a provision to increase the scholarship fund from $500,000 to $1 million.
Malone said Friday that he and his staff still are reviewing the documents. It appears the Senate's issues have been addressed, but Malone needs to ensure that the document is legally enforceable, he said.
DeJongh said ratification of the agreement with the new supporting documents will speed the sale of the refinery.
"I am pleased that, by working together, we were successful in achieving these commitments and clarifications, which I hope will now pave the way for ratification of the Fourth Amendment Agreement and the beginning of the bona fide sales process. This is our best chance of getting the refinery restarted and getting our economy moving again," deJongh said.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.