Senate resoundingly rejects revised HOVENSA agreement
Published: August 8, 2013
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ST. THOMAS - After hours of debate that grew emotional at times, the 30th Legislature closed its session Wednesday night by rejecting a proposed deal with HOVENSA and then immediately passing a resolution encouraging the company to find a new owner for its refinery site.
The shuttered refinery on St. Croix's south shore was the subject of more than a year of negotiations between the deJongh administration and HOVENSA that resulted in the deal senators turned down on Wednesday.
"My vote is not only no - but hell, no!" said Sen. Terrence Nelson, as he argued against the proposal, which would have governed how HOVENSA would go about trying to sell the refinery and operating as an oil storage terminal in the meantime.
Senators voted 11 to 3 against ratifying the agreement.
Senators Judi Buckley, Donald Cole and Sammuel Sanes voted for ratification.
Senators Diane Capehart, Kenneth Gittens, Clifford Graham, Alicia Hansen, Myron Jackson, Shawn-Michael Malone, Nelson, Nereida Rivera-O'Reilly, Clarence Payne, Tregenza Roach and Janette Millin-Young voted against.
Sen. Craig Barshinger was absent for the entire session. He sent a letter saying he was unable to attend "as I am currently out of the territory on a previously scheduled engagement."
Shortly after senators adjourned Wednesday night, Government House released a brief statement saying that Gov. John deJongh Jr. "expressed great disappointment" in the Senate's rejection of the agreement.
"At the same time, deJongh also thanked the many members of the community who participated in the legislative process and who vocally supported the agreement," the release said.
The statement indicated that a lawsuit with HOVENSA to enforce the terms of the existing agreement may be the government's next step.
"DeJongh said he believed that the Fourth Amendment Agreement was the best way to bridge the parties' significant differences and was vastly superior to a lengthy and costly legal dispute that will delay the restart of the refinery and the economic recovery of St. Croix," the release said.
"Now that the Legislature has spoken, it appears that the dispute cannot be avoided," the release said.
"DeJongh said he will now take action to enforce the terms of the existing Concession Agreement," it concluded.
George Dudley, the local lawyer who represents HOVENSA, said during a Senate hearing on the proposal last month that if senators did not ratify the agreement, the parties would wind up in litigation - which he said would keep things tied up in the courts for years.
The company contends it did not breach the agreement, according to Dudley, who was not at Wednesday's session.
Senators on Wednesday voiced a variety of issues they had with the agreement in its current form - although a number also suggested they might be open to an agreement in which those issues had been addressed.
"What we seek is a far and balanced agreement that takes into account the financial problems of both the company as well as the Virgin Islands Government, which has been negatively impacted by their corporate decisions," Malone said in a prepared statement released after the vote.
Rivera-O'Reilly noted that HOVENSA could sell the refinery site at any time - that it did not need an agreement with the government to do so. She contended that the only reason the Senate was being asked to ratify the agreement was that "we're being asked to concede more."
The decision by HOVENSA to shutter its refining operations and convert to an oil storage terminal, announced in January 2012, led to negotiations between the company and the V.I. government, with an eye toward revising HOVENSA's existing concession agreement.
The proposed fourth amendment agreement had HOVENSA agreeing to a sales process with an experienced investment banking firm and the government agreeing to allow HOVENSA to operate the refinery site as an oil storage terminal during the sales process.
The government also would have temporarily reduced the company's payment in lieu of property taxes by half, from $14 million to $7 million annually.
The agreement called on HOVENSA to repay the deferred obligations in 2019 if the refinery did not sell - or earlier if it stopped operating an oil storage terminal. If the refinery were sold, HOVENSA may have been released from its obligations under the concession agreement and would have paid the government a portion of the sales proceeds.
The proposal had become contentious, with emotions running high and the community getting involved.
Senators on both sides of the argument said on Wednesday that they had done their research and were voting accordingly.
"Are we guided by fear or do we take a step back and learn from the mistakes we've made in the past?" Rivera-O'Reilly asked.
Buckley said she fully understood that the vote was the most important senators would cast in this term, and said there were equally valid reasons on both sides of the argument.
She pointed to the dire economic straits that St. Croix finds itself in and the fiscal problems the territory is facing and urged her colleagues to consider what the possible outcomes could be.
"I, for one, do not want to play Russian roulette with the people of the territory," she said.
She said that the territory was not operating from a position of fear.
"It's operating in reality," Buckley said.
Some senators said that HOVENSA had done its worst to the territory when it announced the closure. Rivera-O'Reilly said it was time for St. Croix to diversify - something she suggested wouldn't happen with a refinery operating there.
"St. Croix has had it. St. Croix is tired," Rivera-O'Reilly said. "St. Croix doesn't want to be relegated to any dirty industry like that."
Some senators pointed to hard lessons learned from past agreements with HOVENSA, or spoke about the environmental and health impacts of the refinery. Others were critical of the way HOVENSA shut down.
Roach said one letter he had received argued that the agreement would bring two things: Jobs and hope.
"I say to you that there is no hope in fear," he said.
Hansen spoke critically of the way HOVENSA announced it was closing.
"When they left abruptly, they didn't give a damn about how they destroyed the United States Virgin Islands," she said.
Gittens said he felt like ratifying the agreement would give legitimacy to what the territory contends is a breach of the existing agreement.
His no vote, he said, was not against jobs or reopening the plant - but against this particular agreement, which he characterized as "a bad deal" for the people of the territory.
A number of senators spoke of praying for guidance or sound judgment on the matter.
Jackson spoke of territory's history and culture - at one point bringing out one of his childhood toys, a Hess truck - and said his no vote was a vote for preserving "this beautiful place we call home."
"It is hard times," Jackson said. "But we've had hard times before."
Graham said he is not against the sale of the refinery at all - but he is against this particular agreement. He said that if the agreement came back with some points modified, "you may get a yes out of me."
Cole likened the relationship between the territory and HOVENSA to a marriage ending in divorce.
He said the agreement was the best deal that the government could negotiate - and that rejecting the agreement in hopes of reopening negotiations was risky.
However, he noted that the choice was between imperfect alternatives.
"Whether we vote yes or vote no, we are taking a risk," he said.
Millin-Young said the territory is not defenseless and can do better.
"We shouldn't put our destinies in the hands of Venezuela and New York," she said. "I refuse."
Sanes said he was voting his conscience.
"Who represents the thousands who want this agreement to go forward?" he asked. He spoke of the good livings people who worked for HOVENSA had made through the years - buying houses and raising families and contributing to the quality of life in the territory.
"My question is, 'You guys got a Plan B?" Sanes said. "I hope that each one of you have something in mind to give our people hope and expectations for the future."