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HomeNewsLocal newsPotential Changes to Settlement Mostly Help the Refinery

Potential Changes to Settlement Mostly Help the Refinery

Limetree Bay Terminals LLC (Source file photo)

Thursday, the U.S. Environmental Protection Agency, through the U.S. Justice Department, filed a motion to enter the first modification to a 2011 consent decree with Hovensa, the prior owner of the Limetree Bay refinery and oil storage facility.

The 2011 consent decree resolves alleged violations of the Clean Air Act at the refinery when it was operated by Hovensa. Together with EPA’s enforcement and permitting oversight of the facility, the modification will advance the agency’s ongoing efforts to ensure the protection of public health and the environment.

This is unrelated to ongoing permitting issues with the refinery that have been in the news lately. (See: EPA Withdraws One Limetree Refinery Permit Pending Appeals)

It has to do with a 2011 agreement with Hovensa (See: Hovensa to Pay $5.3M in Fines; Spend $710M For Upgrades) requiring the refinery put in new and upgraded pollution controls, meet more stringent emission limits, do more and better monitoring and leak-detection and initiate repair practices to reduce emissions from the refinery.

At the time, the EPA projected the upgrades would cost roughly $700 million over the next decade. Hovensa shuttered the following year. The refinery had been losing around half a billion dollars per year due in part to relying on oil to run the refinery, while competitors were using less expensive natural gas.

In the court complaint leading to that agreement, the U.S. government said Hovensa made changes to its refinery that increased emissions without first getting proper permits and installing required pollution-control equipment.

The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in significant emissions increase of any pollutant, according to a statement from EPA.

The complaint also alleged violations of Clean Air Act requirements covering the four main sources of emissions sulfur dioxide, nitrogen oxides, volatile organic compounds and benzene.

When Limetree Bay proposed reopening the refinery in 2018, questions about that $700 million upgrade came up in V.I. Senate hearings. Officials answered that they planned to leave the problematic parts of the plant offline and only partially reopen the refinery. (See: UN Sulfur Regs May Briefly Boost STX Refinery Profitability)

St. Croix attorney Joel Holt, who advised Gov. Kenneth Mapp’s administration on the contract, told senators, “They are not reopening the entire refinery. They don’t have to deal with the entire consent decree.”

“Their engineers know what they need to do to comply. That will be an ongoing negotiation as the construction starts,” Holt said.

The new proposed amendment lets Limetree off the hook for some of the expensive upgrades, such as installing flare gas recovery systems, saying “the operational profile of the refinery is now significantly different as compared to when the decree was entered into.” As long as the plant does not exceed specified levels of gas discharge, it will not have to install the systems, if the amendment is approved.

The 2011 agreement also included $4.9 million for environmental projects in the territory. The EPA’s filing says $4.5 million of that funding remains in escrow waiting to be spent. V.I. government budget documents show that the Waste Management Authority has some of the funding. The amendment would streamline the process for spending that money, letting the Department of Planning and Natural Resources make those decisions on its own. It also has provisions to distribute consent decree-required funds to assist the V.I. Water and Power Authority in air monitoring.

The proposed changes also relieved Hovensa of its former obligations, putting those instead onto Limetree Bay, as the new owner. It extends several time limits to install equipment to reduce nitrous oxide and sulfur emissions. The modification includes references to updated Clean Air Act requirements and updates benzene waste and leak-detection and repair audits and operating requirements, which ensure reduced emissions from refinery equipment and process units.

“Modifying this settlement is an important step to ensure the Limetree Bay facility will comply with environmental laws that protect people’s health and to address environmental justice concerns in communities in St. Croix,” EPA acting Regional Administrator Walter Mugdan said in a statement.

The proposed first modification to the consent decree was lodged in federal court on Aug. 25, 2020. It will become effective if the modification is approved by the court. Until that time, the 2011 consent decree remains in effect. A second consent decree modification adjusts a deadline that has already passed to a date later this year. The second modification requires filing, for the record.

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