Dealing With the Closing of the Hovensa Refinery

Dear Source:

This week the Legislature of the US Virgin Islands has taken into consideration legislation of pre-imminent importance. An issue not only for the near term stability but the future viability and growth of these islands; St. Croix more immediately and the other Islands of St. Thomas, St. John and Water Island. That being the Fourth Amendment to the HOVENSA Concession Agreement between the Government of the US Virgin Islands and Hess Oil Virgin Islands, HOVENSA, LLC and PDVSA (Such Joint Venture hereinafter called “HOVENSA”).
The Legislature has before it an Agreement to ratify or reject a proposal which can be summarized as a means to sell the refinery, i.e. the land, equipment, infrastructure of the refinery business we know as Hess or Hovensa. I am in support of the process to find a solution to Hovensa’s closure of the refinery and reverse the negative effect it has had on our community. The closure of this refinery has dramatically effected not only the economy of the island of St. Croix but has an enormous ripple effect on the territory as a whole. As a member of this community, as a Virgin Islander, as an individual with expertise in law, public-private partnerships and economic development I felt it necessary to speak out. This need to speak is even more so as a steward of these lands; as a steward most importantly for my children, for all of our children, who must inherit what we leave for them.
While the purpose of this Fourth Agreement is to stipulate an approximate one year period for sale of the refinery, it presents a possible time for the Legislature and the people of the Virgin Islands to prepare for the next stage in our relationship with the business and area known as Hovensa. Possibly this time next year we will face several distinct options: 1. creating an agreement with a new refinery owner; 2. extending a Concession or other Agreement with Hovensa; 3. Litigation or 4.creating a new arrangement for a completely different use of the facility and/or property.
As an attorney having negotiated, litigated and managed multibillion dollar agreements and projects one of the first rules before entering contract negotiation is as best as possible answer multiple questions. What do you want, what does the other side want, why do they want it, what are all possible outcomes, what are the economics for both sides, what is the industry actualities and trends, and of great importance; what are the breaking points?
The owners of the Joint Venture which has been refining oil on the island of St. Croix, and through the years made billions of dollars through the use of the refinery in the production and sale of oil, have made a business decision to no longer refine oil on the island of St. Croix in the US Virgin Islands. And so we, the Virgin Islands, are in a position that the refinery which sits on vast tracks of land on our island and has accounted for a large percentage of our economy, no longer have these revenues. Our Governor, the respective agencies, Our Delegate to Congress and Legislature has been faced with a crisis of enormous magnitude and has been working to find a solution. We must with short range needs and long range responsibility determine: what next.
These facts lead us to then ask the very necessary questions. A few of which are:
– What type of buyer would be interested in our refinery with its specificity?
– If Hovensa shuts down what obligations do they have under law (local, Federal, Superfund, etc.) to return the facility to its original state? What would that remediation cost be, how long would it take and what jobs could come out of the clean up?
– What are the health, environment, and ecological short and long term ramifications of a continued island society with a refinery as one of its largest private employer?
– What are industry standards and best and worst case scenarios in several negotiation postures?
These questions must be addressed so that if an ultimate negotiation takes place we are negotiating from a place of power. As an experienced attorney more information is better for proper positioning. while the Legislature’s role is to ratify or reject an agreement, it might be helpful for our Legislature, during the possible interim period to engage in its own separate due diligence to give the people of the Virgin Islands additional comfort that a well thought out decision has been reached and potentially before negotiations take place to present to the Governor the Legislature’s own analysis to further empower and afford him with supplemental information for a stronger negotiation process.
Such fact finding could entail; the exploration of alternative uses for the facility; hearings with industry experts, Hovensa officials, EPA and economist; development of legal analysis and opinion to inform of options and potential outcomes and even the use of subpoena powers to compel testimony. Exhaustive independent analysis by the legislature may be completed to inform and assist those that negotiate on behalf of the people of the territory. All of this to inform the people and help develop another conclusion which either supports ratification or gives reasons to reject. The decision for the future of St. Croix and indeed as the largest employer outside of government, the future of the territory; should be arrived at with all relevant branches working in their respective roles.
After careful analysis of the proposed Agreement, previous Agreements between the Government and Hovensa, along with the report published by Duff and Phelps; I believe we are in a position that if this measure is ratified by our Legislature, to have at least a year to further analyses our own next steps. To use this time to allow all sectors to prepare a reasoned and properly vetted long term solution in the people’s best interest. Long term negotiations must entail each branch of Government participating to their fullest capacity, in its respective role, to empower the negotiators through analysis and fact finding. It is imperative that we the citizens of the territory also be a part of thoughtful brainstorming, constructive criticism and positive remedies as we grow economically in the present and realize our prospective potential.
It is my belief that we can and will find answers to all our problems as we work together to find the best solutions not only for our immediate needs but for the future of our children.

Stacey Plaskett Esq., St. Croix

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