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Senate Sends Hovensa Amendment to Committee of Whole – UPDATE: Senate President Message to Governor

The V.I. Legislature was expected to vote Wednesday on a proposed Fourth Amendment to the Hovensa Concession Agreement to set the stage for selling the refinery, but Senate President Shawn-Michael Malone sent it to the Committee of the Whole to receive testimony Nov. 4.
Gov. John deJongh Jr.’s administration negotiated the agreement with Hovensa to settle an array of tax issues with the refinery, create a sales process and create a binding legal framework covering all areas of contention and ambiguity in the territory’s legal relationship to the refinery.
The Hovensa refinery ceased operations in 2012. Earlier this year, the government and Hovensa agreed on a proposed amendment to the concession agreement that would have set the stage for the sale of the facility to a company that might operate it again as a refinery. DeJongh and administration officials have characterized the agreement as a compromise that was preferable to potentially years of expensive lawsuits with uncertain outcomes.
But on Aug. 7 the Senate rejected the proposed amendment by an 11-3 vote, citing concerns over property tax abatements, desire for local control of an Environmental Protection Agency-mandated environmental project fund, and other issues.
Within a week the company announced that, in the face of the deal’s rejection and the re-imposition of the Third Concession Agreement, it could not profitably run the oil storage facility. As a result, officials said Hovensa would close the facility and the fuel rack, which is the source of fuel for virtually everything on St. Croix, and much of the fuel for the whole territory. It used to supply WAPA, but when Hovensa prices rose, WAPA contracted with another supplier to barge fuel in.
Since then Hovensa has signaled it will continue to take delivery of fuel at its facilities, removing the threat of fuel shortages for the time being.
In a Sept. 25 radio broadcast, deJongh called on the Legislature to ratify the Fourth Amendment to the Hovensa agreement. And in a letter to Malone, deJongh reiterated “there is no possibility of reopening or renegotiating the Fourth Amendment Agreement."
On Oct. 1 the Legislature passed a resolution listing changes it wants to see in the government’s negotiated Fourth Amendment to the Hovensa Concession Agreement, signaling that it would approve a modified plan but also insisting that changes must be made to the actual concession agreement.
On Friday deJongh announced he had received the "clarifications" concerning the areas of concern to the Legislature and asserted that the clarifications are binding on the company, in the manner of a contract addendum. "Upon ratification, the assurances and clarifications to which that document commits Hovensa and its owners will be part and parcel of the law, ensuring that any future interpretation of the Fourth Amendment is governed by those commitments," deJongh said at the time.
At the beginning of Wednesday’s legislative session, Sen. Donald Cole moved to waive the rules and put a bill approving the agreement and its clarifications onto the agenda.
Sen. Nereida "Nellie" Rivera-O’Reilly raised a point of order, saying the bill was acted on before and is not a new bill. O’Reilly said the bill was not new but a reconsideration of the bill voted down in August and so the motion must be made by someone who voted with the majority the first time it was considered.
Malone said the Legislature’s legal counsel had determined the legislation was new because it includes not only the original agreement, but also "they have what they are calling an addendum that is legally binding and attached to the agreement."
Several senators raised objections and Malone decided to treat the legislation as a reconsideration and to refer it to the Committee of the Whole to receive testimony, before scheduling it for a vote in legislative session.
Malone wrote to Gov. John deJongh Jr. afterwards, informing him of the body’s decision.
"Per your request the proposal was placed” on the agenda, Malone wrote. "However, after deliberation a majority of my colleagues decided to remove the proposal given the lack of adequate time to prepare and produce the requisite legal analysis and post audit report."
Malone said that more information needed to be provided by the Administration to include the Interim Proposal to which the agreement refers.
"The draft agreement references the so-called Interim Proposal but no one has been given a copy," Malone said. "We can’t operate like that."
Malone also asked deJongh to insert changes requested by the senators into the actual Hovensa agreement and that deJongh’s office resubmit it to the Legislature as a revised agreement. The bill sent to senators this week contained an addendum addressing some of the body’s concerns; however, none of the issues to be addressed were actually incorporated into the agreement itself, Malone said.
"We need ironclad protections for the people of this territory and we are not confident that the simple inclusion of ‘clarifying language’ is adequate," Malone said.
Meanwhile Hess Corporation, which co-owns Hovensa along with Venezuelan state oil company PDVSA, announced earlier this month it has entered into an agreement with Buckeye Partners to sell its U.S. East Coast and St. Lucia terminal network for a total consideration of $850 million in cash, suggesting the company wants to divest itself of facilities similar to Hovensa.
