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Charlotte Amalie
Sunday, August 14, 2022
HomeNewsArchivesMalone Offers Suggestions for Improving Rejected Hovensa Deal

Malone Offers Suggestions for Improving Rejected Hovensa Deal

Senate President Shawn-Michael Malone sent a letter to Gov. John deJongh Jr. on Wednesday outlining what he said were changes to the proposed Fourth Amendment Agreement with Hovensa, the proposal that would have governed a sales process of the refinery but was rejected decisively by the Senate Aug. 7.
Since then, there has been no report that negotiations on the agreement have resumed or that either side has reached out to resume talks on the future of the shuttered refinery. On the contrary, on Aug. 9 deJongh sent Hovensa a letter informing the company of the consequences of the Senate’s 11-3 rejection of the deal, which leaves the current operating agreement in effect.
Hovensa replied the following week by denying the company breeched the agreement and saying that under those terms it could not profitably operate a fuel storage facility. It said it would close its storage facility and the fuel rack which provides fuel to the territory, precipitating fears that the islands might run out of fuel as early as mid-autumn.
The governor requested a $5 million appropriation to begin financing the expected legal battle with the company, a contest observers have said could take 10 years to resolve in court. Meeting Aug. 20, the Senate sent that bill to the Finance Committee to consider with the ongoing 2014 budget deliberations.
Government House did not respond Thursday to a question of whether the Hovensa deal is "dead" or if either side is attempting to reopen talks.
Malone’s letter Wednesday, which can be seen here, called the Hovensa threat a scare tactic that was "very hurtful to our people and our economy." He urged the governor to obtain an injunction "that forces Hovensa to honor its contractual obligations to provide fuel under the agreement."
Hovensa has already said, in its Aug. 14 letter, that it believes the obligation was based on operating a refinery, and since the refinery has ceased operation it no longer applies.
Most of the four-page letter suggests changes the governor’s negotiation team should seek in the rejected Fourth Amendment Agreement.
"I have offered very specific suggestions for improving the agreement that was rejected by the Legislature earlier this month," Malone said in a press release announcing the letter. "If these changes are implemented we will have an agreement that much better protects the Virgin Islands."
Malone said his recommendations do not necessarily reflect every concern of every member of the body.
The suggestions, many of which follow the line of his opposition voiced during the Aug. 7 Senate meeting, include requiring Hovensa to continue bidding to supply fuel to the territory, denying a proposal to allow the company to pay $7 million in annual payment in lieu of taxes, with the unpaid $7 million balance owing when the facility is sold, or else to hold the unpaid balance in an escrow account.
Other suggestions in the four-page letter include holding the company responsible for its share of unpaid unemployment insurance, which Malone estimates at $32 million, expanding the search for a buyer, holding the company fully responsible for the cost of cleaning up the refinery site, and allowing the use of the Hovensa dock for nonpetroleum uses.
Malone said he and his fellow senators "look forward to meeting with the governor next week to further discuss these matters."
Late Thursday afternoon Government House acknowledged without comment that it had received Malone’s letter. It also confirmed a meeting Tuesday between the governor and the senators to discuss the issue.
Malone, who was celebrating his birthday Thursday, was not available for comment.
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Senate President Shawn-Michael Malone sent a letter to Gov. John deJongh Jr. on Wednesday outlining what he said were changes to the proposed Fourth Amendment Agreement with Hovensa, the proposal that would have governed a sales process of the refinery but was rejected decisively by the Senate Aug. 7.
Since then, there has been no report that negotiations on the agreement have resumed or that either side has reached out to resume talks on the future of the shuttered refinery. On the contrary, on Aug. 9 deJongh sent Hovensa a letter informing the company of the consequences of the Senate's 11-3 rejection of the deal, which leaves the current operating agreement in effect.
Hovensa replied the following week by denying the company breeched the agreement and saying that under those terms it could not profitably operate a fuel storage facility. It said it would close its storage facility and the fuel rack which provides fuel to the territory, precipitating fears that the islands might run out of fuel as early as mid-autumn.
The governor requested a $5 million appropriation to begin financing the expected legal battle with the company, a contest observers have said could take 10 years to resolve in court. Meeting Aug. 20, the Senate sent that bill to the Finance Committee to consider with the ongoing 2014 budget deliberations.
Government House did not respond Thursday to a question of whether the Hovensa deal is "dead" or if either side is attempting to reopen talks.
Malone's letter Wednesday, which can be seen here, called the Hovensa threat a scare tactic that was "very hurtful to our people and our economy." He urged the governor to obtain an injunction "that forces Hovensa to honor its contractual obligations to provide fuel under the agreement."
Hovensa has already said, in its Aug. 14 letter, that it believes the obligation was based on operating a refinery, and since the refinery has ceased operation it no longer applies.
Most of the four-page letter suggests changes the governor's negotiation team should seek in the rejected Fourth Amendment Agreement.
"I have offered very specific suggestions for improving the agreement that was rejected by the Legislature earlier this month," Malone said in a press release announcing the letter. "If these changes are implemented we will have an agreement that much better protects the Virgin Islands."
Malone said his recommendations do not necessarily reflect every concern of every member of the body.
The suggestions, many of which follow the line of his opposition voiced during the Aug. 7 Senate meeting, include requiring Hovensa to continue bidding to supply fuel to the territory, denying a proposal to allow the company to pay $7 million in annual payment in lieu of taxes, with the unpaid $7 million balance owing when the facility is sold, or else to hold the unpaid balance in an escrow account.
Other suggestions in the four-page letter include holding the company responsible for its share of unpaid unemployment insurance, which Malone estimates at $32 million, expanding the search for a buyer, holding the company fully responsible for the cost of cleaning up the refinery site, and allowing the use of the Hovensa dock for nonpetroleum uses.
Malone said he and his fellow senators "look forward to meeting with the governor next week to further discuss these matters."
Late Thursday afternoon Government House acknowledged without comment that it had received Malone's letter. It also confirmed a meeting Tuesday between the governor and the senators to discuss the issue.
Malone, who was celebrating his birthday Thursday, was not available for comment.