US Justice Department seeks to modify oversight for Caribbean refinery

The US Justice Department is seeking court approval to transfer environmental oversight for a US Virgin Islands petroleum refinery to Limetree Bay Ventures, after the refinery violated the Clean Air Act under its previous operator, officials said Thursday.

The Environmental Protection Agency says the modification to the consent decree for the St. Croix facility reflects new federal requirements in recent years for benzene emissions monitoring around refineries and adjusts for a decrease in the amount of oil barrels produced at the site.

"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," said EPA acting Regional Administrator Walter Mugdan.

The modification to transfer the consent decree to private-equity backed Limetree Bay was first filed in federal court on August 2020, and the refinery, subsequently began refining crude oil later that year.

"We are pleased that EPA has taken the final step of asking the Court to approve the consent decree modification on which we agreed last August with the US and the US Virgin Islands," said a Limetree Bay spokesperson.

In 2011, the US government found the refinery's previous owner, Hovensa, violated the Clean Air Act by increasing emissions without first obtaining pre-construction permits and installing required pollution control equipment.

Hovensa was then required to spend $700 million on pollution control equipment, among other obligations. Hovensa went bankrupt and shut down the plant the following year; later Limetree Bay Ventures bought the refinery in December 2015.

Limetree Bay's spokesperson said the company has already invested more than $100 million in environment improvements and has cut emissions agreed to in the consent decree modification.

Jean-Pierre Oriol, commissioner of the Virgin Islands Department of Planning and Natural Resources, said the filing of the modification "has been a long time coming. We signed the agreement in July 2020."

John Walke, senior attorney and director of clean air programs with the Natural Resources Defense Council, said the new modifications should have been applied before the refinery restarted in December.

"Applying these basic obligations to Limetree four to five months late offers grim solace to St. Croix residents, and raises more questions than it answers," Walke said.

The modification to the consent decree is unrelated to the EPA's revocation of an expansion permit for the refinery last month, the agency said.

The plant, plagued by operational delays for more than a year, recently halted processing after a mishap and is currently not operating, people familiar with the matter told Reuters.