V.I. reaches $135M settlement with companies blamed for environmental damage on St. Croix's south shore

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ST. CROIX - Government officials announced Friday that they have reached a settlement agreement with several companies identified as responsible for damaging the environment in St. Croix's south shore industrial area. The settlement, expected to be in the neighborhood of $135 million, could add $40 million directly to the General Fund.

Department of Planning and Natural Resources Commissioner Alicia Barnes and Attorney General Vincent Frazer conducted a joint press conference Friday morning to announce the settlement with the companies the government considers responsible for contamination of natural resources in the estates of Anguilla, Pearl, Hope, Figtree, and Jerusalem on St. Croix.

Frazier said the V.I. government sued present and past owners and operators of the former alumina refining property: St. Croix Alumina, LLC; Alcoa World Alumina LLC; St. Croix Renaissance Group, LLLP; and Lockheed Martin Corporation, which is the successor to Martin Marietta Alumina and Harvey Alumina.

Also named in the suit were Virgin Islands Alumina Corporation and Century Aluminum Company and the neighboring oil refinery Hess Oil Virgin Islands Corporation and HOVENSA, LLC, Frazer said.

"All of these parties with the exception of VIALCO and Century have now reached settlements with the government, and the various settlements have an estimated value that could reach between $125 million to $145 million," he said.

Frazer said the government initiated the first of several lawsuits in 2005 against the defendants, and each of the lawsuits sought damages; reimbursement for the government's investigation and cleanup costs; the performance of environmental cleanup and restoration work; penalties; litigation costs; and litigation fees.

The lawsuits contended that the defendants' operations injured and contaminated the public's natural resources, including potential drinking water, the marine environment, plant life and wildlife.

"Pursuant to the settlements, the settling parties have various responsibilities with respect to the cleanup and restoration of large portions of the former alumina refinery property," Frazer said. "The work to be performed includes covering and closing the red mud disposal areas, including the large red hill that is familiar to residents here."

Frazer provided a historical background on the property, saying that from the 1960s until 2000, VIALCO and St. Croix Alumina conducted alumina refining operations at the former alumina refinery property west of HOVENSA and left behind a large red hill of bauxite by-product, which is commonly referred to as red mud.

Barnes said the mud is incredibly caustic, and the massive quantities of red mud and caustic solution, among other wastes, were collected on-site and disposed of for years.

Frazer said Hess Oil and HOVENSA also contaminated the land and water from the 1960s until recently with their petroleum and other wastes.

Barnes said the cleanup work will contain the red mud so that it no longer blows onto nearby properties or flows into the waters. She said a study also will be conducted to determine whether the groundwater is contaminating the shipping channel at the former alumina refinery property. She said that if contamination is detected, Lockheed Martin will take action to stop the discharge.

Frazer said in addition to the estimated $58 million to $76 million in environmental remediation and restoration work and oversight costs the settling parties also are paying the government's cost for the litigation, which he estimated was about $25 million.

In 2012, an initial settlement with respect to the former alumina refinery that involved three of the parties was approved, after public comment, by the federal court.

On June 10, the government and Lockheed Martin filed a new settlement with the federal court and residents can file comments on the settlements after viewing the agreement at the district court, Frazer said.

In addition to the settlements concerning the operators of former alumina refinery property, the government has entered into a settlement with them, Hess and HOVENSA, pursuant to which HOVENSA must make multiple cash payments to the government.

The agreement provides that if the company fails to pay in the next six months, the government can foreclose on its equipment, property and fixtures.

- Contact reporter Fiona Stokes at 714-9149 or email fstokes@dailynews.vi.

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