Hess blocks USVI asbestos cases with bankruptcy, creditors say

Creditors say the former owners of the St. Croix oil refinery are avoiding asbestos lawsuits by filing for bankruptcy. (Photo credit: Environmental Protection Agency)

Creditors of a Hess subsidiary have asked a federal judge to drop the oil giant’s bankruptcy filing, saying its real purpose was to shield the company from lawsuits in the US Virgin Islands, court documents have revealed. .

The legal filing also lists nearly 60 years of environmental and social ills allegedly caused by the refinery.

The petition filed Thursday asked Judge Marvin Isgur of the Southern District of Texas Bankruptcy Court to either void the Chapter 11 bankruptcy for HONX, a subsidiary of Hess, or convert it to Chapter 7. i.e., the former owners of St. Croix’s long troubled The oil refinery is expected to respond to hundreds of lawsuits from Virgin Islanders allegedly injured by gas plant toxins, court records show.

“The debtor did not file this case for his own protection,” wrote lawyers representing a committee of creditors seeking to have the bankruptcy dropped. “Instead, the debtor seeks to protect Hess. But Hess is not prone to the kind of financial distress that would warrant even filing for bankruptcy of his own. Certainly, hundreds of USVI plaintiffs have valuable claims against Hess, including direct premises and vendor liability claims that do not arise from debtor liability.

HONX’s bankruptcy, creditors wrote, shields $37 billion from potential exposure to asbestos-related lawsuits. The filing claimed that Hess had settled approximately 1,100 asbestos-related lawsuits over the past 23 years.

Hess is particularly concerned that the lawsuit will go to trial at USVI because of a law change in 2021 allowing elderly or sick people to have their cases expedited, creditors claimed.

“Hess, like all other asbestos defendants at USVI, was terrified that his liability would be determined by members of the community he devastated by his reckless and rapacious conduct – and no defendant ‘allowed an asbestos case to go to trial there,’ the creditors wrote. “With each passing day in this case, and each day that USVI’s actions remain authorized, Hess continues to generate millions of dollars in free cash flow, while asylum seekers suffer, the memories of witnesses s are fading and the evidence is becoming stale.Like most defendants, Hess would prefer litigation and judgments in the years to come to litigation and judgments right now.

Hess ran the refinery on the south shore of St. Croix from 1965 to 1998, allegedly exposing a generation of goldfish to uncontrolled toxins in their workplace. Hess sold the refinery to Hovensa, which in turn sold to Limetree Bay. who exactly owns the huge refinery is now the subject of debate since it was sold at a bankruptcy auction earlier this year, but Hamilton Refining and Transportation claims sole ownership.

Residents and potential developers demanded that the refinery be permanently closed and dismantled. Some claim to have been disgusted by the fumes from the factory. Others have asked the Environmental Protection Agency to declare sight unsafe and appoint a superfund zone. The EPA, however, has been hampered in its oversight of these issues by recent Supreme Court Judgments. In May 2021, plant oil spray leeward-clad houses.

The recent court filing dug into the history of oil refining in St. Croix, painting a picture of oil barrens taking advantage of USVI tax breaks and plowing through zoning regulations. Refinery owners were able to avoid spending $6.2 billion in 1992, according to the filing. USVI leaders demanded that Hess hire 75% locally, making the refinery a vital part of the territorial economy. But refinery owners leveraged that influence — employing about 15% of the local workforce — to secure even more favorable tax breaks, the court filing said.

“From 1981, when the original agreement was due to expire, Leon Hess wanted to expand the refinery and modify the original agreement to include even more favorable terms. He announced a plan to relocate much of his business, which would deprive the island of now much-needed jobs if the USVI government did not consent to its proposed amendments, the filing alleged.

The new deal was worth hundreds of millions and lasted 16 years. It was not the last, the court filing reported. Refinery officials have repeatedly called for further tax relief, threatening to scale back or shut down operations if local leaders do not comply.

“USVI’s economic expansion and population growth following the refinery came at the cost of severe environmental damage and exposure to asbestos. The refinery’s environmental damage extended to St. Croix’s freshwater supply, brackish water lagoons and beaches, and the refinery’s operations resulted in enormous amounts of air pollution, eventually attracting the attention of the USVI and federal environmental agencies despite its intentionally remote location. folder read.

Reports of health issues were almost immediate, according to the filing.

“Not only did the refinery contaminate the island’s water supply, but it also produced large amounts of emissions that negatively impacted the health of island residents. As early as the 1960s, residents of Sainte-Croix began to complain about these emissions from the refinery,” the court filing reads.

In 1989 alone, the plant released 700,000 pounds of benzene, a carcinogen produced as a byproduct of petroleum refining, according to the court filing. Groundwater was poisoned with oil; leaks of liquefied petroleum gas, naphtha, diesel and gas oil, making schoolchildren sick; thousands of pounds of hydrocarbons and hydrogen sulphide leaked on at least three occasions, according to court records.

The asbestos exposure was also there all along, according to the court filing.

“In addition to the adverse external environmental consequences, refinery operations have also exposed thousands of workers and their families to asbestos. The debtor’s administrative manager, hired by Hess, claims that the presence of asbestos at the refinery was first publicly confirmed in 1982,” the court filing reads.

The refinery claimed to have stopped using asbestos for new construction projects in 1983, but some plaintiffs in asbestos-related lawsuits against Hess and its subsidiaries claimed they had been exposed to asbestos at the refinery after 1983 and in the late 1980s and 1990s, court filing showed.

Of the approximately 1,000 asbestos-related lawsuits filed against Hess and its subsidiaries at the USVI, 606 have been settled out of court, according to the filing. Most of the plaintiffs suffered from asbestosis, a lung disease resulting from the inhalation of asbestos particles, and others suffered from mesothelioma, lung cancer and/or colon cancer following their exposure to asbestos , according to court documents.

In February 2012, the plant, then operating as Hovensa, production stoppedputting 1,800 people out of work, according to the court filing.

“On September 14, 2015, the USVI Department of Justice filed a lawsuit against Hess seeking over $1 billion in damages for a pattern of misconduct by Hess and its affiliates , including Hovensa, which would have stripped assets while burdening the government with pollution responsibilities. . On September 15, 2015, the day after the USVI lawsuit was filed, Hovensa filed for Chapter 11 bankruptcy,” according to the court filing.

Creditors say Hess subsidiary HONX filed for bankruptcy to avoid future asbestos-related lawsuits from plaintiffs who do not wish to settle. HONX’s lawyers have until October 13 to respond.

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