Governor, senators to discuss rejected HOVENSA agreement
Published: September 2, 2013
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ST. CROIX - Gov. John deJongh Jr. and senators are set to meet Tuesday to discuss the issues senators have with the proposed agreement between the government and HOVENSA - the same agreement that senators rejected Aug. 7.
The move comes after Senate President Shawn-Michael Malone wrote a letter last week to deJongh, summarizing concerns senators have about the proposed Fourth Amendment Agreement. The letter, dated Wednesday, spans four pages.
A Government House statement says that Tuesday's meeting is "to further discuss the letter and concerns raised by members of the 30th Legislature regarding the Fourth Amendment Agreement between the government and HOVENSA."
That agreement was the result of more than a year of negotiations between the executive branch and HOVENSA.
It is not clear - even if the governor and senators come to an understanding about changes they want to see in the proposed agreement - whether HOVENSA would be willing to go back to the negotiating table.
Malone told The Daily News that he thinks it is important for senators and the governor to discuss the issues.
"Hopefully we can come to some consensus on what can be included and what not," Malone said. "And hopefully we can come to an agreement that's in the best interest of our territory."
Malone said he had not spoken with anyone from HOVENSA about whether the company is willing to consider renegotiating the proposed agreement.
Currently, the government and HOVENSA are at an impasse over interpretation of the existing agreement, with the governor requesting a $5 million appropriation for Fiscal Year 2014 as a first installment to start breach of contract litigation. The Senate is dealing with that proposal through the budget process and has not yet taken action on it.
According Malone's letter, the issues senators have with the rejected Fourth Amendment Agreement include:
- They think HOVENSA should still be required to bid annually for supplying the V.I. Water and Power Authority's fuel needs.
- They do not think HOVENSA's $14 million annual payment in lieu of property taxes should be temporarily reduced to $7 million.
- If the reduction in payment in lieu of property taxes is part of the agreement, they want support from Hess Oil for the proposed $7 million deferral through an escrow arrangement held by a trustee for the benefit of the territory, a bank letter of credit from Hess for the benefit of the territory, or an unconditional guarantee from Hess for the benefit of the territory. They think the agreement would need to include a provision for collecting interest on the deferred payment.
- They think the agreement should require HOVENSA to make fuel available to the government and public at the HOVENSA loading rack though Aug. 15, 2019, instead of March 31, 2014.
- They say there must be a provision in the agreement that "expressly reserves the government's right to take legal action in the event of a breach of contract."
- They believe the government should get 20 percent of the gross sales proceeds or $50 million, whichever is greater, if HOVENSA sells. Currently, the proposed agreement calls for the government to get the lesser of the two.
- They believe the governor should obtain control and ownership of $5 million held in escrow, from civil penalties paid by HOVENSA in connection with a consent decree.
Malone's letter contains a variety of other suggestions for renegotiating the agreement, as well as general concerns senators have about the situation with HOVENSA, including a suggestion to "hold HOVENSA accountable for its share of unpaid unemployment insurance," and the suggestion to not limit the search for a buyer of the refinery to an entity that will resume oil refining.
"While most of us believed that the agreement was flawed, our concerns as legislators were varied," Malone said in a statement about the letter. "I focused on the agreement's most important aspects. I truly do not believe that any of my colleagues want to enter into litigation with HOVENSA, however, most of us want a better negotiated agreement to be brought forward."
Malone's statement said the letter "is an effort to assist the administration in this regard, and my colleagues and I look forward to meeting with the Governor" to further discuss these matters.
- Contact Joy Blackburn at 714-9145 or email firstname.lastname@example.org.