Several senators took offense Tuesday night when an attorney representing Hovensa outlined what he saw as the likely outcome if the Legislature does not approve the proposed fourth amendment to the Hovensa concession agreement.
But attorney George Dudley, responding to complaints that he was threatening the Senate and being arrogant, said he was just giving his best opinion of what will happen if the Senate does not ratify the agreement – that the issue will end up in a courtroom battle that could drag on 10 years, hurting both the company and the leaving the territory with nothing.
The amendment was designed to circumvent old disputes and move forward with the sale of the facility to someone interested in running it as a refinery, both Dudley and Attorney General Vincent Frazer said. When asked if a compromise was possible, both men told the senators that the agreement is the compromise.
It was the second straight marathon session in which the Senate, meeting as a committee of the whole, mulled over the agreement, which was negotiated between the executive branch of the government and Hovensa. Like Monday’s session on St. Croix, Tuesday’s meeting at the Earle B. Ottley Legislative Hall on St. Thomas extended to almost 1 a.m., and tempers sometimes flared.
Frazer told the senators that the agreement is better viewed as an exit agreement, an opportunity for both sides to get out of the relationship.
"This is not an attempt to shackle Hovensa … or to extract any commitment that requires Hovensa to be in this territory any longer than they want to be here. It’s not a chance to correct any perceived past shortcomings of past agreements," he said.
Frazer said the agreement attempts to look forward. The government had an objective when it entered into the negotiations – to lessen the impact of the Hovensa ceasing refinery operations and restore jobs. It also opens the door to restoring some of the revenues lost to the government, and the more than half a billion dollars of economic activity the refinery produced until it was shuttered last year, he said.
The government believes that Hovensa’s decision to change the facility to an oil storage terminal is a violation of the Third Concession Agreement, Frazer said. Hovensa believes just as firmly that it does not violate the concession and, further, believes that because it is no longer operating a refinery, it no longer should be paying $14 million annually in lieu of property taxes and was looking for a reduced payment, he said.
At the time the refinery ceased operation Hovensa said it did not intend to sell the facility. According to the attorney general, Gov. John deJongh considered that unacceptable and has pushed for a sale to someone who will again operate a refinery.
"We each wanted something," Frazer said. “We got some of what we wanted but we each had to give a little to get what we wanted.”
Dudley said neither side has backed down from its position about the Third Concession Agreement, but instead have agreed to defuse the issue by looking forward.
"Hovensa and its owners do not believe we are in breach of the agreement," he said.
Dudley said he and Frazer could both have stepped back from the dispute and turned it over to litigators. Instead they found a temporary agreement that provides a path forward.
"If the agreement is rejected, all you have done is … restored the disagreement between my client and the government of the Virgin Islands and assured that the two parties are going to litigation, and I guarantee you it will last at least 10 years," he said.
During that time, the refinery will continue to be shuttered, continue to rust, he said. The value that it has as a refinery will be seriously damaged.
Sen. Nereida "Nellie" Rivera-O’Reilly took offense at Dudley’s assessment, saying she was so angry she had to leave the room briefly.
"You are not going to come in here and threaten me and the people of St. Croix," she said. "It’s about time somebody calls your bluff. I want you to know that I am offended."
She then addressed the company officials in the Senate chamber, saying "perhaps you would be better served represented by someone else."
She wasn’t the only one to object. Sens. Kenneth Gittens and Terrence “Positive” Nelson both used the word "disgusted," and Gittens agreed that it might be time to call the company’s bluff.
Dudley said he apologized if he sounded arrogant and didn’t intend his comments as a threat. At the same time, he said, the Senate needed to understand the situation.
"My responsibility here is to tell you my clients’ position on these issues and our assessment of the consequences of your decision," he said. "That’s not a threat … But I’m not going to surrender my clients’ rights … I’m simply stating what my belief is as a matter of law. We’re clearly in disagreement. The fourth amendment IS the compromise. Let’s lay aside our disagreement and find a way to settle. I don’t think I’m being arrogant."
At least one company has expressed interest to Hovensa about purchasing the property and operating a refinery, Calumet Specialty Products LP, an Indianapolis firm that refines specialty petroleum products for use in a wide variety of finished products.
Jennifer Jones, a St. Thomas attorney representing Calumet for the purposes of the Senate hearing, confirmed that the company has formally expressed its interest to Hovensa, but could not answer questions about its plans, potential number of employees or any other specifics. She pointed out that Calumet officials have not even toured the facility yet, which is the next step of the process.
Other questions Tuesday included whether the agreement ceded any rights for redressing environmental damage to the site. Planning and Natural Resources Commissioner Alicia Barnes said no.
Despite the occasional heat, at least some senators said the two days of hearings have reassured them about the general outline of the deal and they are feeling more comfortable with it.
The amendment has been signed by the governor and company officials. The Senate has until Aug. 7 to either ratify or reject it, but amending the negotiated agreement is not an option.