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DeJongh Signs Hovensa Agreement

Gov. John deJongh signed into law Thursday the Fourth Amendment to the Hovensa Concession Agreement approved by the V.I. Legislature Monday, according to Government House.

The move is of no surprise to anyone as deJongh proposed the agreement to the Legislature and actively lobbied for its passage.

The legislative act puts in place a sales process for the closed Hovensa refinery and settles some tax and liability issues with the company, which ceased refining operations and laid off most of its workforce in 2012. Early in 2013, the V.I. government and Hovensa agreed on a proposed amendment that would have set the stage for the sale of the facility to a company that might or might not 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.

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 EPA-mandated environmental project fund and other issues.

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In mid-October, the administration announced it had received "clarifications" of the points in question, and Hovensa officials signed a letter saying the terms of the letter of clarification were legally binding, as an addendum to the Fourth Amendment Agreement.

The document signed by Hovensa officials affirms that the temporary adjustment in property tax payments under the agreement is only a deferral of the unpaid amounts until the refinery is sold, or ceases to operate an oil storage facility, or until Aug. 15, 2019, whichever occurs first. Upon any of those taking place, Hovensa will make a lump sum payment to the government of all amounts deferred, plus interest at the statutory rate. It also affirms that:

• If the refinery is sold, Hovensa will then pay either the amount of property taxes deferred, plus interest, or 20 percent of the gross sales proceeds up to $50 million, which ever is more.

• Hovensa will consider offers by potential buyers interested in using the refinery for other purposes than refining, subject to V.I. government approval.

• Hovensa will keep the rack open and keep supplying it with fuel as long as Hovensa continues to run an oil storage terminal on the property.

• If the refinery is not sold in a year, Hovensa will open the Limetree Bay Channel to commercial vessels heading to St. Croix Container Port, subject to insurance and any federal approvals that may be needed.

• Hovensa has no objection to the government taking over exclusive control of the nearly $5 million in Supplemental Environmental Project funds, plus interest, that Hovensa has paid as part of its Clean Air Act Consent Decree.

• The agreement does not cause a loss of legal rights by either party if the refinery does not sell.

On Nov. 4, the Legislature voted to approve the agreement as amended by the clarifications and written assurances from Hovensa. On Wednesday, Hovensa General Manager Sloan Schoyer said Hovensa has begun to finalize arrangements “to retain a reputable investment bank experienced in the sale of oil and gas assets to conduct a bona fide sales process” in accordance with the agreement.

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Gov. John deJongh signed into law Thursday the Fourth Amendment to the Hovensa Concession Agreement approved by the V.I. Legislature Monday, according to Government House.

The move is of no surprise to anyone as deJongh proposed the agreement to the Legislature and actively lobbied for its passage.

The legislative act puts in place a sales process for the closed Hovensa refinery and settles some tax and liability issues with the company, which ceased refining operations and laid off most of its workforce in 2012. Early in 2013, the V.I. government and Hovensa agreed on a proposed amendment that would have set the stage for the sale of the facility to a company that might or might not 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.

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 EPA-mandated environmental project fund and other issues.

In mid-October, the administration announced it had received "clarifications" of the points in question, and Hovensa officials signed a letter saying the terms of the letter of clarification were legally binding, as an addendum to the Fourth Amendment Agreement.

The document signed by Hovensa officials affirms that the temporary adjustment in property tax payments under the agreement is only a deferral of the unpaid amounts until the refinery is sold, or ceases to operate an oil storage facility, or until Aug. 15, 2019, whichever occurs first. Upon any of those taking place, Hovensa will make a lump sum payment to the government of all amounts deferred, plus interest at the statutory rate. It also affirms that:

• If the refinery is sold, Hovensa will then pay either the amount of property taxes deferred, plus interest, or 20 percent of the gross sales proceeds up to $50 million, which ever is more.

• Hovensa will consider offers by potential buyers interested in using the refinery for other purposes than refining, subject to V.I. government approval.

• Hovensa will keep the rack open and keep supplying it with fuel as long as Hovensa continues to run an oil storage terminal on the property.

• If the refinery is not sold in a year, Hovensa will open the Limetree Bay Channel to commercial vessels heading to St. Croix Container Port, subject to insurance and any federal approvals that may be needed.

• Hovensa has no objection to the government taking over exclusive control of the nearly $5 million in Supplemental Environmental Project funds, plus interest, that Hovensa has paid as part of its Clean Air Act Consent Decree.

• The agreement does not cause a loss of legal rights by either party if the refinery does not sell.

On Nov. 4, the Legislature voted to approve the agreement as amended by the clarifications and written assurances from Hovensa. On Wednesday, Hovensa General Manager Sloan Schoyer said Hovensa has begun to finalize arrangements “to retain a reputable investment bank experienced in the sale of oil and gas assets to conduct a bona fide sales process” in accordance with the agreement.