Editor’s Note: This story has been changed to clarify that the Hovensa rack affects St. Croix more than the rest of the territory.
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The V.I. Legislature was expected to vote Wednesday on a proposed Fourth Amendment to the Hovensa Concession Agreement to set the stage for selling the refinery, but Senate President Shawn-Michael Malone sent it to the Committee of the Whole to receive testimony Nov. 4.
Gov. John deJongh Jr.'s administration negotiated the agreement with Hovensa to settle an array of tax issues with the refinery, create a sales process and create a binding legal framework covering all areas of contention and ambiguity in the territory's legal relationship to the refinery.
The Hovensa refinery ceased operations in 2012. Earlier this year, the government and Hovensa agreed on a proposed amendment to the concession agreement that would have set the stage for the sale of the facility to a company that might operate it again as a refinery. DeJongh and administration officials have characterized the agreement as a compromise that was preferable to potentially years of expensive lawsuits with uncertain outcomes.
But on Aug. 7 the Senate rejected the proposed amendment by an 11-3 vote, citing concerns over property tax abatements, desire for local control of an Environmental Protection Agency-mandated environmental project fund, and other issues.
Within a week the company announced that, in the face of the deal's rejection and the re-imposition of the Third Concession Agreement, it could not profitably run the oil storage facility. As a result, officials said Hovensa would close the facility and the fuel rack, which is the source of fuel for virtually everything on St. Croix, and much of the fuel for the whole territory. It used to supply WAPA, but when Hovensa prices rose, WAPA contracted with another supplier to barge fuel in.
Since then Hovensa has signaled it will continue to take delivery of fuel at its facilities, removing the threat of fuel shortages for the time being.
In a Sept. 25 radio broadcast, deJongh called on the Legislature to ratify the Fourth Amendment to the Hovensa agreement. And in a letter to Malone, deJongh reiterated “there is no possibility of reopening or renegotiating the Fourth Amendment Agreement."
On Oct. 1 the Legislature passed a resolution listing changes it wants to see in the government's negotiated Fourth Amendment to the Hovensa Concession Agreement, signaling that it would approve a modified plan but also insisting that changes must be made to the actual concession agreement.
On Friday deJongh announced he had received the "clarifications" concerning the areas of concern to the Legislature and asserted that the clarifications are binding on the company, in the manner of a contract addendum. "Upon ratification, the assurances and clarifications to which that document commits Hovensa and its owners will be part and parcel of the law, ensuring that any future interpretation of the Fourth Amendment is governed by those commitments," deJongh said at the time.
At the beginning of Wednesday's legislative session, Sen. Donald Cole moved to waive the rules and put a bill approving the agreement and its clarifications onto the agenda.
Sen. Nereida "Nellie" Rivera-O'Reilly raised a point of order, saying the bill was acted on before and is not a new bill. O'Reilly said the bill was not new but a reconsideration of the bill voted down in August and so the motion must be made by someone who voted with the majority the first time it was considered.
Malone said the Legislature's legal counsel had determined the legislation was new because it includes not only the original agreement, but also "they have what they are calling an addendum that is legally binding and attached to the agreement."
Several senators raised objections and Malone decided to treat the legislation as a reconsideration and to refer it to the Committee of the Whole to receive testimony, before scheduling it for a vote in legislative session.
Malone wrote to Gov. John deJongh Jr. afterwards, informing him of the body's decision.
"Per your request the proposal was placed” on the agenda, Malone wrote. "However, after deliberation a majority of my colleagues decided to remove the proposal given the lack of adequate time to prepare and produce the requisite legal analysis and post audit report."
Malone said that more information needed to be provided by the Administration to include the Interim Proposal to which the agreement refers.
"The draft agreement references the so-called Interim Proposal but no one has been given a copy," Malone said. "We can't operate like that."
Malone also asked deJongh to insert changes requested by the senators into the actual Hovensa agreement and that deJongh’s office resubmit it to the Legislature as a revised agreement. The bill sent to senators this week contained an addendum addressing some of the body's concerns; however, none of the issues to be addressed were actually incorporated into the agreement itself, Malone said.
"We need ironclad protections for the people of this territory and we are not confident that the simple inclusion of 'clarifying language' is adequate," Malone said.
Meanwhile Hess Corporation, which co-owns Hovensa along with Venezuelan state oil company PDVSA, announced earlier this month it has entered into an agreement with Buckeye Partners to sell its U.S. East Coast and St. Lucia terminal network for a total consideration of $850 million in cash, suggesting the company wants to divest itself of facilities similar to Hovensa.
Editor's Note: This story has been changed to clarify that the Hovensa rack affects St. Croix more than the rest of the territory.