Comparing the government’s ongoing battle with Hovensa to a messy “divorce,” Gov. Kenneth Mapp laid out his plan Thursday to take on the oil company and retrieve the $40 million owed the territory from a recent environmental settlement that he said Hovensa is threatening to hold hostage unless the facility on St. Croix is sold by the end of February.
Mapp, along with Lt. Gov. Osbert Potter and members of the governor’s legal team, met with representatives from Hess Corporation and Petroleos de Venezuela S.A (PDVSA) on Wednesday afternoon to get an update on the situation, which has been ongoing since 2012, when Hovensa announced that it would be closing its doors.
Mapp said during the meeting, Hess officials gave a limited set of options: either the facility is sold and the government is able to enter into an operating agreement with the successful buyer, or the corporation would use the money it currently owes the government to completely shut down the facility and declare bankruptcy.
Mapp explained that the government filed suit against Hovensa in 2005 after it was discovered that the water tables on the south shore of St. Croix had been contaminated by an oil leak.
“To date, 43 million gallons of oil has been extracted from those tables and contamination remains,” Mapp said.
A statement issued by Hovensa on Thursday indicates that the refinery reported the leak back in 1982, has worked to “identify and repair” the source of the leak, and has “instituted procedures” to prevent it from happening again.
“The spill was determined to have resulted through leaks from storage tanks and underground piping,” said the statement from Hovensa spokesman Alex Moorhead. In the statement, Moorhead added that Hovensa has continued the cleanup effort with oversight from the federal Environmental Protection Agency and the local Planning and Natural Resources Department.
More than 99 percent of the leaked oil has been recovered, and some of the recovered wells are producing water that “meets drinking quality,” he said.
At Thursday’s press conference Mapp said that the government eventually settled the suit for $43.5 million, with $3.5 million received at the settlement signing and the remaining $40 million coming after the sale of the refinery or by Dec. 31, 2014 – whichever came first.
While the refinery has not yet been sold, December has come and gone, but Mapp said the settlement money – which he said is owed to the government through a separate, unrelated matter – has not been paid.
“So basically, what they have said is that I have your $40 million but if you are unable to get a buyer, we would use the money to mothball the plant and shut it down,” Mapp said in an attempt to break down his conversation with Hovensa representatives.
Based on the conversation, Mapp said he directed Attorney General-nominee Soraya Diase-Coffelt to immediately issue a breach of settlement notice to Hess and PDVSA and to advise them that the $40 million is still owed. The District Court will then be advised of the breach, and the government will then move to reopen the contamination suit against Hovensa, Mapp said.
While Mapp said the refinery belongs to Hovensa, the land belongs to the government and a foreclosure notice will also be filed while every “legal action to seize the assets” in Estate Anna’s Hope will be made. Public Works and other agencies will be moving in to take stock of what’s on the site and any attempt by Hovensa to move any assets from the property has to be approved in writing by the government, he added.
Diase-Coffelt was also tasked with engaging a law firm on the mainland experienced in such litigation.
“We have clearly reached a path where we can no longer work in tandem and we are ready for a peaceful parting of the ways, but the obligation and environmental damages to this territory cannot go unabated,” Mapp said, adding that he had also directed his legal team to go for a “peaceful” resolution with Hovensa if possible.
Fielding questions about how the government would be able to cover the costs associated with an expensive legal process, Mapp said it could cost the government more if Hovensa is allowed to do what it wants. While Hovensa said Thursday that it has “no comment” on the potential lawsuit, Diase-Coffelt said after the press conference that the government’s legal team believes “that we should fight, that we should be aggressive because the interest of the people of the Virgin Islands is at stake.”
Diase-Coffelt said the administration has not yet determined how much it would be able to spend on the legal process, but had to take action now since Hovensa has threatened to shut down by the end of February.
Diase-Coffelt resigned shortly after the press conference. A statement issued by Government House Thursday afternoon said the resignation doesn’t change the administration’s position on the issue. (See related links below)
“Mapp assures the people of the Virgin Islands that there will be no break in the government’s stance with regards to litigation issues discussed in this morning’s press conference,” the statement said, adding that Mapp has full faith in chief legal counsel Emile Henderson III, who oversaw the legal team and legal processes and this matter will proceed as stated earlier today.”