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Hovensa to pay $5.4M fine, invest in pollution controls at US Virgin Islands refinery
By Danica Coto, Associated Press Jan 26, 2011
SAN JUAN, Puerto Rico – The owner of a huge oil refinery in the U.S. Virgin Islands has agreed to spend more than $700 million on pollution controls, federal officials said Wednesday. Hovensa LLC also agreed to pay a $5.4 million penalty for violating the Clean Air Act, said Ignacia Moreno, an assistant attorney general with the U.S. Department of Justice.
“This important settlement with the second-largest refinery in the United States will result in significant improvements to human health and the environment of the U.S. Virgin Islands,” Moreno said in a statement.
Hovensa also will have to set aside $4.9 million for environmental projects in the U.S. Caribbean territory. The decree is subject to court approval and to a 30-day public comment period, officials said.
They accuse Hovensa of making modifications to its refinery that resulted in increased emissions without obtaining the necessary permits or installing the required equipment. Alex Moorhead, a Hovensa spokesman, said the agreement is part of a companywide refinery initiative.
“The projects and investments that will result from this agreement will further support Hovensa’s efforts to operate responsibly and protect the environment in St. Croix,” he said in a statement. Hovensa also announced Wednesday that an ongoing economic crisis is forcing it to shut down several units, reducing the company’s daily processing capacity from 525,000 barrels to 350,000 barrels.
The company also said it is reviewing its work force needs and that it has frozen most of its job openings. Virgin Islands Congressional Delegate Donna Christensen said she worried about impending layoffs. “While the large fine is a hard hit to the refinery which has already been losing money, it will be used in the best possible manner,” she said. “Hovensa has been a part of the St. Croix community since the ’60s and are an important part of our economy.”
The refinery is among the 10 largest in the world and is a joint venture of New York-based Hess Corp. and Petroleos de Venezuela SA. The company also is the largest private employer in the U.S. Caribbean territory, and its refinery is located on the island of St. Croix, where residents have been exposed to a series of environmental problems in recent months.
As a result, the local government has launched its own investigation into Hovensa.
In late September, authorities urged St. Croix residents to avoid drinking cistern water because of an industrial gas leak at the refinery. About a week later, officials warned that a problem that triggered a burnoff of heavy oil could lead to falling soot and oil spots.
In early December, at least 16 students and teachers from a high school near the refinery were exposed to hydrocarbon fumes and were taken to the hospital. Authorities later warned against drinking cistern water after finding droplets of oil on the ground.
Eugennie Gardine, a 90-year-old resident who lives near the refinery, told The Associated Press that she complained to officials last year about the heavy smell of smoke and other problems. “It really affected me,” she said in a phone interview. “I was sneezing and it made my eyes watery.”
Paul Chakroff, executive director of the nonprofit St. Croix Environmental Association, said neighborhoods in western St. Croix are most affected because they are downwind from the refinery. He said the association is starting to document health problems blamed on the refinery, including asthma, with help from government officials.
Chakroff said he was cautiously optimistic about the announcement that Hovensa had agreed to make a multimillion-dollar investment that officials say will cut emissions by 8,500 tons (7,700 metric tons) yearly.
“If this happens, it certainly would be tremendous news,” he said. “We’ll have to hope and see if that in fact works.”