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Senate Votes Overwhelmingly To Approve Sale Of HOVENSA to ArcLight Capital

Terrence Nelson

ANTI-BUSINESS SENATOR: Terrence “Positive” Nelson

CHARLOTTE AMALIE – Senators meeting in full legislative session voted overwhelmingly to approve the operating agreement between Limetree Bay Terminals LLC and the Virgin Islands government.

The 31st Legislature, run by Senate President Neville James, determined that the $800 million deal to take the former HOVENSA oil refinery out of mothballs and let Limetree Bay parent ArcLight Capital tranform it into an oil storage facility was a good deal overall.

“My position: it is an OK deal, more mediocre than good,” James said, adding that the economic position of St. Croix was currently “moribund” which he defined as being  terminally “dead.”

Senators meeting in the Committee of the Whole questioned Limetree’s parent ArcLight Capital Partners’ attorney Evan Schwartz, Virgin Islands government attorney Joel Holt, Finance Commissioner Valdamier Collens and Public Works Commissioner Gustav James for about two hours.

Then Sen. Almando “Rocky” Liburd proposed a motion that would lead to a vote on Bill No. 31-0238 in full session. The motion passed on a vote of 14-1, with only Senate Vice President Janette Millin Young voting no, after offering a prior motion to send the bill to committee for more study, which failed on a vote of 10-5.

Sens. Justin Harrigan Sr., Myron Jackson, Terrance “Positive” Nelson, Tregenza Roach and Millen Young voted in favor of delaying a vote on the controversial bill that would put $220 million in territorial coffers immediately.

Nelson was the most outspoken against voting on the bill today, at times accusing ArcLight Capital attorney Schwartz of being “dishonest” in the way he parsed his answers to questions. He suggested that his colleagues were “gullible” in believing that the vote must be taken today to satisfy a ruling of the HOVENSA bankruptcy court that agreement must be reached by Dec. 31, 2015.

“The wiggle room in this agreement goes to the company,” Nelson said. “What future is there if we can’t use the water after this agreement?”

On Dec. 21, Senators met on St. Croix and questioned ArcLight representatives and oil industry experts for several hours before deciding to delay a vote on the bill until today so that they could examine a legal opinion of the deal commissioned by the governor’s office but only presented to lawmakers seven days ago.

Gov. Kenneth Mapp had called the Legislature into special session on Dec. 17 to consider the deal but senators, especially St. Thomas senators Harrigan and Jackson complained that more time was needed to do due diligence on the terms of the deal. The two Senators repeated the claim again today.

ArcLight representatives said in previous testimony before the Senate  that it would take at least one  year to re-purpose the property on St. Croix’s South Shore  for oil storage duties.

The $800 million suggested value of the deal includes $368 million that the territory would save from a lawsuit by HOVENSA against the government being dropped because of the terms of the sale.

“We will be sending a message to the rest of the world, that yes, St. Croix is open for business,” Sen. Clifford Graham of St. Thomas said in favor of the deal on the floor of the Legislature.

Finance Commissioner Collens called the deal a “revenue sharing and concession agreement” that includes a minimum payment of $7 million per year initially and 10 percent of profits made over and above its generous baseline terms. He said that the government’s share is tied to the gross revenues of the oil storage terminal over the 25 years of the agreement and not to “net profits.”

The HOVENSA refinery was shuttered in January 2012 after Hess Corporation and Petróleos de Venezuela, S.A (PDVSA) which operated the oil refinery jointly, claimed that they had been losing money with the business for several years consecutively.

The former HOVENSA refinery employed roughly 2,000 people on St. Croix. Limetree Bay has promised to hire at least 80 people in its first year of oil storage operations.

“Right now St. Croix is on life support, but this agreement can jump start it,” Sen. Sammuel Sanes said.

At the end of the Session, James made a role call and Sens. Nereida “Nellie” Rivera O’Reilly, Novelle Francis Jr., Jean Forde, James, Sanes, Kurt Vialet, Marvin Blyden, Liburd, Gittens and Graham all voted in favor of the bill, making the vote 10-5.

Nelson was the lone dissenting St. Croix vote against the terms of the operating agreement, saying that more time should have been spent examining the possible environmental impacts of the proposed oil storage terminal. Four St. Thomas senators, Harrigan, Jackson and Millin Young  also voted no.

All senators voting against the agreement said that it locked the territory in for 40 years and didn’t offer enough in compensation to the government.

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The Author

John McCarthy

John McCarthy

John McCarthy is primarily known for his investigative reporting on the U.S. Virgin Islands. A series of reports beginning in the 1990's revealed that there was everything from coliform bacteria to Cryptosporidium in locally-bottled St. Croix drinking water, according to a then-unpublished University of the Virgin Islands sampling. Another report, following Hurricane Hugo in 1989, cited a Federal Emergency Management Agency (FEMA) confidential overview that said that over 40 percent of the U.S. Virgin Islands public lives below the poverty line. The Virgin Islands Free Press is the only Caribbean news source to regularly incorporate the findings of U.S. Freedom of Information Act requests. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is the former news director of WSVI-TV Channel 8 on St. Croix.

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